doi:10.

1017/S0043933911000754

An application of the double-bootstrap

data envelopment analysis to investigate
sources of efficiency in the Greek poultry
sector
I. KERAMIDOU* and A. MIMIS

Department of Economic and Regional Development, Panteion University of Social

and Political Sciences, Athens, Greece
*Corresponding author: ikeram@panteion.gr

This paper reviews a double-bootstrap data envelopment analysis of the

performance of the Greek poultry sector for the period of 1994–2007. The
purpose for implementing this method is to obtain consistent inferences in
measuring technical efficiency and in identifying its determinants. The findings
suggest that on average, technical inefficiency is present in the Greek poultry
industry. Under the variable return to scale specification, technical efficiency
decreased to 90% in 2007 from 94% in 1994. In order to explain the factors
influencing technical efficiency, the efficiency scores estimated in this study were
regressed by using specific variables of sample firms and industry context. The
results of the regression analysis show statistically significant positive impacts on
performance are factors like market size, productive flexibility and being a member
of a firm group, with size and innovation activity of the firm being negative
influences. In contrast, the integration of Greece into European Economic and
Monetary Union and several other capabilities of firms, related to age,
vertical integration, capital intensity and skill of employees, did not have any
influence. These results may help managers and policy-makers to determine
adequate policies and practices for achieving performance.

Keywords: economics; marketing; meat; modelling; developing countries

Introduction
Identifying the sources of heterogeneity of performance among companies is a central
issue in industrial organisation and strategic management research. Attempts to explain
the determinants of efficiency are made over several decades. The main question is
whether company or industry characteristics are the most important influential factors.
A major stream of research that has borrowed its framework from the efficiency structure

© World's Poultry Science Association 2011

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Received for publication January 7, 2011
Accepted for publication July 11, 2011 675
Efficiency analysis in Greek poultry: I. Keramidou and A. Mimis

paradigm (Structure-Conduit-Performance) and is popular in industrial organisation

economics, states that the efficiency advantage comes from industry structure (Bain,
1956; Porter, 1985). In this line of research, external variables, including industry
concentration, product differentiation, entry and exit barriers, and growth of demand,
are linked to company performance. Another related stream of research, based on the
resources-based view (RBV) of the company, suggests that the different levels of
resources available between companies explains why some are more efficient than
others (Penrose, 1959; Nelson and Winder, 1982; Wernerfelt, 1984; Barney, 1991;
Rumelt, 1991; Amit and Schoemaker, 1993; Newbert, 2008). In RBV theory,
companies that possesses valuable, rare, imperfectly mobile, and non-substitutable
resources and have an organisation in place that enable them to absorb and apply
them, will attain a competitive advantage, which, in turn, may improve performance.
This central proposition of RBV theory is adopted by several related analyses: core
competences (Prahalad and Hamel, 1990), dynamic capabilities (Teece et al., 1997;
Helfat and Peteraf, 2003), and the knowledge-based view (Grant, 2002). Thus,
business researchers are interested in any differences among companies that could be
a source of efficiency gains. Factors, such as size, age, group ownership and vertical
integration have received attention in the literature and the question is whether these
characteristics may provide a competitive advantage, based on lower cost. The debate
also focuses to whether differences in technology and human resources can explain part
of the variation in efficiency. Another issue that has attracted the interest of academic and
political cycles over the recent years is whether flexibility practices and innovativeness of
the company plays a key role in achieving a better performance. Despite the vast body of
empirical work, the results are ambiguous and require more research.
This paper aims to provide new evidence on effects of industry and company
characteristics on performance. Although a large body of literature in this field has
evolved applying usually a two-stage data enveloped analysis (DEA), evidence for the
drivers of efficiency for poultry industry are scarce (Yusuf and Malomo, 2007; Begum et
al., 2010), and there are no similar studies for the Greek situation. This paper assesses
technical efficiencies of Greek poultry companies over the period 1994−2007 and
investigates the determinants of inefficiency. It aims to verify the explorative strength
of a model that captures the characteristics of the sample, and uncover the effect of
Greece integration into EMU and the size of the domestic poultry meat market on
company performance, as external factors reflecting important macroeconomic
conditions and market characteristics. Simultaneously it investigates the Greek poultry
companies' competitive strategies as a mediator between internal factors and company
performance. In this model, the age and size of the company, the capital intensity and the
skills of employees are included. Some of the aforementioned variables like the company
size have been used in poultry literature (Yusuf and Malomo, 2007; Begum et al., 2010).
However, the few existing empirical works on the efficiency of poultry sector used a
small number of explorative variables related to industry and companies characteristics
such as market concentration, years of experience and education level of the farmer,
hence this offers only a partial explanation of the determinants of poultry production
efficiency. In the present study, it is important to identify links of the company efficiency
with untapped poultry company characteristics like vertical investigation, productive
flexibility, group ownership and company research activities, not only because this
question is often addressed in the literature over several decades, but also these
characteristics appear to be sources of competitive advantage for several Greek
poultry units.
Additionally this study used the Simar and Wilson's (1998, 2007) double-bootstrap
procedure to overcome the inherent shortcomings of previous two-stage DEA empirical

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 Efficiency analysis in Greek poultry: I. Keramidou and A. Mimis

work in the poultry sector. The key advantage of the adopted methodology is that it
permits us to determine statistical properties of non-parametric frontier estimators and
address the serial correlation problem between efficiency measures and explanatory
variables.

Institutional setting
Greece's poultry industry is one of the most significant sectors of the domestic meat
industry, producing 168,000 tonnes of poultry in 2006 or 33.5% of the total meat
production in that country, covering 79.6% of domestic demand for poultry and 46-
62% of Greece's total exports of meat during the period 1996-2006 (ICAP, 2007). The
poultry sector is characterised by high concentration, with the six largest companies
accounting for 68.9% of the market and 45% of the production, while small, family-
owned companies also contribute to local demand (ICAP, 2007).
Significant changes took place during the integration of Greece into the EMU in the
1990's, which generated an environment of increased competition along with lower
interest rates and inflation. In this context, domestic poultry production recorded an
average annual growth rate of 0.91% as a response to the weak rise of the domestic
market, with an average annual growth rate of 1.34% over the period 1994-2006 (ICAP,
2007). At the same time the main foreign trade indicators indicated a loss of
competitiveness. Greece became increasingly more dependent on poultry imports to
meet its domestic consumption needs, so poultry self-sufficiency rates declined for
2006 to 78.3% from 89.2% in 1994 (ICAP, 2007), while the export rate of domestic
production ranged from 1.9% to 6.9% over the same period.
Greek poultry companies followed different competitive strategies, which were partly
responsible for differences in their efficiency. Few companies which control the sector
provided products with strong brands, and entered other high-growth food markets
(sausage, prepared meat products), resulting in the majority of them becoming
vertically integrated (ICAP, 2007). As large companies seem to exploit scale and
scope economies; additionally there are several companies of different sizes that
achieved additional cost economies by applying productive flexibility practices, while
few companies achieved an advantage thanks to innovativeness or improved quality of
their products (Fotinopoulou and Keramidou, 2006).

Methodology for estimation of efficiency scores

Technical efficiency represents the capacity of a company to produce the maximum
output quantities from the same level of input, or several output quantities utilising
minimal input. It is common practice to measure the performance of a company
relative to a best-practice frontier. Two methods have been widely used to calculate
best practice: the non-parametric DEA method and the parametric stochastic frontier
analysis (SFA). This paper adopts a non-parametric linear programming frontier
approach compared to parametric statistical methods. There are two reasons why this
method is selected. Firstly, the DEA method avoids the problem of incorrect specification
of the production function. Secondly, the combination of the DEA model with the
bootstrapping technique proposed by Simar and Wilson (1998, 2000) enables the
determination of statistical properties for non-parametric frontier estimators.
In DEA literature, the best frontier is estimated by either an input-orientation
(minimising input level for a given output) or output-orientation (maximising output

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Efficiency analysis in Greek poultry: I. Keramidou and A. Mimis

given the level of the input). In this survey, an input orientation was chosen and variable
returns to scale (VRS) assumption used (Banker et al., 1984), considering that our sample
companies are not operating at optimal scale due to imperfect competition (Coelli et al.,
2005). ^
Under these assumptions, efficiency score of each company (� VRS ) is calculated by
solving the following linear programming problem:
^ P
n P
n P
n
� VRS ¼ minf� > 0jy � �i yi ; �x � �i xi ; �i ¼ 1; �i � 0; i ¼ 1:::ng (1)
i¼1 i¼1 i¼1
In equation 1 yi is a vector of outputs, xi is a vector of inputs, while �i is a non-negative
vector of constants specifying the optimal weights of inputs/outputs. The efficient level of
input is defined by �x, which is the projection of an observed poultry company ðx; yÞ on
to the efficient frontier, while � is a scalar (see Simar and Wilson, 2007). This linear
programming problem must be solved n times, once for each company in the sample. The
^
value of � VRS obtained is the technical efficiency score for the ith poultry company. In the
^
case, � VRS ¼ 1 , the company is considered fully technical efficient.
However, the standard DEA approach has come under criticism owing to the potential
bias of efficiency estimates. The accuracy of DEA results may be affected by sampling
variation of the estimated frontier and the non-measurement of random error. This survey
addresses the shortcoming of DEA and applies the bootstrap approach of Simar and
Wilson (1998, 2000) that combines the DEA model with bootstrapping techniques, in
order to provide bias-corrected measures of efficiency and confidence intervals. The
complete bootstrap algorithm applied in this study is extensively described in Simar
and Wilson (1998).
Data on input and output were collected for 27 companies composed of both poultry
meat farms and processing facilities, for the period of 1994–2007. The survey includes
five out of six of the largest companies in the Greek industry which control 69% of the
domestic poultry meat production. Companies with 1-49 employees or 50-149 employees
were included as a random sample that can be assumed as being representative for these
size categories as a whole. Following previous studies, three inputs and one output were
chosen for inclusion (Kravtsova, 2008; Goncharuk, 2009; Badunenko, 2010). Input
variables are the cost of capital, estimated as the sum of depreciation and interest, the
cost of raw and auxiliary materials and the number of full-time employees. Thus, the
panel data set was unbalanced, including 328 observations, owning to late entries and
early exits from the market. It is worth noticing that the sample size ensures adherence to
the DEA convention that the minimum number of companies should be greater or equal
to three times the number of inputs plus outputs, and thus the sample size was deemed
adequate for the approach. A questionnaire survey was conducted from January 2010 to
March 2010 by Panteion University of Athens, to obtain information that wasn't
otherwise readily available, such as the cost of raw and auxiliary materials and the
number of employees. Further data was drawn in from the Ministry of Development's
industrial bulletin statistics, as well as from the annual balance sheets of companies
reported in the Greek Government Gazette.

The determinants of technical efficiency

^
The pure technical efficiency scores (� VRS ) derived from the first-stage bootstrapped
DEA analysis were regressed using a set of hypothesised explanatory factors. The
following regression model was used:

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 Efficiency analysis in Greek poultry: I. Keramidou and A. Mimis

^
� VRS i ¼ a þ Zi � þ "� ; i ¼ 1; :::; n (2)

In equation 2, a is the constant term, εi is statistical noise, and Zi is a vector of specific

variables for poultry company that is expected to be related to the poultry company's
efficiency score. These include capital to labour ratio, real average wages, age and size of
the company, vertical integration, productive flexibility, group ownership, and innovation
activities of a company, integration of Greece into EMU, domestic poultry meat market
size and yearly trends. Finally δ is a vector of the estimated coefficients of the
explanatory factors. For estimating equation 2, the bootstrapped truncated regression,
proposed by Simar and Wilson (2007), was implemented. The traditional procedures of
regression (Tobit estimator, OLS, etc) cannot be used, because DEA efficiency estimates
are serially correlated with error and explicative variables and basic model assumption
required by regression analysis, that is independence within the sample, is violated. To
overcome this problem algorithm two of Simar and Wilson (2007) is applied. The
cautioner connection that it is expected to exist between bias-corrected VRS
orientation efficiency estimates and each of the explorative variables is presented in
the following sections.

TECHNOLOGY RESOURCES
The capital intensity indicates the level of technology of a company. Theory on the
relationship between performance and technology resources are ambivalent. The
literature trends to support the theory that a company's technology, embodied in
physical resources possessed by a company, such as plant, machinery and equipment,
can positively influence its performance, due to the strong positive effect on reduction of
cost and/or the possibility for differentiation (Porter, 1985). However, high investment in
technology was also found to worse a company's relative costs and performance (Porter,
1985; Kravtsova, 2008; Latruffe et al., 2008). The hypothesis seem appropriate as a high
level of capital intensity can contribute to the better performance of a company (H1).

HUMAN RESOURCES CAPABILITIES

The productive services provided by individuals to the company in the form of
knowledge and skills represent human resources capabilities of a company which may
play a crucial role for improvement of productivity and company performance (Penrose,
1959; Grant, 2002; Kravtsova, 2008). As effective organisational activities of any
company are achieved through human resources capabilities, measured usually by the
difference in wages, it can be concluded that the stock of knowledge and skills of
employees increases the productivity labour and performance of companies.

VERTICAL INTEGRATION
According to transaction cost economics and traditional theories of market power,
vertical integration may provide economic efficiency advantages, because of a greater
ability of companies involved to decrease transaction costs (Williamson, 1975) or achieve
market power and hence influence the terms of a transaction, such as price, quality
standards and/or delivery dates. However, vertical integrated companies were also
found to have inferior performance (Assaf et al., 2011). Consequently, it is assumed
that the dummy variable of vertical integration that is used in this study will link
positively with technical efficiency of a company.

COMPANY AGE
Theory on the precise relationship between company age and performance is equivocal.

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Company age is usually considered one of the main components of a company's

experience and learning curve (Assaf et al., 2011), which increases the capacity for
efficiency. According to RVB theory, older companies have a greater opportunity to
create a valuable intangible asset, such as a good reputation with customers through the
ownerships of brands and trademarks, with suppliers or financial institutions, as well as
government and communities (Grant, 2002). However, older companies may also have
inferior performance, because of inertia and less adaptive capacity to changing
circumstances (Balcombe et al., 2008; Kravtsova, 2008; Lin et al., 2009; Odeck,
2009). Therefore, it is assumed that company age should have an influence on its
performance.

SIZE OF COMPANY
Company size, measured by the logarithm of total fixed assets, is a popular variable in
efficiency researches, but the findings seem ambiguous. Company size is usually
conceptualised as a primary source of competitive advantage because of the diverse
capabilities of a larger company (Yusuf and Malomo, 2007; Lin et al., 2009). These
include the ability to exploit economies of scale and scope, to have greater funds, to
achieve better market penetration or to employ more educated managers (Kumar, 2003).
On the other hand, larger companies were found to have inferior performance compared
to smaller ones (Latruffe et al., 2008; Vasiliev et al., 2008; Ceyhan and Hazneci, 2010),
because of scale diseconomies. Consequently, the hypothesis that is recommended
suitable is that the size of a company is an important determinant of company
technical efficiency.

INNOVATIVE ACTIVITIES OF COMPANY

Innovativeness of the company, measured by R&D intensity, was usually found to
relate positively to efficiency (Ornaghi, 2006; Thornhill, 2006). However, a negative
relationship between innovative activity and company performance has also been
reported (Simpson et al., 2006), while others found innovation to have a poor
explorative power (Balteiro et al., 2006). Although the empirical findings are
ambiguous, the present research assumes that R&D spending is important in
explaining improvements in technical efficiencies.

PRODUCTIVE FLEXIBILITY
The relationship between efficiency and level of productive flexibility are complex. On
the one hand, productive flexibility indicates company competences which may be
strategically beneficial and provide a positive influential factor in performance (Boyer
and Freyssenet, 2000). To test the possible benefits of flexibility in this study, an index
was devised which denotes a value larger than one when a company is deemed
productively flexible (Boyer and Freyssenet, 2000). Consequently, the hypothesis that
be more appropriate to adopt is that flexible companies are more efficient.

GROUP OWNERSHIP
Theory states that companies forming a group gain additional benefits in terms of
efficiency, by exploitation of economies of scope, attainment of market power, using the
same brand name to promote multiple products, or by transfer of knowledge between
companies and applying internal benchmarking (Barros et al., 2009; Assaf et al., 2011).
Therefore, a positive correlation between the dummy variable of group ownership and
technical efficiency of poultry companies is expected to be confirmed (H8).

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MARKET SIZE
The growing domestic demand for poultry meat, measured by the logarithm of the
apparent consumption of poultry, over the period 1994-2007 in Greece gave rise to an
increase in production, which in turn could be associated with economies of scale,
resulting in a performance increase. It is assumed, therefore, that domestic demand for
poultry is positively linked to technical efficiency.

GREECE INTEGRATION INTO EMU

According to previous studies, the accession of a country into the European Union
relates to the characteristics of the macro-economic environment, and may be one of the
explanatory factors of efficiency (Vasiliev et al., 2008). In this study, a dummy variable
for Greece integration into the EMU period was applied as a proxy for the higher degree
of competition companies faced along with lower interest rates and inflation. In an
environment with high competition it can be hypothesised that average efficiency is
higher, as inefficient companies, by competitive pressure, are forced to leave the
market or to adopt new methods for maintaining market share. Simultaneously it was
assumed that lower interest rates and inflation have a positive effect on the cost of capital
and hence on performance. Consequently, integration of Greece into EMU was expected
to be positively related to performance.

YEAR TREND VARIABLE

The efficiency of an ‘average’ Greek poultry company was expected to be increased
over time. The increased competition, which characterises the production process of
poultry in Greece, motivated some companies to update their technology. Due to
financial difficulties certain companies could not install new technology, so they
would be operating with less productive technology for a short period, but in the long
term they were forced to close or to leave the market, resulting in an average efficiency
increase. Therefore, the year trend variable and efficiencies of poultry companies was
expected to display a positive relationship.

PURE TECHNICAL EFFICIENCY MEASUREMENT

Table 1 presents the original and bootstrapped VRS technical efficiency scores. The
original DEA average efficiency score for the entire period amounted to 0.95, indicating
that there was small potential for increasing the average poultry meat company efficiency
over the period of 1994−2007. A similar situation was concluded by bias-correcting pure
technical efficiency scores of each sample company. Specifically, it showed that the
productive performance of an ‘average’ poultry company ranged from 0.87 to 0.94
during the period 1994-2007, indicating that the same output, for different years of
the study, could have been produced by using 6%–13% less than the observed inputs,
if the existing level of inputs and recourses were used more efficiently.

Table 1 Summary results of original DEA and bootstrapped efficiency estimated for the period 1994
−2007.

Original DEA efficiency scores Bias corrected estimates of VRS technical efficiency scores

Mean Min Std.dev. Mean Min Std. dev. Confidence interval 5%

L.B U.B

1994 0.97 0.84 0.05 0.94 0.82 0.04 0.88 0.97

1995 0.95 0.75 0.08 0.90 0.74 0.06 0.83 0.94
1996 0.95 0.71 0.09 0.89 0.68 0.07 0.81 0.95

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Table 1 Continued

Original DEA efficiency scores Bias corrected estimates of VRS technical efficiency scores

Mean Min Std.dev. Mean Min Std. dev. Confidence interval 5%

L.B U.B

1997 0.97 0.89 0.04 0.94 0.87 0.03 0.89 0.97

1998 0.96 0.83 0.05 0.92 0.81 0.05 0.87 0.96
1999 0.95 0.77 0.08 0.90 0.74 0.07 0.83 0.95
2000 0.97 0.84 0.05 0.94 0.83 0.04 0.88 0.97
2001 0.97 0.80 0.06 0.93 0.78 0.05 0.87 0.96
2002 0.92 0.73 0.09 0.87 0.69 0.07 0.79 0.92
2003 0.92 0.64 0.10 0.87 0.61 0.08 0.78 0.92
2004 0.94 0.67 0.09 0.88 0.64 0.08 0.80 0.93
2005 0.94 0.76 0.08 0.89 0.73 0.07 0.83 0.93
2006 0.93 0.60 0.11 0.88 0.59 0.09 0.79 0.93
2007 0.94 0.62 0.09 0.90 0.61 0.08 0.81 0.94
Mean 0.95 0.75 0.08 0.90 0.72 0.06 0.83 0.95

LB=lower bound of the confidence interval, UB=Upper bound of the confidence interval.

Identifying the pure technical efficiency determinants

The results of the bootstrapped truncated regression are presented in Table 2. A positive
sign in the coefficient indicated a negative influence on efficiency, while a negative sign
indicated a positive influence. Since the dependent variable is the inverse of the efficiency
score, it is larger or equal to one. According to the results, the adopted model had a Wald
chi-squared of 286.67 with an associated p-value of <0.001. These statistics suggest that
the model was a good fit. Overall, the model suggested a statistically significant decrease
in technical efficiency over the study period. Taking into account the average efficiency
of poultry companies, this finding should not come at the surprise. Indeed, a clear trend
of decreasing efficiency was presented over the study period, when looking at both
original efficiency and bias-corrected estimates (Table 1). These findings give grounds
to reject the hypothesis. Consequentially, the logical question which arises is how
performance can be increased in the Greek poultry industry. One of the alternatives
may be to identify what factors drive variations in efficiency.
Looking at external variables, the integration of Greece into the EMU was found to
contribute positively to efficiency. However, this estimate was insignificant. Hence, the
hypothesis holds only with respect to the direction of effects of this variable, but not the
significance. Similar evidence was reported by Vasiliev et al. (2008) who found that the
Estonian accession to the European Union did not influence grain farmers' performance.
It is not clear why this should be the case as it was expected that the decrease of interest
rates and lower inflation, hence the reduced cost of use of capital that comes along with
integration to EMU, should have had a strong impact on investments and on performance
of poultry production. One might speculate that lower cost of capital might imply the
presence of investments which tend to increase the rate of sub-utilisation of existing
capital resources. Another interesting finding is that the domestic market of poultry has a
strong positive impact on efficiency, indicating that Greek poultry companies perform
better with a greater demand and a higher level of poultry consumption. As expected, this
result supports the hypothesis that some external variables, such as the growth of
demand, moderate the trend to decrease in poultry company technical efficiency.

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Table 2 Sources of VRS technical efficiency scores, using a bootstrapped truncated regression (number of
bootstrap iterations 2000).

Bias-adjusted Standard 95% Bootstrap confidence intervals

Variables coefficient error Low High

Constant -0.03228 0.2053 -0.4346 0.3700

Market size -0.00088* 0.0002 -0.0012 -0.0006
Trend 0.00113* 0.0002 0.0008 0.0015
EMU -0.00006 0.0001 -0.0003 0.0001
Size 0.00196* 0.0002 0.0015 0.0024
Age 0.00032 0.0001 0.0000 0.0006
Group -0.00063* 0.0002 -0.0010 -0.0003
Vertical integration -0.00002 0.0001 -0.0001 0.0001
Production flexibility index -0.00145* 0.0006 -0.0026 -0.0003
R&D intensity 0.00181* 0.0003 0.0012 0.0024
Average wage 0.00015 0.0002 -0.0003 0.0006
Capital intensity -0.00031 0.0003 -0.0009 0.0002
Number of observations 328
Wald chi2 (11) 286.670
Prob > chi2 0.00000

*All bias-adjusted coefficients that are significant at the 5% levels are also significant at the 1% level.

Investigating the effect of internal factors, the study found that group ownership,
flexible practices, size and innovative activities of the company have a significant
explanatory power. Especially, companies joining a group appear to be more efficient,
confirming the hypothesis. This is supportive of the view that group ownership is
associated with additional benefits in terms of efficiency, derived from the evidence of
economies of scales achieved by sharing common resources to different products, as well
as from the usage of common brand names to promote multiple products, the transfer of
knowledge and the application of internal benchmarking between companies. This
verifies the results of previous studies in other areas that showed a significant positive
effect of group ownership on company performance (Barros et al., 2009; Assaf et al.,
2011). Similarly, flexible capability was found to have a significant impact on efficiency.
This can be interpreted as suggesting that the various cost-economies together with a
quick response to market changes or the production of unstandardised goods with a high
rate of capital utilisation, can promote performance of flexible companies.
Surprisingly, our findings suggest that the innovation activities of a company have
negative and statistically significant influence on technical efficiency. This may indicate
that R&D is a risky undertaking, which does not always lead to improved products or
cost reductions, and consequently to higher returns, as only a few projects succeed
(Simpson et al., 2006). If this is the case, R&D represents additional costs that will
worsen the competitive position of a company and its performance. Another possible
explanation is that R&D may under-estimate the level of innovation in a company,
because of the low priority of R&D in Greek companies, as their innovation strategy
is geared more to the acquisition of embodied technology available in international
markets. A similar argument was developed by Balteiro et al. (2006) in their effort to
explain the insignificant link between innovation activities and performance of Spanish
wood-based companies.
Furthermore, company size contributes negatively to efficiency, supporting our
hypothesis. A similar relationship was revealed in the Bangladesh and Nigerian
poultry industry (Yusuf and Malomo, 2007; Begum et al., 2010) and in other areas in
developing countries (Latruffe et al., 2008; Vasiliev et al., 2008; Ceyhan and Hazneci,
2010). A possible explanation for this is that there is evidence of scale diseconomies

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contingently driven by diminishing returns to management (Coase, 1937), bureaucratic

failure (Williamson, 1975), increase of agency costs (Jensen, 1986) or less capacity to
respond to changes in the market (Boyer and Freyssenet, 2000), and that inefficiencies
developed along with market power (Leibenstein, 1966). The most important finding is
that small poultry farms in Greece could be efficient too. This might appear to lend
support to the theory that smaller companies manage to gain a competitive advantage in
narrow market segments (Fotinopoulou and Keramidou, 2006), offering lower prices and
enjoying the advantages of low costs, through the use of family labour, various forms of
flexibility and other, often illegal, practices of cost economies (tax evasion etc.).
Another important result is that experience of a poultry company, as measured by
company age, vertical integration and technological and human resources, are not
important in explaining the development of efficiency. A change in efficiency appears
to be independent of the age of the company, indicating that older ones cannot benefit
from experience or a good reputation (Grant, 2002). It is probably that inertia and less
adaptive capacity to changing circumstances that go along with age lead to a negative
impact on performance, but this is statically insignificant. This result is not consistent
with our hypothesis, and the findings of previous studies have suggested a significant
negative impact of company age on efficiency (Balcombe et al., 2008; Kravtsova, 2008;
Lin et al., 2009; Odeck, 2009). Furthermore, it was discovered that the average wage, as
a reflection of the quality of personnel, is an unfavourable but insignificant factor, a
finding mentioned in Kravtsova (2008). This outcome leads to rejection of this
hypothesis, while it is not broadly consistent to human capital theory and RBV
theory, whereby human recourses are considered to play a crucial role in the
improvement of performance. It is not at all clear why an insignificant effect of
human resources capabilities on Greek poultry industry was found. The most, we can
say that higher wages represent additional cost that is offset by higher level of
productivity originating from the quality of labour. Additionally, it was discovered
that vertical integrated companies are operating more efficiently. However, this
estimate is statistically insignificant. From this outcome we can infer that vertical
integrated companies cannot benefit from significant cost economies arising from a
better coordination of adopted technologies, or decreasing the transaction cost, as
several authors have previously argued (Williamson, 1975). A similar argument was
developed by Assaf et al. (2011) in their effort to explore the negative link between
vertical integration and technical efficiency of Spanish retail stores. Similarly, capital
intensity, as an index of technological resources in a company, appears to improve the
company performance, but these estimates were not statistically significant.
Consequently, this holds only with respect to direction of the technological resources
hypothesis, but not the significance. This is not consistent to the finding of previous
studies in other areas which found capital intensity to be a significantly negative
influential factor (Kravtsova, 2008; Latruffe et al., 2008). To understand why high
investments in technology are not a strong positive influential factor in Greek poultry
sector requires knowing the rate of capital utilisation. Despite that, the effect that was
identified may be partly related to poultry managerial practices regarding the use of
subsidies provided by the European Union for purchasing machinery, irrespective of
the size and needs of companies.

Conclusions
This analysis provides the first application of the double-bootstrapping DEA procedure to
the poultry meat industry. Specifically, it measured the bias-corrected efficiency scores

684 World's Poultry Science Journal, Vol. 67, December 2011

 Efficiency analysis in Greek poultry: I. Keramidou and A. Mimis

for a sample of Greek poultry companies during the period 1994−2007. The analysis of
pure technical efficiency scores showed an increase trend of technical inefficiencies over
the study period. In order to determine the inefficiency sources, technical efficiency
scores were related to different managerial practices and some elements of the
industrial environment. For this purpose, a bootstrap truncated regression model was
implemented. From this analysis it was concluded that being a member of a company
group and adopting flexible practices are associated with a company being technically
efficient, and that a higher demand for poultry meat promotes the company's
performance. The variables that are significantly negative related to technical
efficiency, and hence restrict company performance, include company size and
innovation activity. Furthermore the businesses age and vertical integration do not
have a significant impact on performance. This is also the case for the level of
average wage, capital intensity, and Greek integration into the EMU.

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