What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry

Adelina Gschwandtner and Stefan Hirsch

Manchester School, 2018, vol. 86, issue 3, 390-416

Abstract: This paper analyzes persistence and the drivers of profitability in US and EU food processing using GMM estimations. Due to different firm size structures first comparable samples of US and EU food processors are derived using Propensity Score Matching. The GMM results indicate that profit persistence in food processing is lower than in other manufacturing sectors. Firm†specific drivers of profitability are size and financial risk. Regarding industry characteristics concentration and the growth rate significantly influence profitability. The findings provide insights for the management of US and EU food processing firms aiming to enhance their competitiveness.

Date: 2018
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