WHAT DRIVES FIRM PROFITABILITY? A MULTILEVEL APPROACH TO THE SPANISH AGRI-FOOD SECTOR

Ferdaous Zouaghi, Stefan Hirsch and Mercedes Sanchez Garcia

No 244762, 56th Annual Conference, Bonn, Germany, September 28-30, 2016 from German Association of Agricultural Economists (GEWISOLA)

Abstract: Strategic management research has demonstrated the importance of firm resources and industry structure as drivers of profitability. However, less is known about how factors related to firms´ geographical locations affect profitability. In this article, we estimate firm-, industry-, year-, and region-specific effects on agri-food firm profitability in Spain. We apply the multilevel approach of Hierarchical Linear Modeling to a sample of 3,273 agri-food firms operating in different geographical districts during the time span 2006-2013. The results reveal the dominance of firm-specific effects which contribute up to 48.8% to variance in profitability. Moreover, firm size, growth, financial risk as well as innovation activity turn out as significant profit drivers. Although firm-effects have a stronger impact than industry affiliation and location, the results indicate that structural industry factors such as concentration and size as well as territorial factors such as regional education and unemployment influence profitability. Moreover, location in rural districts is not necessarily a handicap for firm profitability.

Keywords: Agribusiness; Industrial Organization; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 26
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-cse and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/244762/files/Hirsch.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:gewi16:244762

DOI: 10.22004/ag.econ.244762

Access Statistics for this paper

More papers in 56th Annual Conference, Bonn, Germany, September 28-30, 2016 from German Association of Agricultural Economists (GEWISOLA) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().