Estimating technical efficiency and bootstrapping Malmquist indices: Analysis of Spanish retail sector

Abstract

Purpose

The purpose of this work is twofold: on the one hand, recent methodologies will be used to estimate efficiency and productivity in Spain's non‐specialized retail sector for the period of 1997‐2007. In particular, the order‐m approach proposed by Cazals et al., which is based on the concept of expected minimum input function. On the other hand, the results obtained applying the methods mentioned in the Spanish retail sector can contribute to opening up a new field of analysis since the results may be compared by means of the methodologies proposed as well as those which already exist in the literature.

Design/methodology/approach

The paper used data envelopment analysis stochastic (order‐m) and bootstrapping Malmquist index to measure productivity and efficiency in 12 sectors in Spanish retail trade 1997‐2007.

Findings

In order to illustrate the methodology proposed in this paper different phases involved; first, we have estimated the efficiency in 12 sectors of the retail sector four digits NACE, we found high levels of inefficiency in most of the sectors analyzed over the period of analysis. Next, we will deepen and simplify the analysis by concentrating on food‐predominant sectors in non‐specialised shops (5211). The evolution of the efficiency of firms belonging to this sector decreases over the period of analysis. Analyzing the relationship between firms and size, the results obtained in this work shows that the firm's size have a positive influence on efficiency that suggest that the management may have incentives to grow in order to improve their efficiency levels. Our second contribution has to do with the use of bootstrapping Malmquist productivity indices. Productivity decreased at an average rate of −4.1 percent over the entire period of 1997‐2007. On average, this deterioration was due to efficiency change −6.1 percent. Technical progress is increased at an average rate of 2.1 percent. All rates at global level are statistically significant at 95 percent.

Originality/value

The main contribution of this paper is to provide an efficiency analysis using a non‐parametric approach with a robust estimator that has been suggested recently by Cazals et al. This methodology is that the first time that is applied in the analysis of retail sector. In addition, we analyze productivity growth using bootstrapping Malmquist indices. This methodology allows for a more careful analysis of what happens at firm level. Differences in conclusions between the original estimates and the bootstrap results are more evident when we scrutinize the sample firms and individual levels.

Citation

de Jorge Moreno, J. and Sanz‐Triguero, M. (2011), "Estimating technical efficiency and bootstrapping Malmquist indices: Analysis of Spanish retail sector", International Journal of Retail & Distribution Management, Vol. 39 No. 4, pp. 272-288. https://doi.org/10.1108/09590551111117545