Organizational Capital, Product Market Competition and Technical Efficiency in Italian Cooperatives

Abstract

This paper tries to identify under which conditions increasing market competition may help cooperatives to improve technical efficiency to guarantee positive profits. This hypothesis is first formalized in a partial equilibrium framework and then is tested on a sample of Italian conventional and cooperative firms, using frontier analysis. Technical efficiency indexes are computed by using the one-stage approach as suggested by Battese and Coelli (1995), where proxies for competition are introduced as determinants of efficiency, along with other exogenous factors accounting for the firms’ heterogeneity. However, the overall impact of increasing competition on efficiency is negative.

Citation

Wanda Maietta, O. and Sena, V. (2007), "Organizational Capital, Product Market Competition and Technical Efficiency in Italian Cooperatives", Novkovic, S. and Sena, V. (Ed.) Cooperative Firms in Global Markets (Advances in the Economic Analysis of Participatory & Labor-Managed Firms, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 29-45. https://doi.org/10.1016/S0885-3339(06)10002-2