Technical Efficiency and Value Chain of Eastern European Union Companies: An Empirical Application using Semi-Parametric Frontier Methods

This study examines technical efficiency and its determinants in companies from East Europe who recently joined the European Union (EU) using survey data at the sector level. In order to get acquainted with the conditioning factors of the obtained technical efficiency, we resort to the classic concept of value chain, as described by M. E. Porter (1985). In terms of the factors that integrate the cited concept, we specify different models regarding the strategic behaviour of the industrial sector firms, with the purpose of learning the impact on the technical efficiency. A Data Envelopment Analysis (DEA) approach is applied to estimate technical efficiency level for individual sectors. In particular, the empirical analysis focuses on country comparisons of company performance and the determinants of technical efficiency among the sectors. One of the most important results that arise from our analysis is the existence of highly heterogeneous efficiency determinants among productive sectors. In this context, while policy priorities may differ across countries and sectors, the identified micro-policies represent practical approaches to common policy challenges in companies from UE member countries from East Europe.