Cooperatives versus corporates in the Spanish agricultural sector: non-parametric estimation of technical efficiency

Abstract

The technical efficiency of small firms is central to the debate about the role of small-scale industries in generating growth and employment in developing economies. Some studies find small firms to be more efficient than large firms in some industrial sectors but not in others, while other studies find them to be less efficient overall. This paper focuses on agricultural enterprises in the northern part of Spain. It compares the distributions of efficiency and identifies most important correlates. It can have important implications for political decisions because this mixed evidence sends conflicting signals to policy makers. It also studies the variation across the two principal forms of business organization focused on ownership, cooperative and corporate firms. Variation in the efficiency may take place between firms that are organised in different ways and result in changes from one form of business organisation to another. This analysis allows us to know what firms are most efficient in the sector considered. Non-parametrical techniques are used in the analysis, concretely Data Envelopment Analysis (DEA). Highly efficient firms have distinct characteristics that distinguish them from inefficient firms: investments in technology, workforce, automation, organizational practices. . . This analysis allows us to know what firms are most efficient in the sector considered if so why.