Macroeconomic and Microeconomic Determinants of Efficiency of Indian Construction & Engineering Firms: An Investigation

Abstract

In an intensely competitive business world, it is of great importance that the firms must perform efficiently for long-term sustainability. The present study made a modest effort to shed some light on the efficiency of the select 47 construction and engineering firms and the different microeconomic and macroeconomic factors affecting such efficiency during the period 1999-2000 to 2018-2019. For the purpose of this study, Stochastic Frontier Analysis was used primarily to determine the firm-level efficiency scores. Subsequently, the determinants of such firm-level efficiency were looked into using Panel Censored Tobit Regression Model. The results of the study showed that leverage, size, age, openness, exchange rate and price factor were the important determinants of the efficiency of the construction and engineering firms during the period of study.