Rights statement: This is the author’s version of a work that was accepted for publication in International Journal of Production Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Production Economics, 246, 2022 DOI: 10.1016/j.ijpe.2022.108411
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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
}
TY - JOUR
T1 - Endogenous efficiency of the dynamic profit maximization in the intertemporal production models of venture behavior
AU - Tsionas, Mike
AU - Patel, Pankaj C.
AU - Guedes, Maria João
N1 - This is the author’s version of a work that was accepted for publication in International Journal of Production Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Production Economics, 246, 2022 DOI: 10.1016/j.ijpe.2022.108411
PY - 2022/4/30
Y1 - 2022/4/30
N2 - How do ventures manage adjustment costs, input elasticities, and productivity growth? We draw on the intertemporal production decisions of ventures that are quasi-fixed, costly to adjust, and endogenous. Using a modified version of the Bayesian Exponentially Tilted Empirical Likelihood (BETEL) method adjusted for the presence of dynamic latent variables, the proposed moment-based multiple-equation estimation system incorporates dynamic and static optimality conditions derived from a firm's expected intertemporal profit maximization. Using reliable tax information data from a sample of 72,035 Portuguese ventures founded between 2010 and 2017, we find that the most important inputs are labor, equity, and inventories. However, the technical change is small, as is productivity growth. Ventures have a high degree of labor input elasticity but much lower elasticities for equity, inventories, capital, and advertising. The findings provide an understanding of the intertemporal behavior of ventures in managing adjustment costs, input elasticities, and productivity growth where adjustments to efficiency are “cheaper” than adjustments to capital. Labor elasticity is the highest, and productivity growth is very small.
AB - How do ventures manage adjustment costs, input elasticities, and productivity growth? We draw on the intertemporal production decisions of ventures that are quasi-fixed, costly to adjust, and endogenous. Using a modified version of the Bayesian Exponentially Tilted Empirical Likelihood (BETEL) method adjusted for the presence of dynamic latent variables, the proposed moment-based multiple-equation estimation system incorporates dynamic and static optimality conditions derived from a firm's expected intertemporal profit maximization. Using reliable tax information data from a sample of 72,035 Portuguese ventures founded between 2010 and 2017, we find that the most important inputs are labor, equity, and inventories. However, the technical change is small, as is productivity growth. Ventures have a high degree of labor input elasticity but much lower elasticities for equity, inventories, capital, and advertising. The findings provide an understanding of the intertemporal behavior of ventures in managing adjustment costs, input elasticities, and productivity growth where adjustments to efficiency are “cheaper” than adjustments to capital. Labor elasticity is the highest, and productivity growth is very small.
KW - Dynamic efficiency
KW - Firms
KW - Intertemporal decision making
U2 - 10.1016/j.ijpe.2022.108411
DO - 10.1016/j.ijpe.2022.108411
M3 - Journal article
VL - 246
JO - International Journal of Production Economics
JF - International Journal of Production Economics
SN - 0925-5273
M1 - 108411
ER -