Volume 12, No. 1, June 2013

 

Microenterprise Origins and Efficiency in Mexico

Rafael Otero
Department of Finance and Economics, The University of Texas at Brownsville, U.S.A.
José Pagán

Center for Health Innovation, The New York Academy of Medicine, U.S.A.

Steve Lovett

Department of Management and Marketing, The University of Texas at Brownsville, U.S.A.

Abstract

This study focuses on the technical efficiency of microenterprises. We use data from Mexico’s National Survey of Microenterprises to estimate a stochastic frontier production model, and we find that the reason the owner started the business is significant in explaining variations in the levels of technical efficiency. Those who inherited the business or started it because of family tradition initially ran more efficient operations. These owners may have benefited from better knowledge and contacts. Over time, however, those who started their businesses to increased their income or, because they could not find a job, became more efficient. We argue that these owners benefited from greater motivation to be successful.

 
   
Key words: microenterprises; technical efficiency; ENAMIN; Mexico
JEL classification: M13; L26

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