A Frontier Approach to Measuring Impact of Adoption of Flexible Manufacturing Technology on Technical Efficiency of Malaysian Manufacturing Industry (original) (raw)
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Economic Modelling, 2010
This paper investigates the influence of the adoption of Flexible Manufacturing Technology (FMT) on the Total factor Productivity Growth (TFPG) of Malaysia Manufacturing Industry. The Principal Component Analysis has been adopted to extract the most appropriate underlying dimensions of FMT to use in place of the eight FMT variables owing to the potential multicollinearity. The study has been conducted within FMT intensively adopted 16 three-digit industries that encompass 50 five-digit industries covering the years 2000-2005. The results obtained from the two situations, one, including the industry fixed effects dummy variables and the other without these, are contrasted. It is established that the model that included the industry fixed effect dummy variables has a greater explanatory power. The two principal components that account for the greater variation in FMT show positive and moderately significant relationship with TFPG. The study provides sufficient evidence to conclude that FMT has a direct and moderately significant relationship with TFPG.
Technology and Investment, 2012
This paper explores the impact of the adoption of Flexible Manufacturing Technology (FMT) on the Malaysian Manufacturing Industry. The Principal Component Analysis has been adopted to extract the most appropriate underlying dimensions of FMT to use in place of the eight FMT variables owing to the potential multicollinearity. The study has been conducted within FMT intensively adopted 16 three-digit industries that encompass 50 five-digit industries covering the years 2000-2005. The results obtained from the two scenarios, one, including the industry fixed effects dummy variables and the other without these, are contrasted. It is established that the model that included the industry fixed effect dummy variables has a greater explanatory power. The two principal components that account for the greater variation in FMT show positive and moderately significant relationship with PCM. The study provides sufficient evidence to conclude that FMT has a direct and moderately significant relationship with PCM.
Technical Efficiency in Malaysian Manufacturing Firms: A Stochastic Frontier Analysis Approach
JOURNAL OF SUSTAINABILITY SCIENCE AND MANAGEMENT, 2021
Liberalisation challenges, such as those that arise with the establishment of the ASEAN Free Trade Area (AFTA) and elimination of trade barriers, have led to competition among local and foreign manufacturers, requiring Malaysian manufacturing companies to achieve high productivity to address the emergence of new operations by increasing their industrial efficiency and performance. This article aims to measure the level of technical efficiency and analyse the factors that contribute to technical inefficiency in the Malaysian manufacturing industry in 2015. This study uses data from 8,653 firms based on the latest census (2015) obtained from the Statistics Department using the Stochastic Frontier Analysis (SFA). Based on the results, the companies' overall technical efficiency level was high at 0.812. For the determinants of technical efficiency, it was found that ratio of medium to high level of education, company size, information and communication technology spending, training expenses and wage rates showed a positive relationship with technical inefficiencies. The manufacturing industry needs to focus on investing in human capital and scale economic achievement, and high technology production that will increase the technical efficiency level of companies and employees.
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.
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This study measures the technical efficiency score of the manufacturing sector of the palm oil products-based subsector in Malaysia and investigates the major determinants that influence efficiency. Based on the Industrial Manufacturing Survey, this study explores the data from 2000 to 2015 over sixteen years, with a total of eleven subsectors of palm oil products-based. The first stage of the study is carried out with a data envelopment analysis (DEA) to calculate the technical efficiency score, which is considered a dependent variable. The second stage of the study uses a panel regression model to examine the determinants of efficiency comprise the variable capital-labour ratio, research and development, information communication technology, training, and skilled labour. The study findings show that most of the palm oil products-based subsectors are not operating efficiently. Skilled labour, technical and supervisory, and professional is one of the main determinants contributing t...
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This study applies stochastic frontier analysis (SFA) and data envelopment analysis (DEA) approaches to measure and explain the technical efficiency of Thai manufacturing SMEs in 2007. The empirical results from both SFA and DEA revealed that the overall simple average technical efficiency in 2007 is relatively low, which can potentially reduce their output contribution. Therefore, specific policies are required to improve the technical efficiency of SMEs and these include easier access to financial services, credit facilities, equity in terms of the political operation, educational system, extensive infrastructural development, and technological upgrading, marketing and management.
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This current study analyses the technical efficiency of Indonesian motor vehicle manufacturing firms (ISIC 34100) and its selected important determinants. The technical efficiency scores are calculated using Data Envelopment Analysis (DEA) and the estimation on the determinants employs the panel data method. The output variable is the total value of output for each firm, whereas the input variables are material, workers, capital, and energy. The selected determinants affecting technical efficiency are export, import, capital-labour ratio, and foreign ownership. It is found that the average technical efficiency score under VRS is 0.81 during the period 2007-2013, with the lowest score is 0.53 in 2010 and the highest score is 0.89 in 2012. The findings from the estimation of important determinants show that export, capital-labour ratio, and foreign ownership provide a positive significant effect on the technical efficiency respectively. In contrast, import has a positive insignificant effect on the technical efficiency.
Estimating Factors Affecting Technical Efficiency in Indian Manufacturing Sector
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Existing studies could not estimate the technical efficiency (TE) of firms and it's affecting factors in the Indian manufacturing sector. So, the present study examines the TE of firms using a stochastic frontier production function approach. Thereupon, it examines the impact of S&T and IPRs related factors on estimated TE of firms using a linear regression model. Estimated values of TE of firms show that most firms have a TE of 94%; thus, firms are efficient in producing surplus production in the manufacturing sector. It is acclaimed that firms can improve production scale using more technological upgradation and advancement. Furthermore, empirical results indicate that process innovations of firms, quality certification of firm, firm acquired process/product patents, in-house R&D expertise of firms, public-technology support institutions of firms, proficiency to improve processes of firms, new or improved products of firms, waste management capabilities of firms, and skilled workforce of firms are appeared effective activities to increase the TE of firms. It is proposed that there is a requirement to increase R&D expenditure, a collaboration of industries with research academia, incentive to researchers and scientists to do extensive research in emerging sectors of technologies and appropriate financial support to firms to boost the growth of Indian manufacturing sector.
Frontier analysis of the Philippine manufacturing efficiency
International Journal of Information and Decision Sciences, 2014
This research investigates the efficiency of 100 firms from ten selected manufacturing industries in the Philippines over the period 1995-2004, using the two frontier models. The aim of this research is to evaluate and measure the technical efficiency of selected firms by applying the data envelopment analysis (DEA) and stochastic frontier analysis (SFA) approaches. A total of 1,000 pooled data are analysed using both DEA and SFA methods. New findings reveal that the average technical efficiency scores of DEA and SFA are 57.4% and 82.63, respectively, but no statistically significant correlation found. New results also suggest that older firms tend to be more technically inefficient than younger firms while larger firms tend to be more technically efficient than smaller firms. Significantly, this research has also found that an imposition of higher tariff rates can make firms to be technically inefficient. Overall, this research provides significant evidences on the usefulness of two frontier methods for evaluating manufacturing efficiency as alternative tools of performance measurement for managerial decision making.