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Abstract
The cottage food processing industry in
Thailand comprises mainly small-scale enterprises such as the
‘housewives groups’ that consist of a number of housewives
who combine their food processing activities in a particular
district or village. The effects of various factors on the
performance of these housewives groups is assessed using
survey data to estimate a stochastic input distance model. Our
results show that membership of vertical strategic alliances at
a high level is associated with higher levels of technical
efficiency. Other factors positively influencing technical
efficiency within these groups are the level of experience of
group members, the ratio of workers to total members,
government support, the community base of the group as
opposed to private ownership, and the availability of funds to
invest in business activities that have been derived from
savings activities by group members. The ability of housewives
groups to exploit cost complementarities by combining fruit
and vegetable processing activities is tested by estimating scope
and diversification economies for fruit and vegetable processed
outputs. While diversification economies were found to exist,
the more rigorous test for scope economies did not support
their existence.