Industrial expansion path: Efficiency analysis in the iron - steel industry (2000-2011)

The aim of this study is to examine the efficiency measurement methods in the guidance of theoretical framework with reference to the basic dynamics of the competitiveness. The main objective is to internalize the methods that will make contribution to applied literature, to measure the short term (static) and long term (dynamic) individual performances of the firms that take place in the Iron ? Steel Industry of Turkey with efficiency criterias and to put forth the potential for future improvement in the performances of firms through the industrial expansion path with mergers method. For this purpose the basic hypothesis of the study can be listed as follows: 1)If the firms that take place in the industry can transfer the quasi-fixed inputs (capital stock) to the following period without incurring the cost of adaptation then they will not face with the problem of resource allocation for investment in quasi-fixed inputs. In this case the source of the inefficiency is short termed. Short term policies should be suggested. (vice versa) 2)A possible merger between the firms involved in the industry provides a potential gain to the firms which remain outside through both merging and positive externality. The database which is subject to the study, is obtained from the balance sheet and income statements of the firms, registered to Istanbul Stock Exchange, that operates in the manufacturing industry of Turkey for the period of 2000 ? 2011. Static Data Envelopment Analysis (DEA), Dynamic DEA, simulation based Bootsrap DEA methods are used among the efficiency measurement methods for the application. At this point, the applied literature about the static and dynamic efficiency that take place in the theoretical framework was evaluated. In our study the efficiency scores that were resulted from the horizontal mergers in the iron ? steel industry which is subject to the application is compared with the dynamic and static efficiency scores of pre-merger firms which are involved in our analysis. Accordingly, it is seen that a possible merger between the firms involved in the industry provides a potential gain both to the firms which remained outside and to the merging firms. This results verify both hypothesis mentioned above. Keywords: The Dynamics of the Competitiveness, Static Efficiency, Dynamic Efficiency, Merger