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

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  • Adelina Gschwandtner
  • Stefan Hirsch
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.

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  • Adelina Gschwandtner & Stefan Hirsch, 2018. "What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry," Manchester School, University of Manchester, vol. 86(3), pages 390-416, June.
    • Handle: RePEc:bla:manchs:v:86:y:2018:i:3:p:390-416
    DOI: 10.1111/manc.12201
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    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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