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Article
Publication date: 3 February 2020

Vipin Valiyattoor and Anup Kumar Bhandari

This paper aims to evaluate the performance of basic metals industry in India and analyze its determinants, using data envelopment analysis (DEA) method. It also intends…

Abstract

Purpose

This paper aims to evaluate the performance of basic metals industry in India and analyze its determinants, using data envelopment analysis (DEA) method. It also intends to compare the results through conventional two-stage and bootstrap-based inferences.

Design/methodology/approach

Considering technical efficiency as a measure of performance, this paper specifically investigates whether the participation of a firm in the global market affects its performance. The conventional two-stage procedure is used to test the export intensity and firm performance nexus. The bootstrap-based algorithms (by Simar and Wilson, 2007) are used to correct the bias and serial correlation issues involved in the conventional approach.

Findings

The result shows a negative relation between export intensity and firm performance while following the conventional procedure. Even after accounting for serial correlation, the relation remains more or less similar to that of conventional analysis. However, a strong negative relation between export intensity and firm performance is not observed in a more reliable inference obtained after correcting for possible bias as well as serial correlation.

Research limitations/implications

This paper is based on cross-sectional analysis, and a more reliable result can be obtained by considering a larger sample and longer period.

Originality/value

This paper shows how the conventional two-stage procedure may result in misleading inferences due to bias in the estimation of efficiency scores and the serial correlation during the second stage inferential analysis. This paper also empirically exemplifies how the double bootstrap DEA procedure can overcome these limitations of the conventional two-stage approach.

Details

Indian Growth and Development Review, vol. 13 no. 3
Type: Research Article
ISSN: 1753-8254

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