Technical Inefficiency in Nine Clusters of Indonesian Manufacturing Firms And its Determinants: Stochastic Frontier Analysis

The current study examines the technical inefficiency of Indonesian manufacturing firms and its key determinants. Extending previous research that mainly focuses on in a specific industry, groups into nine industrial clusters estimates them separately to find variety results among clusters. stochastic frontier analysis (SFA) method is applied estimate score determinants 5,848 for five years (29,240 total observations). Data period ended 2014 due substantial change classification code industry survey by Central Board Statistics. Five notable findings are recorded. First, average efficiency all observed 0.8815. Second, firm size found have negative effect sample three out (ISIC 34, ISIC 35, 37). Third, foreign ownership generates contribution firms’ both each Fourth, export orientation has various effects across clusters, with dominant significant impact paper product 34) metal 38). Finally, import intensity provides most These support argument importance absorption capacity unique characteristics analyzing inefficiency.