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Returns to growth in a nonparametric DEA approach
Author(s) -
Sahoo Biresh K.,
Kerstens Kristiaan,
Tone Kaoru
Publication year - 2012
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/j.1475-3995.2012.00841.x
Subject(s) - returns to scale , constant (computer programming) , econometrics , productivity , competition (biology) , economics , nonparametric statistics , value (mathematics) , industrial organization , microeconomics , mathematics , production (economics) , computer science , statistics , macroeconomics , biology , ecology , programming language
In this contribution, first the concept of returns to growth (RTG) of a high‐tech firm facing hyper‐competition in the new economy is introduced by describing a proportional relationship between growth in inputs and growth in outputs using the growth efficiency (GE) model of Sengupta. Second, both technology‐ and value‐based methods are suggested for estimating the RTG behavior of high‐tech firms. Third, although the GE concept seems closely related to the notion of total factor productivity change, this link remains unexplored: we suggest a link between both concepts. Finally, our empirical application to the Indian computer industry reveals that first, companies operating under increasing returns to scale (RTS) may exhibit constant or decreasing RTG; second, companies showing constant RTS may exhibit increasing or decreasing RTG; and third, companies showing decreasing RTS may exhibit constant or increasing RTG. These findings imply that RTS estimates need not provide proper information regarding the growth strategy behavior of high‐tech companies.