CONCENTRATION AND EFFICIENCY IN INDIAN MANUFACTURING - A REGIONAL STUDY A.M.Swaminathan , M. Gupta , A. Tiwari , N. Prakash
Keywords:
Data Envelopment Analysis, Tobit, Regional ConcentrationAbstract
CONCENTRATION AND EFFICIENCY IN INDIAN MANUFACTURING - A REGIONAL STUDY
Abstract
Regional concentration of firms have several effects on the development of firms. While theories point out different relationships between firm’s efficiency and regional concentration this study analyses such relationships for 9 Indian manufacturing industries located in 17 Indian states using DEA and a Tobit model. Results on efficiency show technical efficiency better than allocative efficiency, indicating betterment of technology, at the same time excess use of resources in Indian industries. Besides, regional concentration of industries is found to have a negative relationship with efficiency, which supports ‘Quiet Life Hypothesis’ of Hicks. Tobit analysis also shows prevalence of negative relations between efficiency and concentration in Indian industries. Just-in-time management of inventories could be encouraged and measures to see that this is successful in industries should be the aim of reforms.
Key words: Data Envelopment Analysis, Tobit, Regional Concentration
JEL: R3, L6.
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