Determinants of Technical Efficiency in Small Firms

Roberto Alvarez and Gustavo Crespi

Small Business Economics, 2003, vol. 20, issue 3, 233-44

Abstract: There is evidence that small firms are less productive than larger ones. This phenomenon could be explained by several factors. In this paper, using plant survey data and non-parametric deterministic frontier methodology, we explore what factors can explain the observed differences in technical efficiency. In the case of Chilean manufacturing firms, we found that efficiency is positively associated with the experience of workers, modernization of physical capital and innovation in products. In contrast, other variables such as outward orientation, owner education and participation in some public programs do not affect the efficiency of the firms. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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