IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Industry, firm, year and country effects on profitability in EU food processing

  • Jan Schiefer


  • Stefan Hirsch


  • Monika Hartmann


  • Adelina Gschwandtner


Registered author(s):

    We decompose the variance of food industry return-on-assets into industry, firm, year and country effects. After determining significance in a nested ANOVA, we estimate the magnitude using components of variance in a large sample of corporations. As a robustness check, we estimate a multilevel model that additionally allows us to estimate the impact of several covariates at each level. The results show that firm characteristics are more important than industry structure in determining food industry profitability. In particular, firm size seems to be an important driver of profitability while firm risk, age and, surprisingly market share have a negative influence.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by School of Economics, University of Kent in its series Studies in Economics with number 1309.

    in new window

    Date of creation: May 2013
    Date of revision:
    Handle: RePEc:ukc:ukcedp:1309
    Contact details of provider: Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP
    Phone: +44 (0)1227 827497
    Web page:

    Order Information: Email:

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June.
    2. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-51, June.
    3. Clark, Todd E. & van Wincoop, Eric, 2001. "Borders and business cycles," Journal of International Economics, Elsevier, vol. 55(1), pages 59-85, October.
    4. Richard J. Sexton, 2000. "Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1087-1104.
    5. Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-86, August.
    6. Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, vol. 89(4), pages 805-826, September.
    7. Teece, David J, 1981. "Internal Organization and Economic Performance: An Empirical Analysis of the Profitability of Principal Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 30(2), pages 173-99, December.
    8. Adelina Gschwandtner, 2004. "Profit Persistence in the "Very" Long Run: Evidence from Survivors and Exiters," Vienna Economics Papers 0401, University of Vienna, Department of Economics.
    9. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2004. "The home country in the age of globalization: how much does it matter for firm performance?," ULB Institutional Repository 2013/14190, ULB -- Universite Libre de Bruxelles.
    10. Tremblay, Victor J, 1985. "Strategic Groups and the Demand for Beer," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 183-98, December.
    11. Caves, R E & Porter, M E, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, MIT Press, vol. 91(2), pages 241-61, May.
    12. Goddard, John & Tavakoli, Manouche & Wilson, John O.S., 2009. "Sources of variation in firm profitability and growth," Journal of Business Research, Elsevier, vol. 62(4), pages 495-508, April.
    13. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
    14. Joyce J. Wann & Sexton Richard J., 1992. "Imperfect Competition in Multiproduct Food Industries with Application to Pear Processing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 980-990.
    15. B. Burcin Yurtoglu, 2004. "Persistence of firm-level profitability in Turkey," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 615-625.
    16. Mueller,Dennis C., 2009. "Profits in the Long Run," Cambridge Books, Cambridge University Press, number 9780521101592, October.
    17. Loderer, Claudio & Waelchli, Urs, 2010. "Firm age and performance," MPRA Paper 26450, University Library of Munich, Germany.
    18. Porter, Robert H, 1985. "On the Incidence and Duration of Price Wars," Journal of Industrial Economics, Wiley Blackwell, vol. 33(4), pages 415-26, June.
    19. Slade, Margaret E, 1987. "Interfirm Rivalry in a Repeated Game: An Empirical Test of Tacit Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 499-516, June.
    20. Waring, Geoffrey F, 1996. "Industry Differences in the Persistence of Firm-Specific Returns," American Economic Review, American Economic Association, vol. 86(5), pages 1253-65, December.
    21. 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.
    22. Sara Schumacher & Michael Boland, 2005. "The effects of industry and firm resources on profitability in the food economy," Agribusiness, John Wiley & Sons, Ltd., vol. 21(1), pages 97-108.
    23. Ollinger, Michael & MacDonald, James, 2000. "Poultry Plants Lowering Production Costs and Increasing Variety," Food Review: The Magazine of Food Economics, United States Department of Agriculture, Economic Research Service, vol. 23(2).
    24. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    25. Christoph R. Weiss & Antje Wittkopp, 2005. "Retailer concentration and product innovation in food manufacturing," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(2), pages 219-244, June.
    26. Goddard, J. A. & Wilson, J. O. S., 1999. "The persistence of profit: a new empirical interpretation," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 663-687, July.
    27. Valerie Y. Suslow, 1986. "Estimating Monopoly Behavior with Competitive Recycling: An Application to Alcoa," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 389-403, Autumn.
    28. Mueller, Dennis C, 1977. "The Persistence of Profits above the Norm," Economica, London School of Economics and Political Science, vol. 44(176), pages 369-80, November.
    29. Aviv Nevo & Catherine Wolfram, 2002. "Why Do Manufacturers Issue Coupons? An Empirical Analysis of Breakfast Cereals," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 319-339, Summer.
    30. Mike Artis & Hans-Martin Krolzig & Juan Toro, 2002. "The European Business Cycle," Economic Working Papers at Centro de Estudios Andaluces E2002/19, Centro de Estudios Andaluces.
    31. André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
    32. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
    33. Andrzej Szymanski & Matthew Gorton & Lionel Hubbard, 2007. "A Comparative Analysis of Firm Performance in Post-socialist Economies: Evidence from the Polish Food Processing Industry," Post-Communist Economies, Taylor & Francis Journals, vol. 19(4), pages 433-448.
    34. Ramos, Raul & Clar, Miquel & Surinach, Jordi, 2003. "National versus sectoral shocks: new evidence for the manufacturing sector in European countries," Economics Letters, Elsevier, vol. 78(2), pages 241-245, February.
    35. Ramon E. Lopez, 1985. "Supply Response and Investment in the Canadian Food Processing Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(1), pages 40-48.
    36. Dorsey, Sarah & Boland, Michael A., 2009. "The Impact of Integration Strategies on Food Business Firm Value," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(03), December.
    37. John Goddard & Manouche Tavakoli & John Wilson, 2005. "Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model," Applied Financial Economics, Taylor & Francis Journals, vol. 15(18), pages 1269-1282.
    38. Chen, Yi-Min, 2010. "The continuing debate on firm performance: A multilevel approach to the IT sectors of Taiwan and South Korea," Journal of Business Research, Elsevier, vol. 63(5), pages 471-478, May.
    39. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2003. "Is performance driven by industry or firm-specific factors? A new look at the evidence," ULB Institutional Repository 2013/14188, ULB -- Universite Libre de Bruxelles.
    40. Karp, Larry S & Perloff, Jeffrey M, 1989. "Dynamic Oligopoly in the Rice Export Market," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 462-70, August.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ukc:ukcedp:1309. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tracey Girling)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.