What is the percentage change in the labor partial productivity measure for SunPath between 2015 and 2022?

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Design/methodology/approach
Practical implications
Originality/value
Acknowledgements
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What is the percentage change in the labor partial productivity measure for Sunpass between 2015 and 2016?
Which of the following is a partial measure of productivity?
Which of the following is the total measure of productivity?

Mohd Azrai Azman (Faculty of Architecture, Planning and Surveying, Universiti Teknologi MARA, Cawangan Sarawak, Kota Samarahan, Malaysia)

Zulkiflee Abdul-Samad (Faculty of Built Environment, University of Malaya, Kuala Lumpur, Malaysia)

Boon L. Lee (QUT Business School, Economics and Finance, Queensland University of Technology, Brisbane, Australia)

Martin Skitmore (Faculty of Society and Design, Bond University, Robina, Australia)

Darmicka Rajendra (Faculty of Society and Design, Bond University, Robina, Australia)

Nor Nazihah Chuweni (Department of Built Environment Studies and Technology, Faculty of Architecture, Planning and Surveying, Centre of Studies for Estate Management, Universiti Teknologi MARA, Cawangan Perak, Kampus Seri Iskandar, Seri Iskandar, Malaysia)

Abstract

Purpose

Total factor productivity (TFP) change is an important driver of long-run economic growth in the construction sector. However, examining TFP alone is insufficient to identify the cause of TFP changes. Therefore, this paper employs the infrequently used Geometric Young Index (GYI) and stochastic frontier analysis (SFA) to measure and decompose the TFP Index (TFPI) at the firm-level from 2009 to 2018 based on Malaysian construction firms' data.

Design/methodology/approach

To improve the TFPI estimation, normally unobserved environmental variables were included in the GYI-TFPI model. These are the physical operation of the firm (inland versus marine operation) and regional locality (West Malaysia versus East Malaysia). Consequently, the complete components of TFPI (i.e. technological, environmental, managerial, and statistical noise) can be accurately decomposed.

Findings

The results reveal that TFP change is affected by technological stagnation and improvements in technical efficiency but a decline in scale-mix efficiency. Moreover, the effect of environmental efficiency on TFP is most profound. In this case, being a marine construction firm and operating in East Malaysia can reduce TFPI by up to 38%. The result, therefore, indicates the need for progressive policies to improve long-term productivity.

Practical implications

Monitoring and evaluating productivity change allows an informed decision to be made by managers/policy makers to improve firms' competitiveness. Incentives and policies to improve innovation, competition, training, removing unnecessary taxes and regulation on outputs (inputs) could enhance the technological, technical and scale-mix of resources. Furthermore, improving public infrastructure, particularly in East Malaysia could improve regionality locality in relation to the environmental index.

Originality/value

This study contributes to knowledge by demonstrating how TFP components can be completely modelled using an aggregator index with good axiomatic properties and SFA. In addition, this paper is the first to apply and include the GYI and environmental variables in modelling construction productivity, which is of crucial importance in formulating appropriate policies.

Keywords

Construction firms
Total factor productivity
Geometric young index
Stochastic frontier analysis
Environmental variables
Developing economies
Malaysia

Acknowledgements

The authors thank the anonymous reviewers for their comments on the manuscript.

Citation

Azman, M.A., Abdul-Samad, Z., Lee, B.L., Skitmore, M., Rajendra, D. and Chuweni, N.N. (2022), "How technological, environmental and managerial performance contribute to the productivity change of Malaysian construction firms", Engineering, Construction and Architectural Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/ECAM-11-2021-1018

Publisher

Emerald Publishing Limited

What is the percentage change in the labor partial productivity measure for Sunpass between 2015 and 2016?

The labor partial productivity measure for 2015 is $300,000 divided by $40,000 or 7.5. For 2016 it is $330,000 divided by $43,000 or 7.67. The percentage change between 2015 and 2016, then, is (7.67 - 7.5)/7.5 or 0.17 divided by 7.5 = 2.33%. Various financial data for SunPath Manufacturing for 2015 and 2016 follow.

Which of the following is a partial measure of productivity?

A partial productivity measure relates output to a single input; examples include labour productivity (output per hour worked), capital productivity (output per unit of capital), and energy productivity (output per joule of energy used).

Which of the following is the total measure of productivity?

The Solow residual, which is usually referred to as total factor productivity, measures the portion of an economy's output growth that cannot be attributed to the accumulation of capital and labor.