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What drives firm profitability? A comparison of the US and EU food processing industry

Adelina Gschwandtner () and Stefan Hirsch ()

Studies in Economics from School of Economics, University of Kent

Abstract: This article 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, growth and financial risk. Regarding industry characteristics the growth rate significantly influences profitability. The findings provide insights for the management of food processing firms as well as for policy decisions aiming to counter power imbalances in the food sector.

Keywords: Firm profit; persistence; food industry; GMM panel estimation; propensity score matching (search for similar items in EconPapers)
JEL-codes: L12 L66 M21 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-agr, nep-cse and nep-sbm
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Journal Article: What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry (2018) Downloads
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