Title: Technical Efficiency of Thai Manufacturing SMEs: A Stochastic Frontier Analysis
Abstract: A major motivation of this study is to examine the factors that are the most important in contributing to the relatively poor efficiency performance of Thai manufacturing small and medium sized enterprises (SMEs). The results obtained will be significant in devising effective policies aimed at tackling this poor performance. This paper uses data on manufacturing SMEs in the North-eastern region of Thailand in 2007 as a case study, by applying a stochastic frontier analysis (SFA) and a technical inefficiency effects model. The empirical results obtained indicate that the mean technical efficiency of all categories of manufacturing SMEs in the North-eastern region is 43%, implying that manufacturing SMEs have high levels of technical inefficiency in their production processes.