Arbeitspapier

A general framework to evaluate economic efficiency with an application to British SME

This article formalises the idea of money-metric production frontiers, which we propose as a general framework for nonparametric evaluation of economic efficiency. As we show in our methodological discussion, this improves the flexibility and economic interpretation of our model. The empirical part is the first attempt to test the existence of a size-efficiency relationship among small businesses in the United Kingdom. It is based on a unique panel both with respect to size ranging from agriculture to services and to the ten year time span. We employ statistically robust methods to estimate and analyse sectoral efficiency. Our analysis yields three main insights: (1) Average sectors are expected to be two to four times less efficient than those on the efficient frontier. Great dispersion of efficiency scores highlights the importance of dynamic out-ofequilibrium modelling. (2) There is no evidence of a general economy-wide sizeefficiency relationship. (3) Economic efficiency remained constant over the past ten years.

Language
Englisch

Bibliographic citation
Series: IES Working Paper ; No. 25/2009

Classification
Wirtschaft
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Firm Performance: Size, Diversification, and Scope
Entrepreneurship
Subject
small and medium enterprises
economic efficiency
firm size
robust efficiency estimation
Wirtschaftliche Effizienz
Betriebsgröße
KMU
Theorie
Großbritannien

Event
Geistige Schöpfung
(who)
Průša, Jan
Event
Veröffentlichung
(who)
Charles University in Prague, Institute of Economic Studies (IES)
(where)
Prague
(when)
2009

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Průša, Jan
  • Charles University in Prague, Institute of Economic Studies (IES)

Time of origin

  • 2009

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