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on Efficiency and Productivity |
| By: | Vutha HING (University of Adelaide, Australia); Shandre Mugan THANGAVELU (Sunway University, Kuala Lumpur, University of Adelaide, Australia) |
| Abstract: | This paper examines the effects of servicification on productivity from the perspectives of service inputs (demand-side) and service outputs (supply-side) for firms in Cambodia. The empirical analysis adopts the firm-level data from the 2014 Inter-censal Economic Survey of Cambodia. The unique data contain a vast array of annual corporate information and allow us to differentiate between the share of service input to total inputs (our first proxy of servicification) and the share of service revenues to total output (another proxy of servicification). The empirical analysis examines the productivity effects of servicification controlling for firm heterogeneity, such as year of operation, foreign ownership, registration, female manager, and skill intensity. |
| Keywords: | servicification, productivity, skill intensity, firm-level analysis |
| JEL: | D24 |
| Date: | 2024–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-07 |
| By: | Demirer, Mert (MIT); Karaduman, Omer (Stanford U) |
| Abstract: | Using rich data on hourly physical productivity and thousands of ownership changes from U.S. power plants, we study the effects of acquisitions on efficiency and underlying mechanisms. We find a 2% average increase in efficiency for acquired plants, beginning five months after acquisitions. Efficiency gains rise to 5% under direct ownership changes, with no significant change when only parent ownership changes. Investigating the mechanisms, three-quarters of the efficiency gain is attributed to increased productive efficiency, while the rest comes from dynamic efficiency through changes in production allocation. Our evidence suggests that high-productivity firms buy underperforming assets from low-productivity firms and make them as productive as their existing assets through operational improvements. Finally, acquired plants improve their performance beyond efficiency by increasing output and reducing outages. |
| JEL: | G34 L22 L25 L40 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4209 |
| By: | Olga Kutnohorská (University of Chemistry and Technology, Prague); Dana Strachotová (University of Chemistry and Technology, Prague); Marek Botek (University of Chemistry and Technology, Prague); Stanislava Grosová (University of Chemistry and Technology, Prague) |
| Abstract: | This study analyzes the productivity of selected chemical industry companies in the Czech Republic through Data Envelopment Analysis (DEA). The selection of companies for analysis was based on the amount of turnover and also according to the field of business. The enterprises were grouped into groups of consumer chemistry, inorganic and organic commodity chemistry, qualified chemistry, technical gases, processing of plastics or rubbers, and distribution of raw materials. The Malmquist productivity index (MPI) was used to analyze changes in the productivity of companies, and the statistical significance of these indices was tested using the bootstrap method. This procedure helped identify the influence of various factors on the efficiency and productivity of companies, including the influence of the area of business. The study showed other possibilities of using this procedure. E.g. in the case of inclusion of environmental costs or investments in the field of the environment. |
| Keywords: | Field of business, Chemical industry company, Data envelopment analysis, Malmquist productivity index, Bootstrapping, Financial statements |
| JEL: | C10 D20 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iacpro:14616447 |
| By: | Marek Botek (University of Chemistry and Technology, Prague); Olga Kutnohorská (University of Chemistry and Technology, Prague); Dana Strachotová (University of Chemistry and Technology, Prague); Stanislava Grosová (University of Chemistry and Technology, Prague) |
| Abstract: | This article studies the performance of selected companies of the Czech chemical industry. Data from financial statements are used for the analysis. The initial data is processed by the Data Envelopment Analysis (DEA) method. Furthermore, the authors use the Malmquist Productivity Index (MPI) to analyze changes in the productivity of companies, and the bootstrap method tested the statistical significance of these indexes. The authors examined the development of selected data over a longer time horizon in order to identify changes, for example, in the period before and after the COVID 19 epidemic. The findings of the study not only show the development of productivity, but also reveal the causes of the development. |
| Keywords: | Chemical industry, Data envelopment analysis, Malmquist productivity index, Bootstrapping, Financial statements |
| JEL: | C10 D20 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iacpro:14616446 |
| By: | Subash SASIDHARAN (Indian Institute of Technology Madras, Chennai, India); Shandre THANGAVELU (Sunway University, The University of Adelaide); Ketan REDDY (Indian Institute of Management Raipur, India) |
| Abstract: | In this study, we explore the impact of urban amenities and the global value chain (GVC) participation of Indian firms on their firm performance using firm-level data. The study uses micro-level data matching firms to urban amenities at the district level based on their district location. Using a panel data framework, we observe a positive relationship between urban amenities and the GVC participation of firms on their productivity performance. We also observe a positive impact of GVC participation on the productivity of firms, especially on their total factor productivity. In terms of channels, we observe the GVC impact through educational amenities on the productivity of the firms. This suggests education amenities increase the productive performance of GVC firms. We also observe that financial amenities tend to increase the productive performance of GVC firms. The results of the paper highlight the importance of urban amenities in affecting the productive performance of Indian firms in GVC activities. |
| Keywords: | Amenities Index; Global Value Chains: Manufacturing; TFP |
| JEL: | F14 F15 L6 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-13 |
| By: | Cristhian D. Prieto; Ilan Noy |
| Abstract: | Floods are among the most frequent and destructive natural hazards worldwide, yet their economic impacts remain poorly understood. This paper examines the effects of two cyclone-induced floods on firms’ economic performance in New Zealand. To identify flood damage, we propose a novel method using high-resolution satellite imagery to track changes in ground vegetation before and after the cyclones. By integrating this information with detailed business administrative records and enterprise survey data, we construct a unique plant-level dataset to estimate the flooding causal effects. Using a Difference-in-Differences (DID) approach, we find that firm premises located in flood-affected areas experienced significant declines in gross output and sales, alongside increased losses in profit and value-added. Contrary to common belief, our analysis reveals that capital damage and labour displacement, rather than productivity losses, are the primary channels through which flooding affects firms. Plants responded to these events by liquidating inventories and cashable assets, though no evidence of relocation is found. Our results are robust to various econometric specifications and alternative estimation methods, including the Synthetic Difference-in-Differences (SDID) estimator. |
| Keywords: | floods, firms, production, cyclones, coping strategies, labour, capital, productivity, DID, SDID |
| JEL: | D24 J20 L11 O13 O14 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11430 |
| By: | Phouphet KYOPHILAVONG (National University of Laos); Shandre Mugan THANGAVELU (Sunway University, University of Adelaide); Inpaeng SAYVAYA (Champasack University) |
| Abstract: | This paper examines the effects of urban amenities on the probability of firms exporting and firm productive performance in the Lao People’s Democratic Republic (Lao PDR). A logit model was used, finding that urban amenities have a positive and statistically significant effect on firm productivity. However, the results do not indicate any impact on the probability of firms exporting. Based on these results, both the government and private sector should invest more in improving urban amenities to facilitate efficient business operations and to enhance firm competition in global markets. In addition, the government should invest more in human capital and production facilities, especially in information and communications technology, to increase firm performance as well as the probability that they will export. |
| Keywords: | productivity, urban amenities, exporting |
| JEL: | O12 L21 L11 D24 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-11 |
| By: | Khanh, Huyen Ngo |
| Abstract: | This paper examines the operational efficiency of commercial banks through the lens of the Data Envelopment Analysis (DEA) model, highlighting its significance in assessing banking performance in a rapidly evolving financial landscape. By analyzing key literature and trends, the study identifies critical factors influencing bank efficiency, including technological advancements, sustainability, and regulatory frameworks. It also explores the impact of digital transformation on traditional banking operations and emphasizes the importance of customer-centric approaches in enhancing service efficiency. Furthermore, the paper discusses future research directions, such as the integration of artificial intelligence and big data analytics, cross-country comparisons, and the relationship between operational efficiency and risk management. Ultimately, this study aims to provide insights for scholars and practitioners seeking to enhance the competitiveness and resilience of commercial banks in an increasingly complex global environment. |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:uy9mx |
| By: | Agnes Norris Keiller (Institute for Fiscal Studies); Áureo de Paula (Institute for Fiscal Studies); John Van Reenen (Institute for Fiscal Studies) |
| Date: | 2024–07–11 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:cwp15/24 |
| By: | Wenxiao WANG (Zhongnan University of Economics and Law); Shandre THANGAVELU (Sunway University, The University of Adelaide) |
| Abstract: | This study examines the relationship between city agglomeration and firm-level performance of global value chains (GVCs) in China. Using a novel dataset of night-time light data and survey data from Chinese manufacturing firms, the dynamic changes of urban agglomeration in China are studied, analysing their impact on firm-level productivity, GVC participation, and GVC upstreamness. The results highlight that the concentration of economic activity in urban areas can lead to productivity gains for firms, especially in the upstream stages of GVCs, which is characterised by higher value-added activities and better access to knowledge and technology. The study also finds that urban agglomeration promotes industrial specialisation and human capital spillovers, further improving the upstreamness of firms in GVCs. Firms in larger cities also tend to be more productive, participate more in GVCs, and are closer to the final demand of GVCs. |
| Keywords: | city agglomeration, global value chains, productivity, upstreamness, GVC participation |
| JEL: | F14 F23 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-14 |
| By: | Mehrzad B. Baktash |
| Abstract: | Increased wages and productivity associated with performance pay can be beneficial to both employers and employees. However, performance pay can also entail unintended consequences for workers’ well-being. This study is the first to systematically examine the association between performance pay and loneliness, a significant social well-being concern. Using representative survey data from Germany, I find that performance pay is positively associated with incidence, dimensions, and intensity of loneliness. Correspondingly, performance pay is negatively associated with social life satisfaction of the workers. The findings also hold in sensible instrumental variable estimations addressing the potential endogeneity of performance pay and in various robustness checks. Investigating the potential role of moderating factors reveals that the association between performance pay and loneliness is particularly large for private sector employees. Finally, implications are discussed. |
| Keywords: | Performance Pay, Loneliness, Social Life, Well-Being, SOEP |
| JEL: | J33 I31 J32 I10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202412 |
| By: | Dabalen, Andrew (World Bank); Paul, Saumik (University of Manchester) |
| Abstract: | This paper examines if ownership control - the share of largest owner in the firm - explains the difference in the adoption of management best practices between Sub-Saharan Africa (SSA) and rest-of-the-world (ROW). Using a sample of 156, 833 firms from 130 countries, of which 25, 005 are in SSA, we estimate the average management practices score in SSA and ROW as -0.096 and 0.023, respectively. The average treatment effect on management practices scores of going from less than 50 percent ownership control to full ownership control is negative, and it is comparable between SSA (-0.136) and ROW (-0.147). However, the share of sole proprietorships characterized by full ownership control is 52 percent in SSA compared to only 30 percent in ROW. A lower average of management practices score in SSA compared to ROW is largely driven by preponderance of sole proprietorship, in addition to lack of awareness about management best practices in SSA. |
| Keywords: | business practices, productivity, management, Sub-Saharan Africa |
| JEL: | D24 E25 G31 L11 O30 O47 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17433 |
| By: | Gmeiner, Michael W.; Gschwandtner, Adelina; Mcmanus, Richard |
| Abstract: | We study the pay of chief executives of higher education institutions in the UK, known as Vice Chancellors (VCs), over a ten-year period. As different institutions might have different missions and follow different performance objectives, we use the LASSO method in a novel way to choose which performance parameters are most strongly associated with VC pay for each institution. Moreover, we use the same method in order to decide if and how institutions benchmark against other institutions in terms of VC pay by constructing a set of benchmarks for each one of them. We find that while institutions at the lower and medium end of the pay distribution benchmark primarily against institutions with larger VC pay than themselves, the institutions at the higher end of the pay distribution benchmark are primarily towards performance parameters. This type of behaviour can explain the recent inflation in pay observed in the sector. Empirical evidence as well as results from simulations motivate a policy recommendation that symmetric benchmarking by all institutions would prevent upward ratcheting of average VC pay. While we are looking at data stemming from the academic sector in the UK, the method and the recommendations can equally apply to other salaries that are benchmarked such as the ones of professional athletes or CEOs worldwide and therefore, bear generality. |
| Keywords: | executive compensation; performance; efficiency; benchmarking |
| JEL: | Z13 G30 J33 |
| Date: | 2023–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:120863 |
| By: | Carles Mulet-Forteza; Berta Ferrer-Rosell; Onofre Martorell Cunill; Salvador Linares-Mustar\'os |
| Abstract: | This study aims to explore the impact of expansion strategies and specific attributes of hotel establishments on the performance of international hotel chains, focusing on four key performance indicators: RevPAR, efficiency, occupancy, and asset turnover. Data were collected from 255 hotels across various international hotel chains, providing a comprehensive assessment of how different expansion strategies and hotel attributes influence performance. The research employs compositional data analysis (CoDA) to address the methodological limitations of traditional financial ratios in statistical analysis. The findings indicate that ownership-based expansion strategies result in higher operational performance, as measured by revenue per available room, but yield lower economic performance due to the high capital investment required. Non-ownership strategies, such as management contracts and franchising, show superior economic efficiency, offering more flexibility and reduced financial risk. This study contributes to the hospitality management literature by applying CoDA, a novel methodological approach in this field, to examine the performance of different hotel expansion strategies with a sound and more appropriate method. The insights provided can guide hotel managers and investors in making informed decisions to optimize both operational and economic performance. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.04640 |
| By: | Telma Yamou; Mr. Alun H. Thomas; Kaihao Cai |
| Abstract: | This paper examines the relationship between citizens’ perceptions of tax authorities and the governments’ efficiency in collecting VAT and CIT revenues in Africa. Drawing on data from 32 countries over 2014-2019, we find a negative and significant association between negative perceptions of trust in authorities (the tax department) from the Afrobarometer survey and tax efficiency for these revenue categories. A 1 percent increase in the share of citizens’ perception of little or no trust in the tax department leads to a 0.22 percent decrease in VAT tax efficiency, controlling for macroeconomic indicators. The magnitude of the effect is significantly greater in fragile compared to non-fragile states. For corporate income tax productivity focusing on tax payments of corporates we find a significant effect only in fragile states. Perceptions about corruption in tax authorities have a similar effect on VAT and CIT tax efficiency since perceptions about trust and corruption capture the tendency to misappropriate revenues but we are unable to distinguish the two effects except for fragile states. Our findings suggest that in the face of fragility, policies aimed at improving fiscal capacity should place a high importance on ensuring that citizens believe resources will be used properly, an aspect of tax policy not typically prioritized. |
| Keywords: | Trust in authorities; fragility; tax efficiency; Africa |
| Date: | 2024–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/234 |
| By: | Foreman-Peck, James; Hannah, Leslie |
| Abstract: | We explore which business forms were predominant in the later Victorian economy and why some forms were more effective among large British manufacturing firms during this period. With a dataset of 483 manufacturing firms in 1881 that either employed at least 1000 or had done so a decade earlier, we find that the great majority were partnerships. Public corporations attained higher capital–labour ratios and stronger employment growth than other business forms. The separation of ownership from control was most effective where it was most thoroughly practised, as by public, in contrast to private, corporations. Engineers were frequently encountered in all business forms and associated with expanding employment. But the large public manufacturing corporations employed almost twice the proportion of engineers and professionals in top management as other enterprises. Family firms, proxied by heirs, were present in management of three-quarters of partnerships but in only one-third of public corporations. Heirs reduced the employment growth of the firm, whereas engineers boosted it. Lords, mayors, and landed wealth in management were also associated with faster employment growth of enterprises. |
| Keywords: | business performance; corporations; engineers; manufacturing; partnerships; Victorian economy |
| JEL: | J1 |
| Date: | 2024–11–03 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126037 |