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Article
Publication date: 1 April 2014

Carlos Pestana Barros, Vincenzo Scafarto and António Samagaio

This paper analyses the cost efficiency of Italian football clubs using a stochastic frontier model. The frontier estimation confirmed that the model fits the data well…

Abstract

This paper analyses the cost efficiency of Italian football clubs using a stochastic frontier model. The frontier estimation confirmed that the model fits the data well with all coefficients correctly signed and in line with the theoretical requirements. Marketing and Sponsorship is taken into account as an explanatory variable and the factors which contributed to these findings, as well as other policy implications, are provided.

Details

International Journal of Sports Marketing and Sponsorship, vol. 15 no. 4
Type: Research Article
ISSN: 1464-6668

Keywords

Open Access
Article
Publication date: 2 December 2016

Taylor Boyd, Grace Docken and John Ruggiero

The purpose of this paper is to improve the estimation of the production frontier in cases where outliers exist. We focus on the case when outliers appear above the true

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Abstract

Purpose

The purpose of this paper is to improve the estimation of the production frontier in cases where outliers exist. We focus on the case when outliers appear above the true frontier due to measurement error.

Design/methodology/approach

The authors use stochastic data envelopment analysis (SDEA) to allow observed points above the frontier. They supplement SDEA with assumptions on the efficiency and show that the true frontier in the presence of outliers can be derived.

Findings

This paper finds that the authors’ maximum likelihood approach outperforms super-efficiency measures. Using simulations, this paper shows that SDEA is a useful model for outlier detection.

Originality/value

The model developed in this paper is original; the authors add distributional assumptions to derive the optimal quantile with SDEA to remove outliers. The authors believe that the value of the paper will lead to many citations because real-world data are often subject to outliers.

Details

Journal of Centrum Cathedra, vol. 9 no. 2
Type: Research Article
ISSN: 1851-6599

Keywords

Article
Publication date: 10 October 2008

Carlos Pestana Barros and Ricardo Sellers‐Rubio

The aim of the paper is to estimate the cost efficiency of supermarket chains in the Spanish retailing industry.

Abstract

Purpose

The aim of the paper is to estimate the cost efficiency of supermarket chains in the Spanish retailing industry.

Design/methodology/approach

The methodology applied is based on a random stochastic frontier model that enables separation of the covariates in the cost function into homogeneous and heterogeneous variables. The methodology is applied to panel data on a sample of 78 supermarket chains between 2001 and 2004.

Findings

The results reveal high levels of cost inefficiency in the Spanish retail sector. The results also reveal that the random frontier models better describe Spanish retailers than homogeneous frontier models.

Research limitations/implications

The generalisation of the conclusions of the study to the whole sector should be made with caution, given the fact that only one of the players in the distribution channel has been analysed.

Practical implications

Managers should be aware of the importance that cost efficiency has for their own firms. Further, a common government retailing policy will be unable to reach all retailing companies, since heterogeneity exists.

Originality/value

For the first time, the cost efficiency of the intermediaries in the Spanish retailing sector is studied.

Details

International Journal of Retail & Distribution Management, vol. 36 no. 11
Type: Research Article
ISSN: 0959-0552

Keywords

Book part
Publication date: 18 October 2019

Eri Nakamura, Takuya Urakami and Kazuhiko Kakamu

This chapter examines the effect of the division of labor from a Bayesian viewpoint. While organizational reforms are crucial for cost reduction in the Japanese water…

Abstract

This chapter examines the effect of the division of labor from a Bayesian viewpoint. While organizational reforms are crucial for cost reduction in the Japanese water supply industry, the effect of labor division in intra-organizational units on total costs has, to the best of our knowledge, not been examined empirically. Fortunately, a one-time survey of 79 Japanese water suppliers conducted in 2010 enables us to examine the effect. To examine this problem, a cost stochastic frontier model with endogenous regressors is considered in a cross-sectional setting, because the cost and the division of labor are regarded as simultaneously determined factors. From the empirical analysis, we obtain the following results: (1) total costs rise when the level of labor division becomes high; (2) ignoring the endogeneity leads to the underestimation of the impact of labor division on total costs; and (3) the estimation bias on inefficiency can be mitigated for relatively efficient organizations by including the labor division variable in the model, while the bias for relatively inefficient organizations needs to be controlled by considering its endogeneity. In summary, our results indicate that integration of internal sections is better than specialization in terms of costs for Japanese water supply organizations.

Details

Topics in Identification, Limited Dependent Variables, Partial Observability, Experimentation, and Flexible Modeling: Part B
Type: Book
ISBN: 978-1-83867-419-9

Keywords

Article
Publication date: 30 April 2021

Habtamu Alem

The study measures the technology gap and performance of the Norwegian dairy farms accounting for farm heterogeneity.

Abstract

Purpose

The study measures the technology gap and performance of the Norwegian dairy farms accounting for farm heterogeneity.

Design/methodology/approach

The analysis was based on a meta-frontier and unbalanced farm-level panel data for 1991–2014 from 417 Norwegian farms specialized in dairy production in five regions of Norway.

Findings

The result of the analysis provides empirical evidence of regional differences in technical efficiencies, technological gap ratios (TGRs) and input use. Consequently, the paper provides some insights into policies to increase the efficiency of dairy production in the country across all regions.

Research limitations/implications

The author used a meta-frontier approach for modeling regional differences based on a single-output production function specification. This approach has commonly been used in the economics literature since Battese et al. (2004). To get more informative and useful results, it would be necessary to repeat the analysis within terms of multiple input-output frameworks using, for instance, the input distance function approach. Moreover, the author estimated the meta-frontier using the non-parametric approach, thus it is also a need for further analysis if the values are different by estimating using a parametric approach.

Practical implications

One implication for farmers (and their advisers) is that dairy farms in all regions used available technology in the area sub-optimally. Thus, those lagging the best-performing farms need to look at the way the best-performing farmers are operating. Policymakers might reduce the gap is through training, including sharing information about relevant technologies from one area to another, provided that the technologies being shared fit the working environment of the lagging area. Moreover, some of the dairy technologies they use may not fit other regions, suggesting that agricultural policies that aim to encourage efficient dairy production, such as innovation of improved technology (like breeding, bull selection and improved feed varieties) through research and development, need to account the environmental differences between regions.

Social implications

For both taxpayers and consumers, one implication is that the contributions they pay that go to subsidize dairy farmers appear to bring some benefits in terms of more efficient milk production that, in turn, increases the supply of some foods so possibly making food prices more affordable.

Originality/value

The paper contributes to the literature in several ways. In contrast to Battese et al. (2004), the author accounts for farm-level performance differences by applying the model devised by Greene (2005), thus may serve as a model for future studies at more local levels or of other industries. Moreover, the author is fortunate to able to use a large level farm-level panel data from 1991 to 2014.

Details

International Journal of Productivity and Performance Management, vol. 71 no. 8
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 16 August 2022

Abebayehu Girma Geffersa

The purpose of this paper is to measure technical efficiency and examine its determinants while disentangling unobserved time-invariant heterogeneity from actual…

Abstract

Purpose

The purpose of this paper is to measure technical efficiency and examine its determinants while disentangling unobserved time-invariant heterogeneity from actual inefficiency using comprehensive household-level panel data.

Design/methodology/approach

This paper estimates technical efficiency based on the true random-effects stochastic production frontier estimator with a Mundlak adjustment. By utilising comprehensive panel data with 4,694 observations from 39 districts of four major maize-producing regions in Ethiopia, the author measures technical efficiency and examine its determinants while disentangling unobserved time-invariant heterogeneity from technical inefficiency. By using competing stochastic production frontier estimators, the author provides insights into the influence of farm heterogeneity on measuring farm efficiency and the subsequent impact on the ranking of farmers based on their efficiency scores.

Findings

The study results indicate that ignoring unobservable farmer heterogeneity leads to a downwards bias of technical efficiency estimates with a consequent effect on the ranking of farmers based on their efficiency scores. The mean technical efficiency score implied that about a 34% increase in maize productivity can be achieved with the current input use and technology in Ethiopia. The key determinants of the technical inefficiency of maize farmers are the age, gender and formal education level of the household head, household size, income, livestock ownership, and participation in off-farm activities.

Research limitations/implications

While the findings of this study are critical for informing policy on improving agricultural production and productivity, a few important things are worth considering in terms of the generalisability of the findings. First, the study relied on secondary data, so only a snapshot of environmental factors was accounted for in the empirical estimations. Second, there could be other sources of unmeasured potential sources of heterogeneity caused by persistent technical inefficiency and endogeneity of inputs. Third, the study is limited to one country. Therefore, future research should extend the analysis to ensure the generalisability of the empirical findings regarding the extent to which unmeasured potential sources of heterogeneity caused by persistent technical inefficiency, endogeneity of inputs and other unobservable country-specific features – such as geographical differences.

Originality/value

This paper contributes to the literature on agricultural productivity and efficiency by providing new evidence on the influence of unobservable heterogeneity in a farm efficiency analysis. While agricultural production is characterised by heterogeneous production conditions, the influence of unobservable farm heterogeneity has generally been ignored in technical efficiency estimations, particularly in the context of smallholder farming. The value of this paper comes from disentailing producer-specific random heterogeneity from the actual inefficiency.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 5 September 2016

Zhaobin Fan, Ruohan Zhang, Xiaotong Liu and Lin Pan

The purpose of this paper is to estimate the China’s outward FDI efficiency and it determinants in 69 countries along the Belt and Road over the period of 2003-2013.

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Abstract

Purpose

The purpose of this paper is to estimate the China’s outward FDI efficiency and it determinants in 69 countries along the Belt and Road over the period of 2003-2013.

Design/methodology/approach

This paper defines the extent of the Belt and Road in terms of geographical boundaries, justifying the application of the stochastic frontier gravity model to the FDI analysis, and then constructing a frontier regression model to assess the China’s outward FDI efficiency and it determinants in countries along the Belt and Road.

Findings

Regarding the core gravity parameter estimates, China’s outward FDI was highly consistent with the gravity model. As far as policy parameters are concerned, China’s outward FDI was significantly restricted by some man-made barriers in host countries. According to the estimated FDI efficiency scores, China has huge outward FDI potential in countries along the Belt and Road. In general, China’s outward FDI efficiency demonstrated a consistent uptrend from the perspectives of both FDI flows and stocks over the period of 2003-2013. Although China’s outward FDI performance indicated a very uneven pattern across different countries and periods, there were no significant performance differences between the Road and Belt.

Practical implications

The Belt and Road initiative can be largely beneficial to China’s outward FDI, but the specific framework of cooperation should be designed on the basis of determinants of China’s outward FDI. The regional cooperation with the Road countries should mainly focus on the removal of business barriers and financial barriers. The regional cooperation with the Belt countries should mainly concern the improvement of local intellectual property protection, the reduction of local tax burden, and removal of business barriers and financial barriers.

Originality/value

To the authors’ best knowledge, no existing literature has specifically examined the efficiency of China’s outward FDI in the countries along the Belt and Road and its determinants.

Details

China Agricultural Economic Review, vol. 8 no. 3
Type: Research Article
ISSN: 1756-137X

Keywords

Book part
Publication date: 18 October 2019

Gholamreza Hajargasht and William E. Griffiths

We consider a semiparametric panel stochastic frontier model where one-sided firm effects representing inefficiencies are correlated with the regressors. A form of the…

Abstract

We consider a semiparametric panel stochastic frontier model where one-sided firm effects representing inefficiencies are correlated with the regressors. A form of the Chamberlain-Mundlak device is used to relate the logarithm of the effects to the regressors resulting in a lognormal distribution for the effects. The function describing the technology is modeled nonparametrically using penalized splines. Both Bayesian and non-Bayesian approaches to estimation are considered, with an emphasis on Bayesian estimation. A Monte Carlo experiment is used to investigate the consequences of ignoring correlation between the effects and the regressors, and choosing the wrong functional form for the technology.

Details

Topics in Identification, Limited Dependent Variables, Partial Observability, Experimentation, and Flexible Modeling: Part B
Type: Book
ISBN: 978-1-83867-419-9

Keywords

Article
Publication date: 1 February 2005

J. Douglas Bate and Robert E. Johnston

To encourage top management to recognize the need for adding new value to their organizations and commit to the creation of new internal capabilities for growth via the

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Abstract

Purpose

To encourage top management to recognize the need for adding new value to their organizations and commit to the creation of new internal capabilities for growth via the exploration of their company's strategic frontier.

Design/methodology/approach

Explains how the CEO can select a team and initiate a project to identify strategy frontier options.

Findings

The authors’ experience suggests that the team should first explore all areas of future growth potential in and adjacent to their industry, creating a long list of potential options. Identifying a breadth of strategic frontier options is more important than a depth of information on any one option.

Research limitations/implications

More case studies of strategy frontier projects in action, with quantitative results, would be valuable.

Practical implications

The goal of this frontier team is to identify a portfolio of innovative new business opportunities that exist on the strategic frontier. It will be the responsibility of another, more qualified group with quantitative skills (strategic planners, business development) to develop a detailed business design and determine its profitability and attractiveness to the company.

Originality/value

The article offers top management an innovative how‐to approach to finding truly new growth opportunities.

Article
Publication date: 29 November 2018

Thanh Pham Thien Nguyen

Given some similarities in the banking industry and economic condition across Vietnam, China and India, the purpose of this paper is to estimate and compare the cost and…

Abstract

Purpose

Given some similarities in the banking industry and economic condition across Vietnam, China and India, the purpose of this paper is to estimate and compare the cost and revenue efficiency of banks across these three countries over the period 1995–2011.

Design/methodology/approach

This study employs the meta-frontier of Battese et al. (2004) and O’Donnell et al. (2008) which envelops the three country-frontiers to measure the cost and revenue efficiency of banks in these three countries.

Findings

This study finds that Chinese banks adopt the most advanced cost-reducing and revenue-increasing technology when providing banking products to their customers, followed by Indian banks. Indian banks are as cost-efficient as Chinese banks, but more cost-efficient than Vietnamese banks. Indian banks are as revenue-efficient as Vietnamese banks, but less revenue-efficient than Chinese banks. Over the analysis period, banks in the three countries have employed the more advanced technology in reducing costs, and they have become more cost-efficient. Nonetheless, for revenue side, the improvement in revenue efficiency and adopted technology are observed only in Chinese banks. The main source of meta-cost and meta-revenue inefficiency of these banking systems stems from undertaking inferior technology rather than managerial ability. Results from comparison across bank types show that state-owned banks (SOBs) are more cost and revenue-efficient than privately owned banks, with Indian and Chinese SOBs being the most cost- and revenue-efficient, respectively.

Practical implications

To improve meta-cost efficiency, Chinese and Indian banks would constitute a relevant benchmark for Vietnamese banks, while to improve meta-revenue efficiency, Chinese banks would be considered as a relevant benchmark for Vietnamese and Indian banks.

Originality/value

This is the first study which utilizes meta-frontier to compare cost and revenue efficiency and technology across banks in Vietnam, China and India.

Details

Benchmarking: An International Journal, vol. 25 no. 9
Type: Research Article
ISSN: 1463-5771

Keywords

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