Efficiency of Investor Owned Firms and Cooperatives Revisited

Providing a performance measure of any firm is a crucial issue, not only for the stakeholders of the firm, but also for policy makers, labor unions, and economists. The relevant performance measures should consider the objectives of the firm’s owners. The ownership structure of cooperatives is different from that of investors owned firms, which in principle implies the need of different tools to measure their performance. Typically, however, the performance of cooperatives and investor owned firm is mostly compared using the same approach. In this study, we use Data Envelopment Analysis (DEA) to compare the performance of dairy cooperatives and investor owned firms in major European dairy producing countries using a traditional approach, which views both types of firms as cost minimizers, and an alternative approach, which considers the objectives of the cooperatives. In the alternatives approach, two hyperbolic models were evaluated, one of them consider the firms to expand both output production and use of material to address the objective of the owners of the cooperatives. The performance of the cooperatives changes across the two approaches form being out performed by IOFs using the traditional approach to outperforming IOFs when using an approach that is in line with the objective of the cooperative.DEA, hyperbolic efficiency, cooperatives, Investor Owned Firms, Bootstrapping, Agricultural and Food Policy,

Transaction Costs and Profitability in UK Manufacturing

This paper explores the impact of transaction costs on performance at firm and industry levels using a sample of 7350 UK manufacturing firms. This is achieved by estimating a profit function with estimated transaction costs as a right hand side variable. The discussion has two specific objectives. (1) To show how firm and average industry transaction costs can be estimated using a stochastic frontier method. (2) To examine a central claim of transaction cost theory that links these costs to performance. In addition the different impacts of static and dynamic transaction costs are emphasised, with the different impacts being respectively negative and positive on profitability. Broadly speaking it is shown that such costs do impact on performance in a way consistent with both static and dynamic costs, in different industries, and that the impacts hold after a series of robustness checks. In addition it is shown that the impacts can depend on monopoly power, firm scale, and firm growth

On the feasibility of collaborative green data center ecosystems

The increasing awareness of the impact of the IT sector on the environment, together with economic factors, have fueled many research efforts to reduce the energy expenditure of data centers. Recent work proposes to achieve additional energy savings by exploiting, in concert with customers, service workloads and to reduce data centers’ carbon footprints by adopting demand-response mechanisms between data centers and their energy providers. In this paper, we debate about the incentives that customers and data centers can have to adopt such measures and propose a new service type and pricing scheme that is economically attractive and technically realizable. Simulation results based on real measurements confirm that our scheme can achieve additional energy savings while preserving service performance and the interests of data centers and customers.Peer ReviewedPostprint (author's final draft

What explains the dramatic changes in cost and profit performance of the U.S. banking industry?

The authors investigate the sources of recent changes in the performance of U.S. banks using concepts and techniques borrowed from the cross-section efficiency literature. Their most striking result is that during 1991-1997, cost productivity worsened while profit productivity improved substantially, particularly for banks engaging in mergers. The data are consistent with the hypothesis that banks tried to maximize profits by raising revenues as well as reducing costs, and that banks provided additional services or higher service quality that raised costs but also raised revenues by more than the cost increases. The results suggest that methods that exclude revenues may be misleading.Banks and banking - Costs ; Banks and banking

The Comparison of Efficiency and Performance of Portuguese and Ukrainian Enterprises

This article intends to analyze the performance and the efficiency of companies and to identify the key factors that may explain it. It was selected a sample with 15 enterprises: 7 Portuguese and 8 Ukrainian ones, belonging to several industries. Financial and non-financial data was collected for 6 years, during the period of 2009 to 2014. Research questions that guided this work were: Are the enterprises efficient/profitable? What factors influence enterprises’ efficiency/performance? Is there any difference between Ukrainian and Portuguese enterprises’ efficiency/performance, which factors have more influence? Which industrial sector is represented by more efficient/profitable enterprises? The main results showed that in average enterprises were efficient with low level of profitability. According to gained results several indicators were highlighted so that companies would pay more attention to them

Allocative Efficiency Measurement Revisited: Do We Really Need Input Prices?

The traditional approach to measuring allocative efficiency is based on input prices, which are rarely known at the firm level. This paper proposes a new approach to measure allocative efficiency which is based on the output-oriented distance to the frontier in a profit - technical efficiency space - and which does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment which provides evidence that the estimates of the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical industry in Germany.Allocative efficiency, data envelopment analysis, frontier analysis, technical efficiency, Monte-Carlo study, chemical industry

What Explains the Dramatic Changes in Cost and Profit Performance of the U.S. Banking Industry?

We investigate the sources of recent changes in the performance of U.S. banks using concepts and techniques borrowed from the cross-section efficiency literature. Our most striking result is that during 1991-1997, cost productivity worsened while profit productivity improved substantially, particularly for banks engaging in mergers. The data are consistent with the hypothesis that banks tried to maximize profits by raising revenues as well as reducing costs, and that banks provided additional services or higher service quality that raised costs but also raised revenues by more than the cost increases. The results suggest that methods that exclude revenues may be misleading.Bank, productivity, efficiency, cost, profit

Explaining the dramatic changes in performance of U.S. banks: technological change, deregulation, and dynamic changes in competition.

The authors investigate the effects of technological change, deregulation, and dynamic changes in competition on the performance of U.S. banks. The authors' most striking result is that during 1991-1997, cost productivity worsened while profit productivity improved substantially, particularly for banks engaging in mergers. The data are consistent with the hypothesis that banks tried to maximize profits by raising revenues as well as reducing costs. Banks appeared to provide additional or higher quality services that raised costs but also raised revenues by more than the cost increases. The results suggest that methods that exclude revenues when assessing performance may be misleadingBanks and banking ; Bank mergers

Allocative efficiency measurement revisited: do we really need input prices?

The traditional approach to measuring allocative efficiency is based on input prices, which are rarely known at the firm level. This paper proposes a new approach to measure allocative efficiency which is based on the output-oriented distance to the frontier in a profit - technical efficiency space - and which does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment which provides evidence that the estimates of the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical industry in Germany. --Allocative efficiency,data envelopment analysis,frontier analysis,technical efficiency,Monte-Carlo study,chemical industry

Lowland farming system inefficiency in Benin (West Africa):

This paper uses a directional distance function and a single truncated bootstrap approach to investigate inefficiency of lowland farming systems in the Benin Republic. First, we employed a dual approach to estimate and decompose short-run profit inefficiency of each farming system into pure technical, allocative and scale inefficiency and also into input and output inefficiency. Second, an econometric analysis of factors affecting the inefficiency was generated using a single truncated bootstrap procedure to improve inefficiency analysis statistically and obtain consistent estimates. In the short run, scale, allocative and output inefficiency were found to be the main sources of inefficiency. Based on inefficiency results, the inefficiency of lowland farming systems is the most diverse. Compared to a vegetable farming system, technical inefficiency is significantly higher if farmers switch to a rice farming system. Scale, allocative, output, and input inefficiency are significantly lower with an integrated ricevegetable farming system and there was high prevalence of increasing returns to scale in the integrated rice-vegetable farming system. Water control and lowland farming systems are complements and play a significant role in the level of inefficiency. Input inefficiency shows the difficulty that the producers face in adjusting the quality and quantity of seeds and fertilizers. The paper provides empirical support for efforts to promote an integrated rice-vegetable farming system in West Africa lowlands to increase food security. Keywords Lowlands . Inefficiency . Bootstrap . Beni