Productive efficiency and firm exit in the food sector

This work examines the effects of productive efficiency on the survival of firms in the Greek food sector. Technical and scale efficiency scores are computed within a data envelopment analysis (DEA) framework and are used as explanatory variables in a parametric (Weibull) survival model. High techni...

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Bibliographic Details
Published in:Food policy 2008-04, Vol.33 (2), p.185-196
Main Authors: Dimara, Efthalia, Skuras, Dimitris, Tsekouras, Kostas, Tzelepis, Dimitris
Format: Article
Language:English
Subjects:
costs and returns
Enterprises
Firm exit
Food industry
food policy
Food supply
Greece
mathematical models
Productivity
Scale efficiency
technical barriers to trade
Technical efficiency
Technological change
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Summary:This work examines the effects of productive efficiency on the survival of firms in the Greek food sector. Technical and scale efficiency scores are computed within a data envelopment analysis (DEA) framework and are used as explanatory variables in a parametric (Weibull) survival model. High technical efficiency increases the median survival time and lowers the hazard rate of exit. As the scale efficiency of a firm operating either at increasing or decreasing returns to scale approaches one (1), its theoretically maximum value, the expected median survival time, is maximized for all types of exits. Developments in biotechnology, the evolution of alternative food supply networks, innovations in the food sector and competition policy are likely to affect technical and scale efficiency of food manufacturing firms. Results unraveling the effects of technical and scale efficiency on the survival of firms in the food sector are of particular relevance to food policy makers.
ISSN:0306-9192
1873-5657
DOI:10.1016/j.foodpol.2007.08.003