Corporate Ownership and the Technical and Scale Efficiency of Pharmaceutical Firms in India - Empirical Evidence

Abstract

Corporate Ownership and the Technical and Scale Efficiency of Pharmaceutical Firms in India - Empirical EvidenceIn the existing literature, the theoretical models suggest that foreign-owned firms perform better than domestic firms and that private sector firms perform better than public sector firms. The present study is a modest attempt in this regard to empirically test and compare the differences in the technical and scale efficiencies of 36 public limited companies, private sector firms and foreign firms belonging to the pharmaceutical industry of India using the DEA model. The analysis shows that overall technical efficiency was different in the case of private domestic and public sector firms in the year 1990, i.e., the pre-reform period. The difference was also significant in the case of private foreign and public sector firms, though it was not significant in the case of private domestic and private foreign firms in the pre-reform period. However, in the subsequent post-reform years, there were no significant differences.