Measuring Technical Efficiency in the Indian Automobile Industry

Mazumder, Ritwik; Adhikary, Maniklal

doi:10.1177/139156141001100104

Cited by 7 publications

(9 citation statements)

References 17 publications

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“…However, Mazumder and Adhikary (2010) found that spending on the welfare of employees, including increasing the rate of wages, is not an important factor in determining the level of technical inefficiency in a firm.…”

Section: Literature Reviewmentioning

confidence: 99%

Technical Efficiency in Transport Manufacturing Firms: Evidence From Malaysia

Fahmy-Abdullah

Ismail²,

Sulaiman³

et al. 2017

AAMJ

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Section: Literature Reviewmentioning

confidence: 99%

Technical Efficiency in Transport Manufacturing Firms: Evidence From Malaysia

Fahmy-Abdullah

Ismail²,

Sulaiman³

et al. 2017

AAMJ

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“…There is an ongoing debate on which are of the approaches is superior to measure TE and the use of both approaches is widely reported in the literature. Examples of DEA applications can be found in Yu and Fan (2009), Agarwal et al (2010), Sun et al (2015) and Sabli et al (2019), while works on SFA include Coto-Millan et al (2004), Mazumder and Adhikary (2010), Jarboui et al (2015) and Fahmy-Abdullah et al (2017), among others.…”

Section: Introductionmentioning

confidence: 99%

Measurement of Technical Efficiency Using the Dea and Sfa Methods: A Case Study on Malaysian Transport Manufacturing Industry

Hashim¹,

JOFREE²,

Fahmy-Abdullah³

et al. 2021

JBSD

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and make it difficult for them to decide on the best courses of action to be taken to improve the industry's TE. TE is widely used as an indicator to gauge the efficiency level of a company or an industry (Mahadevan, 2004) and it has been used successfully to measure said levels in various organisations and industries (Cullinane et al., 2006). In general, approaches to measuring TE can be classified into two, namely, parametric, and non-parametric (Jarboui et al., 2012).An example of a parametric approach is the Stochastic Frontier Analysis (SFA), which evaluates the cost, profit, or production functions based on the input, output, and environmental parameters (Aigner et al., 1977). In the estimation, the effects of random errors and inefficiencies are considered immaterial Abstract: At present, there is limited research on the state of the transport manufacturing industry in Malaysia. This article presents an analysis on the technical efficiency (TE) of the Malaysian transport manufacturing industry using the established parametric and non-parametric approaches of Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA), respectively based on Department of Statistics Malaysia (DoSM) data of 611 firms between 2005 and 2010. The results showed that within the DEA approach, the Variable Return to Scale (VRS) model gave higher average efficiency than the Constant Return to Scale (CRS) model, whereas the Translog function was found to be superior to the Cobb-Douglas function in the SFA approach. Overall, high efficiency values were found in both the parametric and non-parametric methods and the results were consistent. Spearman's coefficients showed weak correlations between the DEA and SFA approaches, with inconsistencies among the samples. Limited comparisons, however, could be made based on subsectors. Although inconsistencies were found in both approaches to identify firms with best and worst performances, the methods could still be useful in measuring TE through a careful selection of the input and output variables, depending on the context, objectives, and environment of the measurement.

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“…Similarly, Saranga (2009) explores the efficiency and its determinants using data of Indian auto component industry and notice most of the auto component firms were inefficient. Mazumdar and Adhikary (2010) measure firm-specific time-invariant technical efficiency (TE) in the Indian automobile industry. They find that age of firm since inception is inversely associated with TE where market share of the firm is positively associated with TE.…”

Section: Introductionmentioning

confidence: 99%

“…First, while previous studies (see Mazumdar and Adhikary, 2010;Gaddam, 2013) mostly focused by examining the productivity and efficiency of aggregate automobile sector, we add to the existing literature by examining productivity growth and efficiency change for three segments of automobile industry. The automobile industry in India broadly segregated into commercial vehicles, passenger vehicles and two wheelers firms.…”

Section: Introductionmentioning

confidence: 99%

“…Second, Mazumdar and Adhikary (2010) examined the time-invariant TE of Indian automobile companies using stochastic frontier analysis (SFA), whereas, we use the DEA not only to estimate the total factor productivity growth (TFPG), but we decompose TFPG to examine whether Indian automobile firm's productivity growth driven by technical change or technical efficiency change (TEC). Further, we examine whether TEC is mainly driven by pure technical efficiency change (PTEC) and scale efficiency change (SEC) (Rath, 2017).…”

Section: Introductionmentioning

confidence: 99%

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Productivity growth, efficiency change and source of inefficiency: evidence from the Indian automobile industry

Sahoo

Rath

2018

IJATM

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This paper investigates the productivity growth and efficiency change of selected automobile industry in India during 2009-2015. This study uses data envelopment analysis (DEA) technique to measure the productivity growth and efficiency change. The empirical findings suggest that the segments of the automobile industry, i.e., passenger vehicles, commercial vehicles and two wheelers have positive productivity growth in the recent period. However, our study found that commercial vehicles are more efficient as compared to passenger vehicles and two wheelers firms. Further, by applying DEA multistage approach to examine the sources of inefficiency. Our results reveal that excess inputs in near about 50% firms are cause of inefficiency and these inefficient firms can become efficient by targeting the peer group with the help of reducing the input sets which are overused in the production process.

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Measuring Technical Efficiency in the Indian Automobile Industry

Cited by 7 publications

References 17 publications

Technical Efficiency in Transport Manufacturing Firms: Evidence From Malaysia

Technical Efficiency in Transport Manufacturing Firms: Evidence From Malaysia

Measurement of Technical Efficiency Using the Dea and Sfa Methods: A Case Study on Malaysian Transport Manufacturing Industry

Productivity growth, efficiency change and source of inefficiency: evidence from the Indian automobile industry

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