Efficiency beyond the stage in Italian theatrical firms

In Italy, as in many European countries, the performing arts (PA) receive public subsidies, raising concerns about the efficient management of companies in this sector, particularly opera houses, which receive about 50% of Italy’s annual PA funding. Within this context, this study evaluates the output-oriented technical and scale efficiency of Italian theatrical firms from 2006 to 2014, using total operating revenues as the measure of artistic output, and employees and total assets as inputs. Nonparametric efficiency measurement techniques, including Free Disposal Hull (FDH) and Data Envelopment Analysis (DEA), are applied to accommodate the flexible production technology of Italian theatres. Additionally, a two-stage double-bootstrap DEA examines the impact of subsidies and other factors on technical efficiency. Theatrical firms are divided into three groups: theatre production companies, permanent theatres, and opera houses. Results show significant inefficiency, with an average bias-corrected technical efficiency score of 0.25 and a scale efficiency score of 0.80. Opera houses are also found to be the most efficient firms in the sample. Double-bootstrap DEA regressions, validated by separability tests and second-stage OLS regressions, reveal that public subsidies enhance efficiency for all theatres and production companies but are insignificant for opera houses. Younger firms and those organized as corporations are more efficient than older firms or those with other legal structures. Regional disparities are evident, with theatres in southern Italy being the least efficient. These findings suggest several policy implications for improving efficiency in the Italian PA sector.