Comparative efficiency of producer cooperatives and conventional firms in a sample of quasi-twin companies

We investigate the comparative technical efficiency of producer cooperatives (PCs)and conventional firms (CFs) by looking at the performance of a mixed sample ofSardinian wine producing companies over the period 2004-2009. Thanks to thesimilarity of the habitats in which the firms operate, the peculiarities of theproduction environment, and the careful measurement of some key inputs throughsuitable aggregation of accounting data, the observed units are “twins” in all nonorganizationalrespects, providing one natural setting for comparative work. Theanalysis is carried out in two steps: in the first, technical efficiency indicators foreach firm in each year are calculated using Data Envelopment Analysis (DEA) withreference to a common production frontier. Subsequently, the measured efficiencyscores become the dependent variables of a pooled truncated maximum likelihoodregression in which we control for external covariates and firm type. To assess theprocedure’s appropriateness, we test whether the separability condition that thesupport of the output variables does not depend on the set of external variables issatisfied. Moreover, a double bootstrap algorithm is run to compute valid standarderrors and confidence intervals of the coefficients estimates. According to ourfindings cooperatives are less technically efficient than their capitalist counterpartsand displays decreasing returns to scale. Both results are particularly worrying inlight of the main challenges (liberalization of EU planting rights and climatechanges) facing the wine industry in the near future.Keywords: comparative firm efficiency, data envelopment analysis, double