What Drives the Productive Efficiency of a Firm?: The Importance of Industry, Location, R&D, and Size

Oleg Badunenko, Michael Fritsch () and Andreas Stephan

No 775, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper investigates the factors that explain the level and dynamics of manufacturing firm productive efficiency. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. We find that (1) about half the model's explanatory power is due to industry effects, (2) firm size accounts for another 20 percent, and (3) location of headquarters explains approximately 15 percent. Interestingly, most other firm characteristics, such as R&D intensity, outsourcing activities, or the number of owners, have extremely little explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm's efficiency over time.

Keywords: Frontier analysis; determinants of efficiency; firm performance; industry effects; regional effects; firm size (search for similar items in EconPapers)
JEL-codes: D24 L10 L25 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2008
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ino, nep-mic and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.81440.de/dp775.pdf (application/pdf)

Related works:
Working Paper: What Drives the Productive Efficiency of a Firm? - the importance of industry, location, R&D, and size (2008)
Working Paper: What Drives the Productive Efficiency of a Firm? The Importance of Industry,Location, R&D, and Size (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp775

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().