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Determinants of Food Industry Performance – Empirical Evidence Based on a Survey

  • Furtan, William Hartley
  • Sauer, Johannes

This paper empirically investigates the determinants of firms’ performance in the agri-food sector by using recent survey data for Denmark. Treating sales per employee as a proxy for value addition we estimate several bootstrapped regression models to draw conclusions on the marginal effects of potential performance determinants such as the form and nature of ownership, stage of the food chain and commodity sector, new product development, staff quality, firms’ competitive stance, and elements of firms’ strategy. To draw robust inferences we apply, besides the ordinary heteroscedasticity corrected Tobit ML-estimator, a nonparametric least absolute deviations estimator (LAD/CLAD) based on a quantile regression procedure. The results indicate that we cannot reject the hypothesis of no influence of dominant orientation on value added. Rather, firms’ focus on human capital, stage and commodity sector better explains their value addition. We can reject the hypothesis that regional networks have no influence on value added. Differences in location, emphasis on human capital and the negative influence of outsourcing on value added all provide supporting evidence. We reject the hypothesis of no influence of FDI, and moreover propose that FDI has targeted the domestic Danish market as a source of value added.

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File URL: http://purl.umn.edu/6422
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida with number 6422.

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Date of creation: 2008
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Handle: RePEc:ags:aaea08:6422
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  1. Stefano Breschi & Francesco Lissoni, 2001. "Knowledge spillovers and local innovation systems: a critical survey," LIUC Papers in Economics 84, Cattaneo University (LIUC).
  2. Peter Walkenhorst;, 2001. "Determinants of foreign direct investment in the food industry: The case of Poland," Agribusiness, John Wiley & Sons, Ltd., vol. 17(3), pages 383-395.
  3. Derek Baker & Kenneth Baltzer & Anja Skadk�r M�ller, 2006. "Branding behavior in the Danish food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 31-49.
  4. Derek Bosworth & Joanne Loundes, 2002. "The Dynamic Performance of Australian Enterprises," Melbourne Institute Working Paper Series wp2002n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  5. Sonobe, Tetsushi & Hu, Dinghuan & Otsuka, Keijiro, 2004. "From inferior to superior products: an inquiry into the Wenzhou model of industrial development in China," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 542-563, September.
  6. W. Bruce Traill & Matthew Meulenberg, 2001. "Innovation in the food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 18(1), pages 1-21.
  7. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
  8. Christy, Ralph D. & Connor, John M., 1989. "Economic Forces Influencing Value-Added Food Industries: Implications For Southern Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 21(01), July.
  9. Eckhardt Bode, 2004. "The spatial pattern of localized R&D spillovers: an empirical investigation for Germany," Journal of Economic Geography, Oxford University Press, vol. 4(1), pages 43-64, January.
  10. Asheim, Bjorn T. & Coenen, Lars, 2005. "Knowledge bases and regional innovation systems: Comparing Nordic clusters," Research Policy, Elsevier, vol. 34(8), pages 1173-1190, October.
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