Profit-sharing, Technical Efficiency Change and Finance Constraints

Ornella Maietta and Vania Sena
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Ornella Maietta: University of Naples, Italy
Vania Sena: University of Leeds, UK

Microeconomics from EconWPA

Abstract: This paper analyses the mechanisms through which profit-sharing schemes may induce debt constrained firms to improve technical efficiency over time to guarantee positive profits. This hypothesis is first formalised in a partial equilibrium framework and then is tested on a sample of Italian traditional and cooperative firms. Technical efficiency change indexes are computed by DEA. These are regressed on a measure of finance constraints to analyse their impact on firms' efficiency growth. The results support the hypothesis that a restriction in the availability of financial resources can affect positively the growth in efficiency in firms with profit-sharing schemes.

Keywords: Finance Constraints; Technical Efficiency and Profit Sharing (search for similar items in EconPapers)
JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
Date: 2004-05-21
Note: Type of Document - pdf. Tables and Figure 1 are in two separate (pdf) files

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