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Kashika Arora (), Areej Siddiqui and Biswajit Nag ()
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Biswajit Nag: Indian Institute of Foreign Trade (IIFT)

No 2045, Working Papers from Indian Institute of Foreign Trade

Abstract: The study examines the technical efficiency of Indian small manufacturing firms and their specific determinants utilising firm-level data for 2007-08 and 2017-18. The focus is on simultaneous expenditure on insurance premium and export earnings by firms on their technical efficiency. Results from a stochastic frontier production function and technical inefficiency effects model reveal that Indian firms on an average had widening technical efficiencies for the years. The results also indicate that factors such as firm size, firm age, type of firm ownership, technological imports, expenditure on R&D and export guarantees contribute to the technical efficiency. In fact, top 25 percent of firms in 2017-18 relied more on exports with higher expenditure on marketing & advertising and expenditure on export guarantees. This, thus warrants further improvement in technical efficiency through easier access to financial services, access to skilled labour, training of the workforce and entrepreneurs, encouraging foreign investment for operational synergies and export incentives for easier and risk-free penetration in the world market.

Keywords: Technical Efficiency; Insurance Policy; Export Credit Guarantee Scheme; Trade; Manufacturing Firms (search for similar items in EconPapers)
JEL-codes: F14 F36 G28 G32 H81 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020-11
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