Determinants of firm-level performance: A study of Indian manufacturing and service sectors

The present paper is an attempt the firm level performance of manufacturing and service sectors in India in terms of the level of technical change, technical efficiency change, and productivity growth. The study uses the Malmquist Productivity Index (MPI) model to estimate the total factor productivity growth index for manufacturing and service sectors with decomposition into catching up effect and the innovation effect of the common set of over the study period during 1991?92 to 2010?11. For analytical convenience, this period has been divided into two sub-periods, namely, 1990?91 to 1999?2000 (Phase-I: Liberalization) and 2000?01 to 2010?2011 (Phase-II: Liberalization). The study also examines the total factor productivity growth (TFPG) of manufacturing and service sectors and the factors determining the level of total factor productivity growth of both sectors with the help of the regression model. The study also recommends that for the enhancement of TFPG the level of openness, raw material, energy, and advertising, profit margin, and investment are the major contributions.