Technological Innovation, CEO Characteristics and Firm Cost Efficiency:
An Application of the Stochastic Cost Frontier Model to Thai Manufacturers
This study employs the World Bank’s 2006 Enterprise Survey (Manufacturing Survey) and the stochastic cost frontier and cost inefficiency effects models to empirically examine the significant sources of technological innovation and CEO characteristics, as well as other factors related to the cost efficiency of Thai manufacturers. Technological innovation, CEO education and firm size are significantly and positively related to Thai manufacturers’ cost efficiency. Their production costs also see decreasing returns to scale with a high level of cost inefficiency. In addition, the maximum likelihood tobit regression model is used to empirically investigate the determinants of CEO characteristics and other factors affecting Thai manufacturers’ technological innovation. The results reveal that CEO education and gender, firm size, exports and the supply of professional workers have a significant and positive correlation with a firm’s technological innovation. Empirically evidence-based policies and recommendations to enhance the cost efficiency and technological innovation of Thai manufacturers are provided.