Determinants of Firm-Level Technical Efficiency: Evidence Using Stochastic Frontier Approach

Evis Sinani, Derek C. Jones, Niels Mygind

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    By estimating stochastic frontiers we investigate the determinants and dynamics of firm efficiency. We use a representative sample of Estonian firms for the period 1993-1999 – and are able to address problems that plague much previous work, such as the endogeneity of ownership. Our main findings are that: (i) foreign ownership increases technical efficiency; (ii) firm size and higher labor quality enhance efficiency, while soft budget constraints adversely affect efficiency; (iv) Estonian firms operate under constants returns to scale; (v) the percentage of firms operating at high levels of efficiency increases over time. As such our findings provide support for hypotheses that a firm’s ownership structure and its characteristics such as firm size, labor quality, soft budget constraints and time of privatization are important for its technical efficiency.
    TidsskriftCorporate Ownership and Control
    Udgave nummer3-1
    Sider (fra-til)225-239
    Antal sider15
    StatusUdgivet - 2008


    • Estland
    • Ejerformer
    • industriøkonomi
    • markedseffektivitet
    • Privatisering