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Innovation and technical efficiency in Malaysian family manufacturing industries

Author

Listed:
  • Susila Munisamy

    (Associate Professor, Faculty of Economic, University of Malaya.)

  • Edward Wong Sek Khin

    (Associate Professor, Faculty of Business and Accountancy, University of Malaya)

  • Chia Zi Fon

    (Ph.D candidate, Faculty of Economic, University of Malaya)

Abstract

This study investigates the technical efficiency for each industry in the Malaysian manufacturing sector is estimated by using Data Envelopment Analysis (DEA). In order to pursue a balance of innovation between long-term and short-term performance strategy, we integrate the Balance Scorecard (BSC) approach with DEA. Furthermore, this paper looks at the determinants of efficiency using the Tobit regression model. In measuring the level of firms’ efficiency and innovation, the wood and wood based products industry is emphasized due to its importance in the economic growth of manufacturing sector. In the wood and wood based products industry, the highest level of technical efficiency was achieved by two sub-sectors i.e. veneer sheets and plywood and laminboard, particle board and other panels board, with the mean value of technical efficiency of 1.081 and 1.097 respectively. Generally, the majority of the manufacturing firms are operating technical inefficiently. The distribution of DEA and DEA-BCS technical efficiency in Malaysian Manufacturing Industries show that most of the industries have the average technical efficiency scores greater than 1.05 with only 7 industries (13.21%) in DEA-BSC model operating at or near to the most optimal productions.

Suggested Citation

  • Susila Munisamy & Edward Wong Sek Khin & Chia Zi Fon, 2015. "Innovation and technical efficiency in Malaysian family manufacturing industries," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 3(4), pages 50-67, August.
    • Handle: RePEc:lrc:lareco:v:3:y:2015:i:4:p:50-67
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    More about this item

    Keywords

    Data Envelopment Analysis; technical efficiency; innovation and balanced scorecard.;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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