IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i2p941-d1025196.html
   My bibliography  Save this article

Comparison of the Technical Efficiency of Construction Industries—A Case Study of Taiwan and Mainland China

Author

Listed:
  • Wei Tong Chen

    (Department of Civil & Construction Engineering, Graduate School of Engineering Science & Technology, National Yunlin University of Science & Technology, Yunlin 64002, Taiwan)

  • Adiqa Kausar Kiani

    (Bachelor Program in International Management, College of Management, National Yunlin University of Science & Technology, Yunlin 64002, Taiwan)

  • Ming-Tsung Wu

    (Chang Hong Construction Co., Ltd., Yunlin 64002, Taiwan)

  • Hew Cameron Merrett

    (Centre for Emergency Response Information, National Yunlin University of Science & Technology, Yunlin 64002, Taiwan)

  • Chih-Hsing Wang

    (Bachelor Program in Industrial Projects, National Yunlin University of Science & Technology, Yunlin 64002, Taiwan)

Abstract

A strong construction industry is critical to any country’s economic and infrastructural development. Facing declining business prospects in the domestic market, Taiwanese construction firms have sought new opportunities overseas, particularly in the mainland Chinese market. Without an adequate understanding of the market, making such investments involves significant risks. To better understand the differences in the markets, this study investigates the technical efficiency (TE) of the Taiwanese construction industry compared to mainland China. The focus was on TE values of construction companies across the two markets as well as the strengths and weaknesses to help inform the decision-making process. The TE evaluation was completed using the stochastic frontier approach (SFA) with a subinput efficiency model to evaluate three inputs (assets, costs, and labor) of 123 construction companies with 59 companies in mainland China and 64 companies in Taiwan. Results show that for the key asset investment factors in Taiwan’s construction industry, TE is lower than that in mainland China. However, Taiwan’s construction industry was found to have higher labor efficiency than mainland China. Relative to mainland Chinese companies, Taiwanese companies have advantages in both labor inputs and revenue outputs but are disadvantaged in terms of the firm and market size. This study shows that Taiwanese construction firms are positioned to pursue expansion into mainland China, ideally by establishing cooperative alliances. Results also show that government policy needs to ensure construction companies are supported by increased economic freedom and reduced restrictions, as these positively correlate with the revenue of local construction companies.

Suggested Citation

  • Wei Tong Chen & Adiqa Kausar Kiani & Ming-Tsung Wu & Hew Cameron Merrett & Chih-Hsing Wang, 2023. "Comparison of the Technical Efficiency of Construction Industries—A Case Study of Taiwan and Mainland China," Sustainability, MDPI, vol. 15(2), pages 1-23, January.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:2:p:941-:d:1025196
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/2/941/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/2/941/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anatoliy G. Goncharuk, 2007. "Using the DEA in efficiency management in industry," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 2(2), pages 241-262.
    2. Hossain, Md. Uzzal & Ng, S. Thomas & Antwi-Afari, Prince & Amor, Ben, 2020. "Circular economy and the construction industry: Existing trends, challenges and prospective framework for sustainable construction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 130(C).
    3. Dariush Khezrimotlagh & Yao Chen, 2018. "Data Envelopment Analysis," International Series in Operations Research & Management Science, in: Decision Making and Performance Evaluation Using Data Envelopment Analysis, chapter 0, pages 217-234, Springer.
    4. Wei Tong Chen & Hew Cameron Merrett & Ying-Hua Huang & Theresia Avila Bria & Ying-Hsiu Lin, 2021. "Exploring the Relationship between Safety Climate and Worker Safety Behavior on Building Construction Sites in Taiwan," Sustainability, MDPI, vol. 13(6), pages 1-21, March.
    5. Taewoo You & Hongmin Zi, 2007. "The economic crisis and efficiency change: evidence from the Korean construction industry," Applied Economics, Taylor & Francis Journals, vol. 39(14), pages 1833-1842.
    6. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    7. Ren-Jye Dzeng & Jih-Shong Wu, 2013. "Efficiency measurement of the construction industry in Taiwan: a stochastic frontier cost function approach," Construction Management and Economics, Taylor & Francis Journals, vol. 31(4), pages 335-344, April.
    8. Zhou, P. & Ang, B.W. & Zhou, D.Q., 2012. "Measuring economy-wide energy efficiency performance: A parametric frontier approach," Applied Energy, Elsevier, vol. 90(1), pages 196-200.
    9. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    10. Anatoliy G. Goncharuk, 2007. "Impact of political changes on industrial efficiency: a case of Ukraine," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 34(4), pages 324-340, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Otsuka, Akihiro, 2023. "Industrial electricity consumption efficiency and energy policy in Japan," Utilities Policy, Elsevier, vol. 81(C).
    2. E. ERNAWATI & Raja MASBAR & M. Shabri Abd. MAJID & Abd. JAMAL, 2021. "Production And Marketing Efficiency Of Patchouli Oil Industry In Indonesia," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 135-148, June.
    3. Honma, Satoshi & Ushifusa, Yoshiaki & Okamura, Soyoka & Vandercamme, Lilu, 2023. "Measuring carbon emissions performance of Japan's metal industry: Energy inputs, agglomeration, and the potential for green recovery reduction," Resources Policy, Elsevier, vol. 82(C).
    4. Anatoliy G. Goncharuk, 2016. "Evaluating the Efficiency of Higher Education," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 82-91, May.
    5. Mark A. Andor & David H. Bernstein & Stephan Sommer, 2021. "Determining the efficiency of residential electricity consumption," Empirical Economics, Springer, vol. 60(6), pages 2897-2923, June.
    6. Akihiro Otsuka, 2020. "How do population agglomeration and interregional networks improve energy efficiency?," Asia-Pacific Journal of Regional Science, Springer, vol. 4(1), pages 1-25, February.
    7. Amjadi, Golnaz & Lundgren, Tommy, 2022. "Is industrial energy inefficiency transient or persistent? Evidence from Swedish manufacturing," Applied Energy, Elsevier, vol. 309(C).
    8. Liu, Fengqin & Sim, Jae-yeon & Sun, Huaping & Edziah, Bless Kofi & Adom, Philip Kofi & Song, Shunfeng, 2023. "Assessing the role of economic globalization on energy efficiency: Evidence from a global perspective," China Economic Review, Elsevier, vol. 77(C).
    9. Khezrimotlagh, Dariush & Kaffash, Sepideh & Zhu, Joe, 2022. "U.S. airline mergers’ performance and productivity change," Journal of Air Transport Management, Elsevier, vol. 102(C).
    10. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499, April.
    11. Lundgren, Tommy & Marklund, Per-Olov & Zhang, Shanshan, 2016. "Industrial energy demand and energy efficiency – Evidence from Sweden," Resource and Energy Economics, Elsevier, vol. 43(C), pages 130-152.
    12. António Afonso & Ana Patricia Montes & José M. Domínguez, 2024. "Measuring Tax Burden Efficiency in OECD Countries: An International Comparison," CESifo Working Paper Series 11333, CESifo.
    13. Khanal, Aditya & Koirala, Krishna & Regmi, Madhav, 2016. "Do Financial Constraints Affect Production Efficiency in Drought Prone Areas? A Case from Indonesian Rice Growers," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230087, Southern Agricultural Economics Association.
    14. Noel Uri, 2003. "The Effect of Incentive Regulation in Telecommunications in the United States," Quality & Quantity: International Journal of Methodology, Springer, vol. 37(2), pages 169-191, May.
    15. Kangile, Rajabu Joseph, 2015. "Efficiency In Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes In Pwani And Morogoro Regions, Tanzania," Research Theses 265681, Collaborative Masters Program in Agricultural and Applied Economics.
    16. Tovar, Beatriz & Wall, Alan, 2015. "Can ports increase traffic while reducing inputs? Technical efficiency of Spanish Port Authorities using a directional distance function approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 71(C), pages 128-140.
    17. Ruwan Jayasuriya & Quentin Wodon, 2007. "Efficiency in Improving Health and Education Outcomes: Provincial and State-Level Estimates for Argentina and Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 22(1), pages 57-97.
    18. Muhammet Enis Bulak & Murat Kucukvar, 2022. "How ecoefficient is European food consumption? A frontier‐based multiregional input–output analysis," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 817-832, October.
    19. Forsund, Finn R. & Sarafoglou, Nikias, 2005. "The tale of two research communities: The diffusion of research on productive efficiency," International Journal of Production Economics, Elsevier, vol. 98(1), pages 17-40, October.
    20. Yang, Guo-liang & Fukuyama, Hirofumi & Chen, Kun, 2019. "Investigating the regional sustainable performance of the Chinese real estate industry: A slack-based DEA approach," Omega, Elsevier, vol. 84(C), pages 141-159.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:2:p:941-:d:1025196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.