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What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry
Author(s) -
Gschwandtner Adelina,
Hirsch Stefan
Publication year - 2018
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12201
Subject(s) - profitability index , profit (economics) , food industry , food processing , propensity score matching , industrial organization , matching (statistics) , profit margin , agribusiness , business , persistence (discontinuity) , economics , econometrics , monetary economics , agriculture , microeconomics , marketing , finance , food science , statistics , engineering , mathematics , ecology , chemistry , geotechnical engineering , biology
This paper analyzes persistence and the drivers of profitability in US and EU food processing using GMM estimations. Due to different firm size structures first comparable samples of US and EU food processors are derived using Propensity Score Matching. The GMM results indicate that profit persistence in food processing is lower than in other manufacturing sectors. Firm‐specific drivers of profitability are size and financial risk. Regarding industry characteristics concentration and the growth rate significantly influence profitability. The findings provide insights for the management of US and EU food processing firms aiming to enhance their competitiveness.