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Growth Dynamics of Dairy Processing Firms in the European Union

  • Gardebroek, Cornelis
  • Turi, Kedir N.
  • Wijnands, Jo H.M.
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    The structure of the dairy processing industry in the European Union has changed enormously in recent decades. In many countries the industry is characterized by a few large companies with a big market share accompanied by many small processors that often produce for niche markets. This paper investigates which factors relate to growth of dairy processing firms. Using a unique ten-year panel data set and recently developed dynamic panel data estimators, the growth process of dairy processors is investigated for six rather diverse European countries. The data structure and the estimation method allow for dealing with endogeneity issues in an appropriate way. Firm size growth measured in total assets is found to be affected by firm size, firm age and financial variables. Growth in number of employees is only affected by firm age and lagged labour productivity. Implications for these results are given in the final section of the paper.

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    Paper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51473.

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    Date of creation: 2009
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    Handle: RePEc:ags:iaae09:51473
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    8. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
    9. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
    10. Thomas F. Cooley & Vincenzo Quadrini, 1999. "Financial Markets and Firm Dynamics," Working Papers 99-14, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. Campello, Murillo, 2006. "Debt financing: Does it boost or hurt firm performance in product markets?," Journal of Financial Economics, Elsevier, vol. 82(1), pages 135-172, October.
    12. Evans, David S., 1986. "Tests of Alternative Theories of Firm Growth," Working Papers 86-36, C.V. Starr Center for Applied Economics, New York University.
    13. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October.
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