Efficiency and profitability: An inverse relationship according to the size of Austrian firm?

This paper tries to shed some light on the Austrian situation of the efficiency of firms according to their size class. For total Austria we find that large firms seem to be more efficient with respect to value-added per employee, but small firms are more efficient with respect to the gross residual quota and to profitability (= (value added — wages)/(value added)). On the other side a similar analysis for Upper Austria does not show this result. Here firms with the size of 500 employees or more seem to be the most efficient with respect to efficiency and profitability, and only the employment cost efficiency criteria reveals the picture, the smaller the firm, the more cost effective it seems to be. Hence, the result obtained from most studies in Europe, that at least the biggest firms are not the most efficient, can only be confirmed to a limited extent for (Upper) Austria.