The Most Efficient Czech SME Sectors: An Application of Robust Data Envelopment Analysis

This paper analyzes the efficiency of Czech small and medium-sized enterprises (SMEs). The main focus is on structural analysis of Czech SMEs in manufacturing based on their efficiency. The author uses sectoral data from 2002 to 2005 for 30 manufacturing industries, each divided into five subgroups according to the number of employees. He employs standard and advanced robust data envelopment analysis (DEA) to obtain cross-sectional rankings of individual industries. The results reveal substantial variance in the efficiency scores, variance which is only partly removed by the robust DEA specification. The author found that the majority of sectors operate below full efficiency, with only a few industries belonging to the top performers. The average efficiency lies between 50 and 70 percent of that of the best sectors. He concludes that only a minor proportion of Czech SMEs are able to generate high value added per unit of labor-capital.