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

Evis Sinani, Derek C. Jones, Niels Mygind

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    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.
    Original languageEnglish
    JournalCorporate Ownership and Control
    Volume5
    Issue number3-1
    Pages (from-to)225-239
    Number of pages15
    ISSN1727-9232
    DOIs
    Publication statusPublished - 2008

    Keywords

    • Stochastic frontier
    • Technical efficiency
    • Ownership structure

    Cite this

    @article{307c1fe0bf9b11ddab34000ea68e967b,
    title = "Determinants of Firm-Level Technical Efficiency: Evidence Using Stochastic Frontier Approach",
    abstract = "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.",
    keywords = "Estland, Ejerformer, industri{\o}konomi, markedseffektivitet, Privatisering, Stochastic frontier, Technical efficiency, Ownership structure",
    author = "Evis Sinani and Jones, {Derek C.} and Niels Mygind",
    year = "2008",
    doi = "10.22495/cocv5i3c1p7",
    language = "English",
    volume = "5",
    pages = "225--239",
    journal = "Corporate Ownership and Control",
    issn = "1727-9232",
    publisher = "Virtus Interpress",
    number = "3-1",

    }

    Determinants of Firm-Level Technical Efficiency : Evidence Using Stochastic Frontier Approach. / Sinani, Evis; Jones, Derek C.; Mygind, Niels.

    In: Corporate Ownership and Control, Vol. 5, No. 3-1, 2008, p. 225-239.

    Research output: Contribution to journalJournal articleResearchpeer-review

    TY - JOUR

    T1 - Determinants of Firm-Level Technical Efficiency

    T2 - Evidence Using Stochastic Frontier Approach

    AU - Sinani, Evis

    AU - Jones, Derek C.

    AU - Mygind, Niels

    PY - 2008

    Y1 - 2008

    N2 - 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.

    AB - 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.

    KW - Estland

    KW - Ejerformer

    KW - industriøkonomi

    KW - markedseffektivitet

    KW - Privatisering

    KW - Stochastic frontier

    KW - Technical efficiency

    KW - Ownership structure

    U2 - 10.22495/cocv5i3c1p7

    DO - 10.22495/cocv5i3c1p7

    M3 - Journal article

    VL - 5

    SP - 225

    EP - 239

    JO - Corporate Ownership and Control

    JF - Corporate Ownership and Control

    SN - 1727-9232

    IS - 3-1

    ER -