Analysing drivers of efficiency in the leather industry: a two-stage double bootstrap DEA approach
Benchmarking: An International Journal
ISSN: 1463-5771
Article publication date: 2 December 2021
Issue publication date: 24 November 2022
Abstract
Purpose
The Indian leather industry contributes to economic growth at a significant environmental cost. Due to the rising global demand for sustainable leather products, promoting efficient input utilisation has become vital. This study measures input efficiency and its determinants for leather industry in order for it to improve its future performance.
Design/methodology/approach
In the first stage, bootstrap data envelopment analysis (DEA) approach is used for measuring efficiency and analysing firms' differences based on their geographical location, organisational structures, urban-rural location and sub-industrial groups. A second stage regression examines efficiency determinants using size, age, skill and capital-labour intensity as the explanatory variables.
Findings
Efficiency result shows a significant potential of minimising inputs by 47% provided the firms adopt best practices. West Bengal firms, urban located firms, individual and proprietorship owned firms and leather consumer goods firms are found to be relatively efficient to their counterparts. Size, skilled managerial staff and labour-intensive firms positively affect efficiency.
Practical implications
Construction of well-connected roads for accessing urban retail markets and provision of reliable electricity would improve efficiency of rural firms. Small-scale enterprises have a larger share in Indian leather industry; therefore, policy should focus on enhancing the firms' scale and investing in training facilities to skill employed labour for ensuring optimal use of inputs.
Originality/value
Previous studies on the leather industry have used the conventional DEA efficiency measurement approach. This study uses DEA bootstrapping model for robust efficiency estimates and provides consistent inferences about the determinants.
Keywords
Acknowledgements
The first author would like to acknowledge the financial support from Indian Institute of Technology Bombay for carrying the primary work during the doctoral research and to Indian Institute of Technology Roorkee for the help during revisions of the paper. The authors also thank the anonymous reviewers who helped improve the paper with their valuable feedback.
Citation
Singh, A. and Gundimeda, H. (2022), "Analysing drivers of efficiency in the leather industry: a two-stage double bootstrap DEA approach", Benchmarking: An International Journal, Vol. 29 No. 9, pp. 2780-2805. https://doi.org/10.1108/BIJ-04-2021-0178
Publisher
:Emerald Publishing Limited
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