Competitive intensity and technical efficiency in public sector firms: evidence from India

Competitive intensity and technical efficiency in public sector firms: evidence from India Reports that transfer of ownership from government to private hands is touted as the only way to eliminate inefficiencies in the public sector. Argues that the alternative approach ‐ increasing competitive intensity through decontrol of restricted industries without changing ownership to private investors ‐ is likely to provide similar efficiency gains. Examines this hypothesis empirically in the context of state‐owned manufacturing enterprises in India that face effective competition from private sector firms. Shows, from analysis of variance of efficiency indicators of a longitudinal sample of 108 firms over the period 1988‐1992, that increasing levels of competition trigger corresponding increases in the overall level of technical efficiency of state‐owned enterprises that face competitive conditions. Provides a persuasive case for introducing competitive markets as an alternative to complete privatization, especially in monopolisitc settings. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Public Sector Management Emerald Publishing

Competitive intensity and technical efficiency in public sector firms: evidence from India

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Publisher
Emerald Publishing
Copyright
Copyright © 1996 MCB UP Ltd. All rights reserved.
ISSN
0951-3558
DOI
10.1108/09513559610124441
Publisher site
See Article on Publisher Site

Abstract

Reports that transfer of ownership from government to private hands is touted as the only way to eliminate inefficiencies in the public sector. Argues that the alternative approach ‐ increasing competitive intensity through decontrol of restricted industries without changing ownership to private investors ‐ is likely to provide similar efficiency gains. Examines this hypothesis empirically in the context of state‐owned manufacturing enterprises in India that face effective competition from private sector firms. Shows, from analysis of variance of efficiency indicators of a longitudinal sample of 108 firms over the period 1988‐1992, that increasing levels of competition trigger corresponding increases in the overall level of technical efficiency of state‐owned enterprises that face competitive conditions. Provides a persuasive case for introducing competitive markets as an alternative to complete privatization, especially in monopolisitc settings.

Journal

International Journal of Public Sector ManagementEmerald Publishing

Published: Jun 1, 1996

Keywords: Competitive strategy; Efficiency; India; Manufacturing industry; Ownership; Private sector

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