Evaluating Level Efficiency Versus Growth Efficiency in the Indian Automobile Industry in a Non-parametric DEA Approach

Abstract

This article examines level (static) efficiency vis-à-vis growth (dynamic) efficiency for the Indian automobile sector which faces intense competition following the liberalization policies of 1991. In recent times, with stricter environmental norms and rising costs of production, the industry faces an uphill task to keep the costs down to remain relevant in the global market characterized by an oligopolistic market structure with sticky output price phenomenon. To remain profitable in such a hyper competitive market, a firm needs to innovate constantly and manage the costs by ensuring optimality in production, distribution and the entire supply chain. This requires that a firm needs to have dynamic efficiency along with static efficiency so as to achieve cost competitiveness. The empirical findings of dynamic efficiency of our study provide deeper insights regarding the growth strategy behaviour of firms in the Indian automobile industry.