Use of Accounting and the Efficiency of Microenterprises in Mexico

Abstract

This study focuses on the technical efficiency of Mexican microenterprises. We estimate a stochastic frontier production with inefficiency effects model to determine the effect on the efficiency of Mexican microenterprises to achieve profits by using data from Mexico’s 2010 National Survey of Microenterprises (Encuesta Nacional de Micronegocios, ENAMIN). The findings indicate that about half of the surveyed microenterprises have no accounting system in place, with the majority of those remaining split between using an outside accountant, and an in-house notebook. Microenterprises using an outside accounting service were more efficient at achieving profitability than those firms with no accounting system.