Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry
This paper compares the sources of total factor productivity (TFP) growth of foreign (establishments with 51% and above foreign equity ownership) and local establishments in Malaysia’s automotive sector by applying a stochastic production frontier to a panel of 510 plants for the period 2000-2004....
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
UUM Press
2008-09-01
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| Series: | International Journal of Management Studies |
| Subjects: | |
| Online Access: | https://e-journal.uum.edu.my/index.php/ijms/article/view/9856 |
| _version_ | 1797943170061828096 |
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| author | Noor Aini Khalifah Basri Abdul Talib Putri Zharifa Amdun |
| author_facet | Noor Aini Khalifah Basri Abdul Talib Putri Zharifa Amdun |
| author_sort | Noor Aini Khalifah |
| collection | DOAJ |
| description | This paper compares the sources of total factor productivity (TFP) growth of foreign (establishments with 51% and above foreign equity ownership) and local establishments in Malaysia’s automotive sector by applying a stochastic production frontier to a panel of 510 plants for the period 2000-2004. The results showed that TFP growth for local automobile plants was minimal at 0.63% and minimally negative at -0.27% for foreign plants. On average, over the study period, technical efficiency changes contributed positively toward TFP growth but scale efficiency changes were negative for both local and foreign establishments. Technical progress was minimally positive for local establishments and minimally negative for foreign establishments. The small size of plants and the lower share of white-collar workers were significant in explaining plant inefficiency in Malaysia’s automobile sector. A higher capital-labour ratio was positively related to plant inefficiency and this may be due to excess capacity in the automobile sector as a result of a small domestic market. Finally, foreign multinationals are significantly more efficient than locally owned plants.
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| first_indexed | 2024-04-10T20:18:57Z |
| format | Article |
| id | doaj.art-73d55f0a86a14028ab89832ed5494fec |
| institution | Directory Open Access Journal |
| issn | 2232-1608 2180-2467 |
| language | English |
| last_indexed | 2024-04-10T20:18:57Z |
| publishDate | 2008-09-01 |
| publisher | UUM Press |
| record_format | Article |
| series | International Journal of Management Studies |
| spelling | doaj.art-73d55f0a86a14028ab89832ed5494fec2023-01-26T03:14:04ZengUUM PressInternational Journal of Management Studies2232-16082180-24672008-09-0115Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile IndustryNoor Aini Khalifah0Basri Abdul Talib1Putri Zharifa Amdun2Faculty of Economics and Business Universiti Kebangsaan MalaysiaFaculty of Economics and Business Universiti Kebangsaan MalaysiaEconomic Planning Unit Prime Ministers DepartmentThis paper compares the sources of total factor productivity (TFP) growth of foreign (establishments with 51% and above foreign equity ownership) and local establishments in Malaysia’s automotive sector by applying a stochastic production frontier to a panel of 510 plants for the period 2000-2004. The results showed that TFP growth for local automobile plants was minimal at 0.63% and minimally negative at -0.27% for foreign plants. On average, over the study period, technical efficiency changes contributed positively toward TFP growth but scale efficiency changes were negative for both local and foreign establishments. Technical progress was minimally positive for local establishments and minimally negative for foreign establishments. The small size of plants and the lower share of white-collar workers were significant in explaining plant inefficiency in Malaysia’s automobile sector. A higher capital-labour ratio was positively related to plant inefficiency and this may be due to excess capacity in the automobile sector as a result of a small domestic market. Finally, foreign multinationals are significantly more efficient than locally owned plants. https://e-journal.uum.edu.my/index.php/ijms/article/view/9856Technical efficiency changetechnological progressstochastic production frontierautomobile industryMalaysia |
| spellingShingle | Noor Aini Khalifah Basri Abdul Talib Putri Zharifa Amdun Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry International Journal of Management Studies Technical efficiency change technological progress stochastic production frontier automobile industry Malaysia |
| title | Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry |
| title_full | Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry |
| title_fullStr | Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry |
| title_full_unstemmed | Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry |
| title_short | Are Foreign Multinationals More Efficient? A Stochastic Production Frontier Analysis of Malaysia’s Automobile Industry |
| title_sort | are foreign multinationals more efficient a stochastic production frontier analysis of malaysiaa€™s automobile industry |
| topic | Technical efficiency change technological progress stochastic production frontier automobile industry Malaysia |
| url | https://e-journal.uum.edu.my/index.php/ijms/article/view/9856 |
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