Technology and the optimal size of the firm‏Evidence from manufacturing firms in the first year of the second, third, and fourth development plans

The Size of The firm varies according to the technology levels and production efficiency of a firm depends on ideal situation of these two factors. In this regard, the level of technology used in the manufacturing process of a firm requires optimal size of firm in an industry. Thus, this research aims to shed light on the impact of technology on the distance of firm’s production from its optimal size in the industry. Using R&D intensity index, manufacturing firms in Iran are classified into high, medium, and low levels in terms of technology. In addition, Kumanor-Wilson method is applied to determine the optimal size of manufacturing firms in terms of output value criterion. Using Panel data method related to 547 firms of manufacturing industries during 1995 to 2005, the results indicate that, on the one hand, the distance of firms’ production from output optimal size in industryyy has a significant relationship with technology level at the significance level of 5 percent. On the other hand, the findings show that as technology increases, the distance of firms’ production from its optimal level in industry is reduced and manufacturing firms work more efficiently. From policy point of view, this finding explains the importance of technology in approaching firms’ activity to its optimal size in industry which leads to the survival of firms and also prevention of its possible exit from the industry.