Academic journal article International Review of Management and Business Research

Performance of Textile Sector of Pakistan: Application of Data Envelopment Analysis Approach

Academic journal article International Review of Management and Business Research

Performance of Textile Sector of Pakistan: Application of Data Envelopment Analysis Approach

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Performance means the completion of tasks within given level of accuracy, cost and time. According to Richard et al. (2009) performance at organizational level includes achievement of end results (organizational goals). It is widely used dependent variable by many researchers in past. March and Sutton (1997) observed that 23% of research papers published in Strategic management journal, academy of management journal an administrative science, used performance as dependent variable in last three years. Performance can be measured by different ways for instance financial ratios, market share, growth, exports, product, employment and efficiency analysis. Mostly, researchers have measured business performance through financial variables but it should be measured through productivity and efficiency analysis (Kalirajan and Shand, 1999).

According to Fried et al (2008), financial variables are influenced by variations in prices of input and output and also by the productivity and efficiency. This study will also measure the performance of textile sector through technical efficiency. Technical efficiency refers the ability of any firm to generate maximum output within given level of input and technology (Coelli et al., 2005). It is considered in relative terms as production abilities of firm are compared with the best practices of input-output combinations (Alauddin et al., 1993).

Manufacturing sector is the 3rd largest sector of Pakistan and contribute in GDP at large extent (Credit Rating Company Limited, 2010).There are more than 13 sub sectors that are collectively known as large manufacturing sector and among these sectors textile is one of the largest subsector. According to the Federal Bureau of Statistics (2010), the growth rate of textile sector was -0.70 % in 2009 and -1.78% in 2010. The ruthless conditions of textile sector require to analyse the current condition of this sector and also to take necessary steps for its betterment. Textile sector is the back bone of Pakistan's Economy. Pakistan's textile sector has been the 8th largest exporter of textile products and 4th largest manufacturer of cotton in Asia. Its contribution towards GDP is 9.5% and providing employment to more than 15 million workforce of Pakistan. This sector significantly contributes in real GDP that's why it is necessary to analyse its performance and efficiency.

Research Oobjectives

The basic objective of this study is to measure the efficiency of listed textile firms of Pakistan, for the period of 2006 to 2011. There are following specific objectives of this study.

i. To measure the performance of listed textile firms of Pakistan.

ii. To identify factors which haveaffect on the performance of listed textile sector of Pakistan;

iii. To suggest valuable and facts based recommendation for the improvement of the performance of the listed textile firms of Pakistan.

Hypotheses

According the above mentioned objectives, six hypotheses have been developed for this study by reviewing the different studies on performance and firm specific factors.

Ho= There is no relationship between firm size and performance of textile sector of Pakistan.

H1 = There is relationship between firm size and performance of textile sector of Pakistan.

Ho= There is no relationship between firm age and performance of textile sector of Pakistan.

H2 = There is relationship between firm age and performance of textile sector of Pakistan.

Ho= There is no relationship between market share and performance of textile sector of Pakistan.

H3 = There is relationship between market share and performance of textile sector of Pakistan.

Ho= There is no relationship between leverage (financial constraints) and performance of textile sector of Pakistan.

H4 = There is relationship between leverage (financial constraints) and performance of textile sector of Pakistan. …

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