Downsizing in the German chemical manufacturing industry during the 1990s. Why is small beautiful?

Downsizing in the German chemical manufacturing industry during the 1990s. Why is small beautiful? The German chemical manufacturing industry experienced major downsizing between 1992 and 2004, with the average size of firms shrinking by nearly half during this period. This study uses modern frontier efficiency analysis to investigate the determinants of this downsizing. Based on reliable census data, the results of this analysis suggest that firms were not primarily concerned with improving technical efficiency, but with establishing an optimal scale of production. The proportion of scale-efficient firms has been persistently increasing, and downsizing is found to be a rational conduct because all scale-inefficient firms have continually operated under the decreasing returns portion of technology. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Downsizing in the German chemical manufacturing industry during the 1990s. Why is small beautiful?

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Publisher
Springer US
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-008-9142-x
Publisher site
See Article on Publisher Site

Abstract

The German chemical manufacturing industry experienced major downsizing between 1992 and 2004, with the average size of firms shrinking by nearly half during this period. This study uses modern frontier efficiency analysis to investigate the determinants of this downsizing. Based on reliable census data, the results of this analysis suggest that firms were not primarily concerned with improving technical efficiency, but with establishing an optimal scale of production. The proportion of scale-efficient firms has been persistently increasing, and downsizing is found to be a rational conduct because all scale-inefficient firms have continually operated under the decreasing returns portion of technology.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 15, 2008

References

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