The identification of geographical factors on the determination of the value of agri-food companies

Purpose - The purpose of this paper is to provide evidence about the role of the geography on agri-food firms’ valuations. The goal is to test clusters and agglomeration effects on the SMEs valuations. Design/methodology/approach - The authors propose an empirical test applying a spatial regression analysis on a sample constitute by 306 agri-food SMEs located in two municipalities with different economic characteristics: Murcia and Madrid. In addition, the authors applied the discounted cash flow model in order to estimate the SMEs’ economic value. Findings - The findings show the importance of the geography variables on the SMEs’ performances highlights interesting differences between territories. In particular, the results confirm that the geographical proximity between agri-food firms and between them and external agents is significant on firms’ valuations. The agglomeration effects are verified in both municipality but the density variable present a negative non-linear effect confirming previous studies which indicates that the existence of a large number of firms 05 rise competition, decreasing the economic opportunities of these companies. Originality/value - This study gives interesting insights to policymakers, researchers and practitioners concerning the importance of the relationships among agents, also favoured by a developed infrastructures system in a fully connected environment.