An empirical study on measuring technical performance of industry based on ISIC classification

Measuring technical efficiency of different industries plays an important role on making managerial decisions. In this paper, we present an empirical study to measure technical efficiencies of various industries based on two-digit ISIC classification method in Iran. The proposed model uses stochastic frontier analysis (SFA) and implements maximum likelihood estimation (MLE) to estimate the parameters. The proposed study gathers the necessary data from year 2001 to year 2008 and implemented two methods where the second method is an extended model by using energy as part of efficiency estimation. The results of the survey indicate that auto industry was the most productive sector followed by equipments and the paper industry was among inefficient sectors.