Manufacturing Performance and Organizational Practices: Evidence from an Emerging Economy

Abstract

Assessing productive efficiency is vital for enhancing the manufacturing sector’s contribution to the economic growth of emerging countries like Bangladesh. However, there has been no research evaluating the productive efficiency of the manufacturing sector in Bangladesh concerning organizational factors. This study examines Bangladesh’s manufacturing sector, concentrating on technical performance. It uncovers reasons for the sector's limited contribution to the nation's industrial foundation. Nonparametric frontier models were employed to estimate technical efficiency, revealing compelling insights via diverse econometric techniques. According to the results, the manufacturing performance in 2019 exhibited a heightened disparity across subsectors compared to 2012, with some subsectors improving their efficiency while others experiencing a decline. Organizational practices were identified as having a modest impact on manufacturing performance. Subsectors characterized by higher levels of labor intensity demonstrated significantly superior economic performance compared to other subsectors. Some previously efficient subsectors, such as luggage, printing, and cement production, lost efficiency, while cocoa, textiles, jute-related industries, chocolate, sugar confectionery, and polythene manufacturing showed improvement in recent years. In brief, Bangladesh’s manufacturing sector’s performance declined from 2012 to 2019, with widening industry disparities. Subsectors that generated export revenue displayed unsatisfactory performance, highlighting the need for organizational improvement.