TECHNICAL EFFICIENCY OF THAILAND SMALL AND MEDIUM ENTERPRISES: THE APPLICATION OF DATA ENVELOPMENT ANALYSIS

This study focuses on examining the level of technical efficiency and the efficiency changes in SMEs in Thailand from 2008 to 2010 using Data Envelopment Analysis (DEA) approach. The sample consists of 1,411 SMEs with completed data are obtained from the Ministry of Commerce's database. The results found that Thai SMEs have quite low technical efficiency score about 20-24% during 2008 to 2010. In addition, SMEs in manufacturing sector is the most efficient SMEs with the efficiency score of 63% 54.60% and 47.50 % in 2008, 2009 and 2010, respectively. Furthermore, we also found that small scale SMEs is the most efficient SMEs compare to medium and large scale SMEs. Small SMEs have the efficiency score of 54.30%, 64.80% and 59.30% in 2008, 2009 and 2010, respectively. Using Malmquist Productivity Index for investigating the efficiency changes, the study found that, from 2008 to 2010, the technical efficiency of SMEs have decreased. However, Thai SMEs have invested more in high technology to support the business operation, consequently, the Total Factor Productivity of SMEs from 2008 to 2010 have improved. The results imply that Thai SMEs have plenty of room for improving their efficiency. These SMEs could have the same level of output by decreasing approximately 80% of the input used at the current level. The entrepreneurs and policy makers could adopt the research results for benchmarking the performance of SMEs in Thailand and improving their efficiency level.