Does hiring a manager improve efficiency – owner vs. non-owner management control of rice mills

Eucabeth Majiwa, Boon Lee, Jonas Månsson and Clevo Wilson

Journal of Economic Studies, 2022, vol. 50, issue 4, 718-733

Abstract: Purpose - In this study, the impact of owner-operator and non-owner operator rice mills on productive efficiency is investigated. Design/methodology/approach - Primary data collected from a survey of 111 rice mills in the Mwea region of Kenya are used. A metafrontier approach is employed to measure overall technical efficiency which is decomposed into managerial and organisational efficiency. Findings - The results reveal no significant difference in overall technical and managerial efficiency between owner and non-owner operated mills. However, a significant difference exists in organisational efficiency of mills: non-owner operated mills were found to be performing significantly better than owner-operated. Practical implications - The authors provide supporting evidence to the study and discuss some of the significant policy implications stemming from the study. Originality/value - It is recognised that for owners to take the risk of divesting control to a hired manager rather than manage the firm themselves can have major strategic, financial and often emotional consequences. However, there is little empirical evidence on how production efficiency will develop as a result of hiring a manager with the underlying economic theory providing ambiguous guidance. Standard economic theory assumes that firms behave as profit maximisers, which can be achieved by operating efficiently. However, this may not always be the case and as the literature indicates, this may especially be so for small businesses in low- and middle-income countries.

Keywords: Performance measurement; Data envelopment analysis; Efficiency; Developing countries; Owner and non-owner operated mills (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

Related works:
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:eme:jespps:jes-12-2021-0605

DOI: 10.1108/JES-12-2021-0605

Access Statistics for this article

Journal of Economic Studies is currently edited by Prof Mohsen Bahmani-Oskooee

More articles in Journal of Economic Studies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().