Abstract
This study investigates the technical efficiency for each industry in the Malaysian manufacturing sector is estimated by using Data Envelopment Analysis (DEA). In order to pursue a balance of innovation between long-term and short-term performance strategy, we integrate the Balance Scorecard (BSC) approach with DEA. Furthermore, this paper looks at the determinants of efficiency using the Tobit regression model. In measuring the level of firms’ efficiency and innovation, the wood and wood based products industry is emphasized due to its importance in the economic growth of manufacturing sector. In the wood and wood based products industry, the highest level of technical efficiency was achieved by two sub-sectors i.e. veneer sheets and plywood and laminboard, particle board and other panels board, with the mean value of technical efficiency of 1.081 and 1.097 respectively. Generally, the majority of the manufacturing firms are operating technical inefficiently. The distribution of DEA and DEA-BCS technical efficiency in Malaysian Manufacturing Industries show that most of the industries have the average technical efficiency scores greater than 1.05 with only 7 industries (13.21%) in DEA-BSC model operating at or near to the most optimal productions.
Highlights
Previous research acceded that there are myriad of definitions and usage of the term innovation (Jain, 2010)
Of appendix below and according to constant returns to scale (CRS) results, manufacture of laminboard, particle board and other panels and board indicated the highest percentage of firms (47.27%) that are fully efficient followed by veneer sheets and plywood (29.41%), wooden and cane containers (26.39%), builders' carpentry and joinery (9.47%), sawmilling and planing of wood (6.27%), and wooden and cane furniture (6.12%), respectively
According to VRS results, the analysis shows that manufacture of laminboard, particle board and other panels and board indicated the highest percentage of firms (60%) that are fully efficient which is the firms have efficient operation of the firm itself followed by veneer sheets and plywood (49.58%), wooden and cane containers (43.06%), builders' carpentry and joinery (30.04%), sawmilling and planing of wood (10.98%), and wooden and cane furniture (17.93%), respectively
Summary
Previous research acceded that there are myriad of definitions and usage of the term innovation (Jain, 2010). During the period of 1996 to 2005, the trade and economic policy undertook progressive liberalization to achieve the long-term objectives of freer and open trade as well as strengthening the domestic capacity to participate in an increasingly open trading environment This export-led growth is vital in the present transition for Malaysia’s economy to transform into the high-tech and capital-intensive industries as well as manufacturing related services (Third Industrial Master Plan, 2006 - 2020). In a small and open economy like Malaysia, productivity enhancement of the manufacturing sector is especially crucial in the growth and continuous development of the economy In this analysis will evaluate the efficiency of Malaysian manufacturing industry and attempts to identify its influencing factors. The final section summarizes all the findings and concludes the study
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