| Author Name | OGAWA Kazuo (Kansai Gaidai University) |
|---|---|
| Creation Date/NO. | August 2021 21-E-068 |
| Research Project | Study Group on Corporate Finance and Firm Dynamics |
| Download / Links | |
| Notes |
First draft: August 2021 |
Abstract
This study examines the technical inefficiency of small and medium Japanese manufacturing firms by using panel data from the Basic Survey on Small and Medium Enterprises (2009-2018). We estimate the stochastic frontier production function with four production factors (regular workers, nonregular workers, capital stock and materials) and calculate the technical inefficiency of individual firms by applying a true random effects model that can distinguish technical inefficiency from firm heterogeneity.
We find that inefficient firms are smaller, rely more on nonregular workers, exhibit poorer firm performance, have a higher debt-asset ratio, pay a lower interest rate and are inactive in capital investment and R&D investment. We also find that inactive capital investment and a high debt-asset ratio are mainly responsible for causing technical inefficiency.
Published: Ogawa, Kazuo, 2023. "Technical inefficiency and firm behavior: A panel study of small and medium Japanese manufacturing firms," Social Sciences & Humanities Open, Volume 7, Issue 1 (2023), 100388.
https://www.sciencedirect.com/science/article/pii/S2590291122001425
