Year

2011

Degree Name

Doctor of Philosophy

Department

University of Wollongong. School of Economics

Abstract

This thesis aims to measure the technical efficiency performance of Thai listed manufacturing enterprises over the period 2000 to 2008. It also aims to identify and measure firm-specific and business environment factors which significantly impact on the technical efficiency performance of Thai listed manufacturing enterprises. Unbalanced panel data for 178 Thai listed manufacturing enterprises over the period 2000 to 2008 is compiled and used to conduct an empirical analysis employing both parametric (Stochastic Frontier Analysis (SFA)) and non-parametric data Envelopment Analysis (DEA)) approaches. This provides a robust check of the empirical results to analyse technical efficiency performances as well as significant factors influencing the efficiency of Thai listed manufacturing enterprises including sub-manufacturing sectors.

The empirical results of this study reveal that the mean technical efficiency scores of Thai listed manufacturing enterprises obtained from the SFA and DEAapproaches are found to be quite consistent, given by 0.812 and 0.887 respectively,indicating that they operated at a high level of technical efficiency. Even though their technical efficiency performance is high, the empirical evidence from both estimation approaches confirm that they had operated under decreasing returns to scale over the period 2000 to 2008. More specifically, the SFA approach reveals the existence of decreasing returns to scale for Thai listed manufacturing enterprises. Similarly, the DEA approach suggests that approximately 86 percent of Thai listed manufacturing enterprises, on average, operate under decreasing returns to scale. Theempirical results from the SFA approach also highlight that the production of Thai listed manufacturing enterprises is mainly contributed by intermediate inputs and labour input, but capital is found to be the least important input. Similarly, the empirical evidence from an estimated Translog production function confirm theexistence of labour-using and capital-saving technical progress for Thai listedmanufacturing enterprises, indicating that their technical progress relied on labour input over the period 2000 to 2008. Moreover, the rate of technical progress is found to be 0.0205 for Thai listed manufacturing enterprises, technical change only increased by 2.05 percent per year. As a result they must attain a higher production frontier to enhance their future technical efficiency performance.

The empirical evidence from both the SFA and DEA approaches also revealthat financial constraints (leverage) have a significant and positive association with the technical efficiency of Thai listed manufacturing enterprises. To confirm thisem irical evidence the empirical results from both estimation approaches reveal that liquidity has a significant and positive impact on their technical efficiencyperformance. In addition, the empirical evidence from both estimation approaches indicate that both external and internal financing are found to have a negative association with the technical efficiency performance of Thai listed manufacturing enterprises, but only the empirical evidence from the SFA approach is found to be statistically significant. External financing, however, does not exert a significant impact on their technical efficiency due to the very small magnitude of the estimatedcoefficients. The empirical results from both estimation approaches also reveal thatresearch and development (R&D) has a significant and negative association with the technical efficiency of Thai listed manufacturing enterprises. The empirical resultsfrom both estimation approaches, however, reveal that controlling ownership has a positive association with the technical efficiency performance of Thai listed manufacturing enterprises, but only the SFA approach produces a significant result. There is strong evidence from both estimation approaches that managerial ownershiphas a significant and positive impact on the technical efficiency of Thai listedmanufacturing enterprises. Both estimation approaches also strongly confirm thatexecutive remuneration has a significant and positive influence on their technical efficiency performance. Focusing on different types of firm ownership there is strong evidence from both estimation approaches that foreign and family ownership exerts asignificant and positive effect on the technical efficiency of Thai listed manufacturing enterprises. According to the magnitude of the estimated coefficients of each type of firm ownership, there is strong evidence from both estimation approaches that foreign and family ownership exerts asignificant and positive effect on the technical efficiency of Thai listedmanufacturing enterprises. According to the magnitude of the estimated coefficients of each type of firm ownership, there is strong evidence from both estimation approaches that foreign-owned firms perform best, followed by family-owned firms, hybrid-owned firms and domestic- owned firms, given joint-owned firms as the base category. There is strong evidence of a learning-by-exporting hypothesis from bothestimation approaches, indicating exporting exerts a significant and positive effect one technical efficiency performance of Thai listed manufacturing enterprises. Vice versa, there is evidence of the self-selection hypothesis that a firm’s technicalefficiency predicted by the SFA approach has a significant and positive impact on theexport participation of Thai listed manufacturing enterprises. A positive result is also found from the DEA approach, but is not statistically significant.

Finally, the robust results from this study can be used to provide empiricallybased policy implications and recommendations which are useful to both policymakersand entrepreneurs to enhance the long-term efficiency and competitiveness of Thai listed manufacturing enterprises.

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Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.