Two-Stage Efficiency Measurement and Technological Heterogeneity: Evidence from the Biotechnological Industry in Taiwan

This paper explores the operational and market efficiencies of various biotechnological company formats in Taiwan during the period 2006 to 2008 by adopting the two-stage directional distance function and the meta-frontier concept. It conducts an efficiency assessment by taking into account a five-year time lag between R&D investments and actually obtaining a patent in order to better reflect the actual business operating process and thus more accurately gauge the efficiency of business operations in biotechnological companies. The empirical results show that non-listed companies registered better operational efficiency in the first stage, whereas their market efficiency in the second stage is inferior to that of listed companies when the meta-technology set is used as a basis. The average operation gap ratio and market gap ratio of non-listed companies exceeded those of listed firms, indicating that the technological heterogeneity (i.e., the gap) of non-listed companies is smaller than that of listed ones.