Technical efficiency, market share and profitability of manufacturing firms in Côte D'Ivoire

This paper measures the level of technical efficiency of manufacturing firms in Cote d'Ivoire using a stochastic frontier production function and analyses its effect on firm market shares and profitability. Most sectors of activity exhibit large economies of scale implying that one source of efficiency gain consists of broadening the scale of activities of firms. Moreover,irrespective of size, a large majority of firms is producing far below its maximum attainable output level but some significant inter-firm differences seem to exist. Foreign owned firms and formal firms tend to be more efficient. More efficient production and more advertising intensive marketing translate into a better competitive position and via its impact on the market share into higher profitability. However, besides the competitive market selection mechanism, legitimation and reputation effects are also important as determinants for a firm's competitive position and profitability.nrpages: 19status: publishe