Business decision making, production technology and process efficiency

Abstract

Purpose

This paper aims to analyze the influence of business decision on process efficiency and production technology in the communication equipment and consumer electronics sectors of Indian hardware electronics industry after liberalisation.

Design/methodology/approach

The study is based on 26 sample firms, belonging to the two sectors of Indian hardware electronics industry with continuous operation from 1993 to 2004. Estimation of the contribution of production technology and process efficiency to output growth is based on stochastic production function. Influence of business decisions on production technology and process efficiency is based on indigenously developed business decision model.

Findings

Sectors, in general, fail to achieve improvement in process efficiency in comparison to progress in production technology. The business decisions factors like improve capacity utilization and operational efficiency together with decisions to adopt vertical integration to help sample firms to achieve both progress in technology and improvement in process efficiency in the sectors. However, R&D investments and technology imports are costly for both, indicating inadequate and inappropriate investments made by the sample firms. Disinclination of firms towards improving or developing their own technology is evident from their high dependence on import of technology.

Research limitations/implications

This study only analyses the role and importance of business decision factors in the past. What lies ahead is to meet the challenges and improve performance to withstand the stiff competition. This study suggests for further research about how to improve on the effectiveness of business decision factors that can help Indian hardware electronics industry to survive competition.

Originality/value

The paper develops a business decision model which analyses the impact of business decisions on production technology and process efficiency for a sample of firms in Indian hardware electronics industry.

Citation

Majumdar, R. (2014), "Business decision making, production technology and process efficiency", International Journal of Emerging Markets, Vol. 9 No. 1, pp. 79-97. https://doi.org/10.1108/IJoEM-03-2011-0023