nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2024‒02‒12
sixteen papers chosen by

  1. Digitalization and Resilience: Data Assets and Firm Productivity Growth During the COVID-19 Pandemic By Koski, Heli; Fornaro, Paolo
  2. Is the Nexus Between Capital Structure and Firm Performance Asymmetric? An Emerging Market Perspective By M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin
  3. Women Directors and Cost Efficiency By Anastasia Litina; Luca J. Uberti; Skerdilajda Zanaj
  4. The effects of Innovation capacity on Innovation Performance in Spanish fast-growing firms: A DEA-based Malmquist productivity approach Effets des capacités d'innovation sur la performance d'innovation au sein des entreprises à forte croissance espagnoles : Une approche Malmquist-DEA de la productivité By Nawfal Acha
  5. Market power and innovation in the intangible economy By De Ridder, Maarten
  6. Boosting growth and productivity in the United Kingdom through investments in the sustainable economy By Esin Serin; Nicholas Stern; Anna Valero; John Van Reenen; Bob Ward; Dimitri Zenghelis
  7. Use of indexes in evaluating environmental and health efficiency By Halkos, George; Argyropoulou, Georgia
  8. The Power of Proximity: How Working beside Colleagues Affects Training and Productivity By Natalia Emanuel; Emma Harrington; Amanda Pallais
  9. The Impact of Capital Structure on Business Performance of Vietnamese Enterprises During the Covid 19 Pandemic By Hung, Dang Ngoc
  10. Input price dispersion across buyers and misallocation By Ariel Burstein; Javier Cravino; Marco Rojas
  11. Public expenditure and growth dynamics in Indian agriculture: Trends, structural breaks, and linkages By Akber, Nusrat; Kumar, Anjani; Bathla, Seema
  12. Capital diversion in Vietnamese state-owned enterprises By Cuong Le-Van; Ngoc-Anh Nguyen; Ngoc-Minh Nguyen; Phu Nguyen-Van
  13. Least-cost Decarbonization Pathways for Electricity Generation in Finland: A Convex Quantile Regression Approach By Kuosmanen, Natalia; Kuosmanen, Timo; Maczulskij, Terhi; Zhou, Xun
  14. Digital transformation in firms: determinants of technology adoption and implications for performance By Silvia Massini; Mabel Sanchez Barrioluengo; Xiaoxiao Yu; Reza Salehnejad
  15. Agglomeration and Productivity: The Effect of Job-to-job Accessibility on Workers and Establishments By Haapamäki, Taina; Harjunen, Oskari; Kauhanen, Antti; Kuivalainen, Veeti; Riukula, Krista; Valmari, Nelli; Väänänen, Touko
  16. A User-Centric Approach to Explainable AI in Corporate Performance Management By Vetter, Oliver A.; Efremov, Alexander

  1. By: Koski, Heli; Fornaro, Paolo
    Abstract: Abstract This study investigates the impact of firm-level investments in data assets on productivity growth during the COVID-19 pandemic, utilizing matched employer-employee data of 13, 609 Finnish firms for 2015–2020. Our estimation results indicate that firms with greater pre-pandemic investments in software and database assets and ICT experienced significantly higher labor productivity growth in the first year of the pandemic. Notably, these positive effects are predominantly observed in the service sector, while manufacturing companies did not exhibit statistically significant impacts. Furthermore, our analysis highlights that large service companies with greater investments in data assets demonstrated higher labor productivity growth than their counterparts. We also identify a noteworthy complementarity between a firm’s investments in ICT and databases and employees’ skills, as measured by education level. Interestingly, our empirical findings underscore that firms investing more in data, databases and ICT were statistically significantly more likely to belong to the productivity frontier of their industry.
    Keywords: Data assets, Digitalization, Productivity, Growth, Resilience, Pandemics
    JEL: D22 L25 O33
    Date: 2024–01–16
  2. By: M N, Nikhil; S Shenoy, Sandeep; Chakraborty, Suman; B M, Lithin
    Abstract: The nature of the relationship between leverage and firm performance has been a subject of investigation in extant literature. We re-examine the nature of the association by using a sample of 78 non-financial firms listed in the Nifty 100 index during the 2013-2023 period by applying the quantile regression technique and comparing the result with the linear regression approach (system GMM technique). Our empirical analysis demonstrates that leverage negatively impacts the performance of firms. Further, results show that the association is non-homogeneous among firms of different quantiles: leverage withers the performance of highly profitable firms (upper quantile) than low profitable firms (lower quantile). The identified concave relationship highlights the prominence of optimal capital structure and the role of finance managers in designing a sound financial policy that matches firm characteristics and borrowing requirements. The findings of our study draw insightful implications for managers and policymakers while contributing to the ongoing leverage and firm performance debate reported in previous studies.
    Keywords: leverage, profitability, non-homogeneous, nonlinear relation, quantile regression, GMM, India
    JEL: C23 C26 C33 G30 G32
    Date: 2023–09–02
  3. By: Anastasia Litina (University of Macedonia); Luca J. Uberti (University of Milano-Bicocca,); Skerdilajda Zanaj (DEM, Université du Luxembourg)
    Abstract: In an era where gender norms vary widely and quite frequently hint to gender inequality in the labor market, previous studies have shown that higher gender diversity is associated with better economic outcomes. Using a novel dataset that provides granular data at the firm level, we test this hypothesis in the context of gold mining companies. We concentrate on a relatively overlooked aspect, namely cost efficiency, and study whether a larger number of women directors is associated with more efficient use of a company’s resources. We use a stochastic frontier methodology to estimate the cost-efficiency of gold mines for a representative sample of global mining companies. Using fixed-effects and instrumental-variable regressions, we find that an increase in female representation on the parent company’s board translates into significant efficiency gains for the mining operations controlled by the parent company. Specifically, a one standard-deviation increase in the share of female directors increases cost-efficiency by 12 percent of a standard deviation of our main efficiency index. This finding is robust to using alternative instruments for female representation, alternative stochastic-frontier methodologies, and different specifications of the main estimating equation. Interestingly, the efficiency gains induced by female directors do not necessarily improve the overall performance of the company as measured by accounting profitability. Yet, cost efficiency is associated with higher cost-sustainability and long-term viability of a firm, thereby rendering it more resilient. This hints that the underlying mechanism is consistent with evidence that suggests that women directors exert a higher monitoring and audit effort than their male counterparts. Our results provide additional evidence of a distinctly female style in corporate leadership and shed light to different aspects of a firm’s productivity. Understanding differences in styles of leadership, allows policy makers to implement more inclusive policies in the labor market and firms to endorse diversity in leadership. This ultimately can lead to more inclusive norms in the labor market.
    Keywords: Gender; Boards of directors; Cost efficiency; Stochastic Frontier Analysis; Mining.
    JEL: L2 L25 M14 Z1
    Date: 2023
  4. By: Nawfal Acha (INPT - Institut National des Postes et Télécommunications [Rabat])
    Abstract: Authors are not aware of any findings that might be perceived as affecting the objectivity of this study and they are responsible for any plagiarism in this paper.
    Keywords: Innovation capabilities Innovation performance High-growth firms (Gazelles) DEA Malmquist Index Pitec database. Classification JEL : M15 Paper type : Empirical Research, Innovation capabilities, Innovation performance, High-growth firms (Gazelles), DEA Malmquist Index, Pitec database. Classification JEL : M15 Paper type : Empirical Research
    Date: 2023–12–27
  5. By: De Ridder, Maarten
    Abstract: This paper offers a unified explanation for the slowdown of productivity growth, the decline in business dynamism, and the rise of market power. Using a quantitative framework, I show that the rise of intangible inputs, such as software, can explain these trends. Intangibles reduce marginal costs and raise fixed costs, which gives firms with high-intangible adoption a competitive advantage, in turn deterring other firms from entering. I structurally estimate the model on French and US micro data. After initially boosting productivity, the rise of intangibles causes a decline in productivity growth, consistent with the empirical trends observed since the mid-1990s.
    Keywords: productivity; growth; business dynamism; intangible inputs; market power; Centre for Macroeconomics; “Investissements d’Avenir” program (reference: ANR-10-EQPX-1; CASD
    JEL: D20 D24 E23 L11 O31 O47
    Date: 2024–01–01
  6. By: Esin Serin; Nicholas Stern; Anna Valero; John Van Reenen; Bob Ward; Dimitri Zenghelis
    Abstract: It is now widely accepted that the UK has a major productivity growth problem, with chronic underinvestment across both the public and private sectors being a key cause. Continued low public investment, as laid out in the Chancellor's Autumn Statement of 2023, and ongoing barriers to business investment in productive and sustainable assets, are inconsistent with success in international markets and will likely lead to more stagnation. Investing in the opportunities afforded by the global transition to an efficient, resilient and inclusive economy needs to be a bigger part of restoring productivity and output growth for the UK to gain a competitive lead in the innovative markets of the 21st century. This report sets out the need for long-lasting institutional and policy frameworks that can induce investment in a broad range of assets. These assets drive technological, institutional and behavioural innovation. The report is intended to guide policymakers to manage a structural transition, by taking advantage of the opportunity associated with the sustainable, intelligent and resilient economy while minimising the disruption and risks associated with assets being left redundant and devalued in the economy of the 21st century.
    Keywords: growth, UK, investment, productivity
    Date: 2024–01–22
  7. By: Halkos, George; Argyropoulou, Georgia
    Abstract: Widespread in THE literature is the conclusion that air pollution is associated with various health problems. The present study discusses two discrete Data Envelopment Analysis (DEA) models and two related indexes. This approach has been adopted in previous research by Halkos & Argyropoulou (2021a, 2021b, 2022). Consequently, this paper uses inputs and insights published in the above-mentioned studies to evaluate the efficiency of managing pollutant levels in terms of health status at a country level. The main objective here is to offer useful tools to researchers, so that depending on their needs they can refer to the appropriate methodology, comparing the above evaluation models and presenting their capabilities, advantages and disadvantages.
    Keywords: Environmental Efficiency; Mortality; DEA; Energy;ˑAir pollution; Health effects; Sustainable Development Goals; Bertelsmann Index; ˑ Distance Measure Index.
    JEL: C67 I10 I15 O13 O44 Q01 Q40 Q53 Q56
    Date: 2024–01
  8. By: Natalia Emanuel; Emma Harrington; Amanda Pallais
    Abstract: Firms remain divided about the value of the office for “office” workers. Some firms think that their employees are more productive when working from home. Others believe that the office is a key place for investing in workers’ skills. In this post, which is based on a recent working paper, we examine whether both sides could be right: Could working in the office facilitate investments in workers’ skills for tomorrow that diminish productivity today?
    Keywords: work from home; remote work; on-the-job training; peer effects; mentoring; gender
    JEL: J0 J24
    Date: 2024–01–18
  9. By: Hung, Dang Ngoc
    Abstract: This paper investigates the impact of capital structure on business performance of Vietnamese enterprises during the Covid-19 pandemic. The study focuses on key performance indicators such as return on total assets (ROA), return on equity (ROE), and earnings per share (EPS). The analysis employs the table data regression method using a dataset comprising 5747 enterprise observations for the period of 2019 to 2022. The findings indicate that capital structure has a significant negative influence on the business performance of Vietnamese enterprises. Moreover, the study highlights the substantial effect of capital structure on business performance when considering different aspects and debt structures, particularly within the framework of the Covid-19 pandemic. Based on these research findings, the article recommends that business administrators carefully consider the optimal capital structure to enhance business efficiency, especially given the unpredictable nature of the Covid-19 pandemic
    Date: 2024–01–05
  10. By: Ariel Burstein; Javier Cravino; Marco Rojas
    Abstract: We leverage a comprehensive dataset of electronic invoices from Chilean firms to document new facts on price dispersion across buyers of the same manufactured intermediate goods. Over half of firm-tofirm sales in manufacturing are accounted for by products that are purchased by more than one buyer in a given month, with prices ranging by 40 percentage points across buyers for the average product. Price dispersion is pervasive across all manufacturing sectors. Observable characteristics of products and of buyer-seller pairs (including distance, mode of payment, and size of the parties and of the transaction) explain only a small fraction of the variance of price gaps in the data. We use a workhorse model of production networks to quantify the productivity gains from eliminating markup dispersion across buyers of individual products, inferring initial differences in markups from observed price gaps. The increase in aggregate productivity relative to the sales share of treated multi-buyer firms ranges from 2 to 7 percent, depending on the calibration of elasticities of substitution. The gains from eliminating markup dispersion across buyers are as large as those of eliminating markup dispersion across products.
    Date: 2024–01
  11. By: Akber, Nusrat; Kumar, Anjani; Bathla, Seema
    Abstract: The present study analyzes temporal and spatial trends in public expenditure on agriculture and irrigation in India. It links sub-period growth performance with expenditure based on structural breaks. The analysis pertains to the period between 1992/1993 and 2019/2020. This is a period that has witnessed a stagnation, and even a decrease in public expenditure in the agricultural sector and a resulting deceleration in productivity growth, which was then followed by a revival in both expenditure and output. Significantly expenditure on subsidies of key inputs, viz. fertilizer, irrigation, and power, however, has not incentivized farmers to increase output and productivity to achieve a higher rate of growth. Empirical findings based on the first-difference regression analysis confirm that agricultural growth is determined by public expenditure on agriculture and irrigation; across the states, however, input subsidies alone are shown to be less, or not at all, efficient. Funds to agriculture and irrigation should be increased in proportion to their contribution to the state domestic product, and input subsidies should be rationalized by weighing their positive welfare effects against their cost to the exchequer.
    Keywords: public expenditure; agriculture; inputs; subsidies; input subsidies; structural break; kinked growth; INDIA; SOUTH ASIA; ASIA
    Date: 2023
  12. By: Cuong Le-Van; Ngoc-Anh Nguyen; Ngoc-Minh Nguyen; Phu Nguyen-Van (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Purpose The authors estimated the hidden overhead (capital diversion or wasteful use of capital) of Vietnam state-owned enterprises (SOEs). Design/methodology/approach The authors used a panel data set of 10, 200 Vietnam SOEs observed over the period 2010–2018. The authors modeled and estimated the hidden overhead by using a stochastic production frontier. The hidden overhead parameter is modelled as the technical inefficiency in the production function. Findings Vietnam SOEs are very capital intensive. The hidden overhead (or the wasteful use of capital) is very high with an average rate of 69%. Research limitations/implications Alternative estimation methods should be used to account for endogeneity in production inputs. Lack of comparison with the Vietnam private firms. Originality/value The paper proposes an original way to quantify hidden overhead (or capital diversion) in the Vietnam SOEs. The finding (a capital diversion rate of 69% on average) is astonishing. It calls for an urgent and profound reform of the Vietnam SOEs.
    Date: 2023–11–14
  13. By: Kuosmanen, Natalia; Kuosmanen, Timo; Maczulskij, Terhi; Zhou, Xun
    Abstract: Abstract This study investigates the least-cost decarbonization pathways in the Finnish electricity generation industry in order to achieve the national carbon neutrality goal by 2035. Various abatement measures, such as downscaling production, capital investment, increasing labor and intermediate inputs are considered. The marginal abatement costs (MACs) of greenhouse gas emissions are estimated using the convex quantile regression method and applied to unique register-based firm-level greenhouse gas emission data merged with financial statement data. We adjust the MAC estimates for the sample selection bias caused by zero-emission firms by applying the two-stage Heckman correction. Our empirical findings reveal that the median MAC ranges from 0.1 to 3.5 euros per tonne of CO2 equivalent. The projected economic cost of a 90% reduction in emissions is 62 million euros, while the estimated cost of achieving zero emissions is 83 million euros.
    Keywords: Abatement cost, Convex quantile regression, Forward-looking assessment, Climate policy, Decarbonization pathways
    JEL: O44 Q43 Q51 Q52 Q54
    Date: 2024–01–19
  14. By: Silvia Massini (Manchester Institute of Innovation Research, The University of Manchester); Mabel Sanchez Barrioluengo (Manchester Institute of Innovation Research, The University of Manchester); Xiaoxiao Yu (Manchester Institute of Innovation Research, The University of Manchester); Reza Salehnejad (Manchester Institute of Innovation Research, The University of Manchester)
    Abstract: Advanced digital technologies (DTs) such as AI, Big Data, Cloud Computing, 3D printing, IoT, and Robotics are known for their potential to be pervasive and generate disruptive change. Despite this, there is limited evidence regarding the factors that motivate or hinder technology adoption. This study, based on an original survey of firms in Greater Manchester, aims to shed light on the determinants of DT adoption, including underlying motivations, potential barriers, and skills deficits. Additionally, it explores the influence of digitalisation and skills on firms‘ performance. Our results suggest that while different DTs are at varying stages of technology diffusion, they are characterised by complementarity and are often jointly adopted. Furthermore, the adoption of DTs in SMEs and younger firms, coupled with the presence of appropriate (digital and non-digital) skills, constitutes a pivotal synergy that significantly influences firms' productivity levels.
    Keywords: Digital transformation, Adoption, Skills, Motivations, Barriers, Productivity, Firms
    Date: 2024–01
  15. By: Haapamäki, Taina; Harjunen, Oskari; Kauhanen, Antti; Kuivalainen, Veeti; Riukula, Krista; Valmari, Nelli; Väänänen, Touko
    Abstract: Abstract In economics, the regional densification of economic activity is referred to as agglomeration. The effects of agglomeration are often referred to when discussing the wider economic benefits of transportation infrastructure projects. The magnitude of these effects has not been extensively studied in Finland. In this report, we examine the impact of agglomeration on productivity in the Helsinki region, utilizing extensive registry data. We find that improved job to job accessibility increases employees’ wages. However, our findings concerning the value-added at establishment level are less conclusive and statistically insignificant. Our results suggest that increased accessibility leads to increases in other operating expenses such as rents, potentially explaining the lack of statistically significant effect on value-added. Our results suggest that agglomeration benefits are predominantly intraregional, with interregional accessibility having little impact on these benefits. Thus, the ratio between the agglomeration benefits and the direct benefits of transportation infrastructure projects varies depending on the project. Including these benefits directly to cost-benefit analyses risks double counting some benefits. Taxes and similar payments on increased wages due to accessibility increases could be included as a separate item in the cost-benefit analysis.
    Keywords: Agglomeration, Productivity, Transport project, Cost-benefit analysis, Accessibility, Wider economic impacts
    JEL: R41 R42 R12
    Date: 2024–01–23
  16. By: Vetter, Oliver A.; Efremov, Alexander
    Date: 2023–07

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