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The Effect of Competitive Advantage on the Economic Performance of Spanish Agro-Food Firms

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  • Albisu, Luis Miguel
  • Mamaqi, Xhevrie

Abstract

The objective of this work is to analyse the relative importance of three groups of competitive advantage factors on firms’ results of the Spanish agro-food industry. Competitive advantage factors correspond to three aspects: agro-food firms internal sources called, in this study, Potential Resources (RP); agro-food firms relationships with other firms, which are called Specific Firms Relationships (RE); and, the market and industry characteristics plus the industrial localisation, which are included in the so called Market Structure and Industry Location (EMI). Seven hypotheses have been formulated to asses direct and indirect relationships between RP, RE, EMI and economic Results (R) specifying causality directions between explicative indicators for each competitive factor. The seven hypotheses have been combined in a hypothetical model with structural equations defining firms’ competitiveness. A sample of 294 firms has been used and 17 variables related to competitive advantages have been selected. Indicators related to Potential Resources refer to technological levels, development of new products as well as promotion and advertising activities. Agro-food firms’ relationships are taken into account introducing variables accounting for relationships with suppliers, distributors and other firms. The Market Structure and Industry are taken into account considering the concentration degree of the food distribution firms, entry of new firms into the market and product prices, among others. Results have been measured with indicators measuring investment over sales, added value and export intensity. Results indicate that Potential Resources and the Specific Firms Relationships explain better the variability of the Results with a strong relationship between those two groups of variables. Altogether this analysis supports 4 out of the 7 proposed hypotheses. The most important variables influencing results are product and process innovations as well as relationships with suppliers.

Suggested Citation

  • Albisu, Luis Miguel & Mamaqi, Xhevrie, 2008. "The Effect of Competitive Advantage on the Economic Performance of Spanish Agro-Food Firms," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria 49765, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa110:49765
    DOI: 10.22004/ag.econ.49765
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    References listed on IDEAS

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    1. Geroski, Paul A, 1988. "In Pursuit of Monopoly Power: Recent Quantitative Work in Industrial Economics," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(2), pages 107-123, April.
    2. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    3. James D. Shaffer, 1980. "Food System Organization and Performance: Toward a Conceptual Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(2), pages 310-318.
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