Economies of Scale in Thailand’s Small and Medium Enterprises
Keywords:
Economies of Scale, SME Promotion Policy, Log-Log Model, Cost Function, Small and Medium EnterprisesAbstract
This study aimed to analyze and compare economies of scale of small and medium enterprises (SMEs) in Thailand by firm size and business sector, and to propose evidence-based, size-specific policies for SME promotion. The data comprised 43,184 financial records drawn from the open database of the Office of Small and Medium Enterprises Promotion (OSMEP) for fiscal year 2021, covering 77 provinces and classified into three firm sizes (micro, small, and medium) and four business sectors (trade, manufacturing, agriculture, and services). One-way ANOVA was applied together with a log-log model estimated by weighted least squares, testing the null hypothesis that β = 1. Thai SMEs overall recorded β = 1.026 (p < .001), indicating slight diseconomies of scale. When disaggregated by firm size, small firms (β = 0.992) and medium firms (β = 0.961) showed significant economies of scale, whereas micro enterprises had not yet reached the minimum efficient scale (β = 1.011). By sector, all sectors recorded β above 1.00, with agriculture the highest (β = 1.064) and services the lowest (β = 1.024). Micro enterprises also recorded the highest net profit margin (37.7%) despite the absence of economies of scale, reflecting an institutional structure in which accounting costs understate true economic costs. The study recommends that OSMEP design size-specific policies, assisting micro enterprises to cross the minimum efficient scale through credit access and clustering programs, and reducing non-production costs for small and medium enterprises so that cost advantages can be fully translated into profit.
References
ADB. (2023). Asia Small and Medium-Sized Enterprise Monitor 2023. Asian Development Bank. https://www.adb.org/publications/asia-sme-monitor-2023
Audretsch, D. B. (1995). Innovation and Industry Evolution. MIT Press.
Audretsch, D. B., & Mata, J. (1995). The Post-Entry Performance of Firms: Introduction. International Journal of Industrial Organization, 14(4), 413–419. https://doi.org/10.1016/0167-7187(95)00509-9
Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Small vs. Young Firms Across the World: Contribution to Employment, Job Creation, and Growth (Policy Research Working Paper No. 5631). World Bank. https://doi.org/10.1596/1813-9450-5631
Bank of Thailand. (2020). The Private Sector Amid the COVID-19 Storm: SME Vulnerabilities and Relief Measures. https://www.bot.or.th
Baumol, W. J., Panzar, J. C., & Willig, R. D. (1982). Contestable Markets and the Theory of Industry Structure. Harcourt Brace Jovanovich.
Beck, T., Demirgüç-Kunt, A., & Levine, R. (2005). SMEs, Growth, and Poverty: Cross-Country Evidence. Journal of Economic Growth, 10(3), 199–229. https://doi.org/10.1007/s10887-005-3533-5
Charoenrat, T., & Harvie, C. (2013). Technical Efficiency of Thai Manufacturing SMEs: A Stochastic Frontier Analysis. Australasian Accounting, Business and Finance Journal, 7(1), 99–121. https://doi.org/10.14453/aabfj.v7i1.7
Charoenrat, T., & Harvie, C. (2014). The Efficiency of SMEs in Thai Manufacturing: A Stochastic Frontier Analysis. Economic Modelling, 43, 372–393. https://doi.org/10.1016/j.econmod.2014.08.013
Chen, K.-H., Chen, P.-H., Elston, J. A., & Zhang, Y. (2023). Are Family Firms More Efficient? Revisiting the U-Shaped Curve of Scale and Efficiency. Small Business Economics, 61(3), 983–1008. https://doi.org/10.1007/s11187-022-00720-8
Christensen, L. R., & Greene, W. H. (1976). Economies of Scale in U.S. Electric Power Generation. Journal of Political Economy, 84(4), 655–676. https://doi.org/10.1086/260464
Coelli, T., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An Introduction to Efficiency and Productivity Analysis (2nd ed.). Springer.
Dinh, H. T., Mavridis, D. A., & Nguyen, H. B. (2010). The Binding Constraint on Firms' Growth in Developing Countries (Policy Research Working Paper No. 5485). World Bank. https://doi.org/10.1596/1813-9450-5485
Erdogan, A. I. (2023). Drivers of SME growth: Quantile Regression Evidence from Developing Countries. SAGE Open. https://doi.org/10.1177/21582440231163479
Hsieh, C.-T., & Klenow, P. J. (2009). Misallocation and Manufacturing TFP in China and India. The Quarterly Journal of Economics, 124(4), 1403–1448. https://doi.org/10.1162/qjec.2009.124.4.1403
Kumbhakar, S. C., & Lovell, C. A. K. (2000). Stochastic Frontier Analysis. Cambridge University Press.
Mata, J., & Machado, J. A. F. (1996). Firm Start-Up Size: A Conditional Quantile Approach. European Economic Review, 40(6), 1305–1323. https://doi.org/10.1016/0014-2921(95)00068-2
OECD. (2021). OECD SME and Entrepreneurship Outlook 2021. OECD Publishing. https://doi.org/10.1787/97a5bbfe-en
OECD. (2025). Unleashing SME Potential to Scale Up.OECDPublishing.https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/11/unleashing-sme-potential-to-scale-up
Office of Small and Medium Enterprises Promotion. (2021). Economic Projection of Thai MSMEs, 2021. https://www.sme.go.th
Office of Small and Medium Enterprises Promotion. (2023). MSME Situation Report 2023. https://www.sme.go.th
SCB Economic Intelligence Center. (2024). The Path to Overcoming Challenges Toward Sustainable Growth. SCB EIC. https://www.scbeic.com
Siripatthanasophon, S. (2020). The Novel Coronavirus Pandemic (COVID-19): Impact on Thai Small and Medium Enterprises and Recovery Strategies. Journal of Researchers, 25(2), 9–24.
Suttipun, M., & Insee, K. (2024). R&D Intensity and Firm Performance of SME Firms in Thailand: The Moderating Role of Firm Size. Cogent Business & Management, 11(1), 2304370. https://doi.org/10.1080/23311975.2024.2304370
Thailand Development Research Institute. (2023). Thai SMEs and the Mission to Build Economic Security Amid Change. https://tdri.or.th
Tukey, J. W. (1977). Exploratory Data Analysis. Addison-Wesley.
Tybout, J. R. (2000). Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?. Journal of Economic Literature, 38(1), 11–44. https://doi.org/10.1257/jel.38.1.11
World Bank. (2025). SME Finance. https://www.worldbank.org/en/topic/smefinance
Yangchuay, K., Charoenkitthanalap, S., Sangthong, M., & Emaksorn, S. (2026). Environmental, Social, and Governance Performance, Audit Quality, and the Earnings Response Coefficient: Empirical evidence from Thailand. Academic Journal of Management Technology, 7(1), 82–101.
Yoshino, N., & Taghizadeh-Hesary, F. (2018). Role of SMEs in Asia and Their Difficulties in Accessing Finance (ADBI Working Paper No. 911). Asian Development Bank Institute. https://www.adb.org/publications/role-smes-asia-and-their-difficulties-accessing-finance
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Faculty of Management Technology, Rajamangala University of Technology Isan Surin Campus
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
บทความที่ได้รับการตีพิมพ์เป็นลิขสิทธิ์ของคณะเทคโนโลยีการจัดการ มหาวิทยาลัยเทคโนโลยีราชมงคลอีสาน วิทยาเขตสุรินทร์
ข้อความที่ปรากฏในบทความแต่ละเรื่องในวารสารวิชาการเล่มนี้ เป็นความคิดเห็นส่วนตัวของผู้เขียนแต่ละท่านไม่เกี่ยวข้องกับคณะเทคโนโลยีการจัดการ มหาวิทยาลัยเทคโนโลยีราชมงคลอีสาน วิทยาเขตสุรินทร์ และคณาจารย์ท่านอื่นๆในมหาวิทยาลัยฯ แต่อย่างใด ความรับผิดชอบองค์ประกอบทั้งหมดของบทความแต่ละเรื่องเป็นของผู้เขียนแต่ละท่าน หากมีความผิดพลาดใดๆ ผู้เขียนแต่ละท่านจะรับผิดชอบบทความของตนเองแต่ผู้เดียว
