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Production technologies and technical efficiency: evidence from Portuguese manufacturing industry

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This paper aims to test whether a given type of process innovation, namely flexible production technologies (FPTs), contributes to increased firm efficiency. Using one-year firm data from the Portuguese manufacturing industry and applying a parametric stochastic frontier approach, individual technical efficiencies are obtained and their determinants simultaneously estimated, using a single-step procedure recently proposed by Battese and Coelli (1995). The results support the hypothesis that technological flexibility, measured through the use of FPTs, is important in explaining differences in efficiency. Furthermore, given the specifications of the stochastic frontier function, the null hypothesis that Portuguese firms are fully technically efficient is rejected.

Document Type: Research Article


Affiliations: 1: Department of Economics, University of Minho, Largo do Paço, 4704-553 Braga, Portugal 2: Nottingham University Business School, Nottingham, UK

Publication date: May 20, 2005

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