Small Business Economics

, Volume 40, Issue 2, pp 335–350 | Cite as

Firm size and efficiency in the German mechanical engineering industry

  • Alexander Schiersch


Research usually finds a positive size-efficiency relationship, but few studies focus on sectors dominated by small and medium-sized firms (SMEs). This paper fills this gap by analyzing this relationship in the German mechanical engineering industry sector, which is both successful and increasingly dominated by SMEs. The analysis, using a large and representative dataset, finds that small and large firms are, on average, the most efficient ones, while medium-sized firms have, on average, the greatest inefficiencies. Thus, the size-efficiency relationship is U-shaped rather than monotonically increasing. Additionally, the analysis finds that companies with active owner(s) are significantly more efficient and that capital firms are less efficient than firms with personally liable owners. Being located in either East or West Germany has no effect.


Efficiency DEA Mechanical engineering firms Germany 

JEL Classifications

C14 L25 L60 L26 



I would like to thank the anonymous referees for useful comments and suggestions.


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Copyright information

© Springer Science+Business Media, LLC. 2012

Authors and Affiliations

  1. 1.German Institute for Economic ResearchBerlinGermany

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