Sources of Firm Performance Differences in the US Food Economy

Researchers in economics and strategy have long been interested in understanding the determinants of firm performance. We apply the relatively novel approach of hierarchical linear modelling (HLM) to a large panel of food economy firms to shed new light on the long‐standing debate about the relative importance of industry, corporate parent and business unit effects on firm profits. Our results suggest that business unit and corporate effects are more relevant than industry effects in explaining firm performance differences in the food economy. In addition, we also explore the effect of specific strategic factors on performance within each level of analysis. In particular, we find that business‐segment size, industry barriers to entry, corporate diversification, R&D intensity, capital intensity and resource availability are significant predictor variables that explain firm performance differences. Given the relatively important role of corporate effects and the positive influence of corporate strategic variables on business unit performance, our findings suggest that the environment provided by corporate parents significantly affects business unit profitability. In other words, corporate strategy does matter and thus should continue to draw attention from scholars interested in explaining profitability in the food economy.     

Spatial determinants of productivity growth on agri‐food Spanish firms: a comparison between cooperatives and investor‐owned firms

This study analyses the effect of the spatial factor, location, and interaction effects among peer companies, on the productivity growth of agri‐food companies in Spain. With this aim, we build a productivity growth index and apply a multiequational Seemingly Unrelated Regression on a sample of 344 Spanish cooperatives and investor‐owned firms for the period 2010–2012. Our findings show that agri‐food firms are influenced by spatial factors finding interesting differences between cooperatives and investor‐owned firms. With regard to the geographical location, cooperatives in the western of Spain show higher productivity growth rates, whereas investor‐owned firms in the northeast of Spain present better results. The interaction effect among closer peer companies is also a relevant factor to determine the productivity growth in agri‐food companies. This factor is more relevant for cooperatives than for investor‐owned firms.     

Dragon Head Enterprises and the State of Agribusiness in China

This paper examines the political trajectory of agribusiness firms called ‘dragon head enterprises’ in China's ongoing agri‐food transformations. It starts from the premise that state and private elites in China are working together to consolidate a robust domestic agribusiness sector, as both an arena for national‐level rural and economic development, and a new frontier for access to resources and markets abroad. Through analyses of policy documents, market share data and ethnographic materials, I explore the organization and operation of dragon heads in the pork sector. My findings reveal that agribusiness development in China's pork sector is largely domestic, has a mixed state–private form and tends to marginalize the foreign‐based TNCs that have been the most powerful actors in the global agri‐food system to date. I argue that China is not only a destination for ‘external’ transnational capital, but also a site of agribusiness development in its own right. This has important implications for analysing capitalist transformations and for engaging global agri‐food politics.     

Are In‐House and Outsourcing Innovation Strategies Correlated? Evidence from the European Agri‐Food Sector

We analyse European agri‐food firms’ choices about innovation in‐house or through outsourcing and provide empirical evidence about the correlation between these strategies. The relationship between the innovation strategy and firm‐, industry‐ and innovation‐specific characteristics is analysed through a bivariate probit model, which uses firm data from the EFIGE Bruegel‐UniCredit dataset. Transaction cost, resource base and knowledge governance arguments are used to explain the choice of innovation strategy. Our results show that the decisions to innovate in‐house or through outsourcing are independent from each other. In addition, we find that several organisational characteristics such as communication systems, human resource practices and specialisation are likely to influence both strategies. Conversely, organisational characteristics such as the allocation of authority and the business network do not seem relevant in determining the innovation strategies of the European agri‐food sector.     

An Agent-Based Model of Entrepreneurial Behavior in Agri-Food Markets

Rapid technological innovation and globalization have led to increasingly complex agri‐food supply chains and networks, and uncertain agri‐food markets. Given this type of competitive environment, management scholars have argued that agri‐food firms that adopt capabilities for entrepreneurship will outperform firms that do not. We use agent‐based simulation methods to explore this hypothesis. Agent‐based models are particularly relevant in this study as they allow for the explicit simulation of the entrepreneurial behaviors and firm interactions that lead to wealth creation. In our analysis, we find that entrepreneurial capabilities of alertness, risk‐taking, and efficiency vary in their effect on firm performance given alternative agri‐food strategic landscape configurations. L'innovation technologique rapide et la mondialisation ont donné lieu à des chaînes d'approvisionnement agroalimentaire et à des réseaux de plus en plus complexes ainsi qu'à des marchés agroalimentaires incertains. Compte tenu de ce type d'environnement concurrentiel, les spécialistes en gestion soutiennent que les entreprises agroalimentaires qui possèdent des capacités entrepreneuriales surclasseront celles qui n'en possèdent pas. Nous avons utilisé des modèles de simulation multi‐agent pour étudier cette hypothèse. Les modèles multi‐agent sont particulièrement pertinents dans la présente étude puisqu'ils permettent la simulation explicite de comportements entrepreneuriaux et d'interactions entre firmes qui engendrent la création de richesse. Les résultats de notre analyse ont montré que les capacités entrepreneuriales, telles que la vigilance, la prise de risque et l'efficacité, ont des répercussions variées sur la performance d'une firme en raison de différentes configurations stratégiques du paysage agroalimentaire.     

Determinants of Food Industry Performance: Survey Data and Regressions for Denmark

This paper investigates empirically the determinants of firms’ performance in the agri‐food sector by using recent survey data for Denmark. Treating sales per employee as a proxy for value added, we estimate several bootstrapped regression models to draw conclusions on the marginal effects of potential performance determinants such as the form and nature of ownership, stage of the food chain and commodity sector, new product development, staff quality, firms’ competitive stance, and elements of firms’ strategy. To draw robust inferences we apply, besides the ordinary heteroscedasticity‐corrected Tobit maximum likelihood estimator, a non‐parametric least absolute deviations estimator (LAD/CLAD) based on a quantile regression procedure. The results indicate that we cannot reject the hypothesis of no influence of dominant orientation on value added. Rather, firms’ focus on human capital, stage and commodity sector better explains their value addition. We reject the hypothesis that regional networks have no influence on value added. Location in Århus, emphasis on human capital and the negative influence of outsourcing on value added all provide supporting evidence. We reject the hypothesis of no influence of foreign direct investment (FDI), and moreover propose that FDI has targeted the Danish domestic market as a source of value added.     

R&D and Innovation in Food Processing Firms in Transition Countries

We examine the implications of the liberalised economic conditions associated with the economic transformations in the transition countries of Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) for R&D and innovation in the food processing sector. We use a dataset derived from the World Bank's Business Environment and Enterprise Performance Surveys (BEEPS) database to examine the relationships between R&D/innovation activities in food processing firms in transition countries and (i) privatisation, (ii) foreign direct investment, (iii) trade activities, (iv) market competition pressure, and (v) economies of scale. The empirical analysis is implemented through: (i) a double‐hurdle model for R&D participation and expenditures, and (ii) a bivariate probit model for product and process innovation. We find that these economic transformations generally promote R&D/innovation activities in the food processing sector. Our results suggest that broadened and deepened economic liberalisation policies would improve the innovation performance of the food processing sector in transition countries, and would enhance competitiveness in domestic and foreign markets. They also indicate that innovation policies may need to be tailored to market and industrial characteristics of different transition regions.     

Role of international politics on agri‐food trade: Evidence from US–Canada bilateral relations

A well‐functioning trade relationship between Canada and the United States is crucial to the economic vitality of the Canadian agri‐food industry. However, agri‐food trade is more susceptible than other sectors to political interventions. The Trump presidency has strained Canada–US relations and his trade policy actions have significantly increased trade restrictions and trade policy uncertainty and undermined the rules‐based global trading system. We examine the pattern of agri‐food trade between the two countries and find that the upward trajectory of bilateral agri‐food trade ended in 2013. Although this flatlining predates the Trump administration, we show that Trump increased trade policy uncertainty starting in 2017 and likely impacted further expansion of trade. We examine what might change under the Biden presidency and argue that the new administration is likely to restore strong relationships with allies and work to rebuild important international institutions such as the World Trade Organization (WTO). Although protectionist forces will continue to impact bilateral agri‐food trade, we expect closer political ties between a Biden administration and the Canadian Prime Minister. This should have a positive effect on the Canadian agri‐food industry by reducing trade uncertainties, thereby increasing agri‐food trade between Canada and the United States.     

Complementarity between In-house R&D and Technology Purchasing: Evidence from Chinese Manufacturing Firms

In order to catch up with the current technological frontier, firms, especially in developing countries, try to acquire technological advancement through internal R&D efforts, as well as through external technology-sourcing activities. This study tests whether these two sources of technology acquisition are complements or substitutes for each other in small- and medium-sized Chinese manufacturing firms. The evidence that we present shows some signs of complementarity between the two sources of knowledge in reaching a higher unconditional intensity of product innovation for firms with 100–300 employees and, in general, a significant degree of substitutability between them in achieving higher levels of labour productivity.     

Dependent development in South America: China and the soybean nexus

This article examines the expansion of the soybean complex in South America and the role of Chinese firms in expanding their presence in different sectors of the oilseed complex. The growth in trade relations between the two parties has been built on the export of primary commodities from South America and the import of Chinese manufactures—a trade pattern that reproduces core‐periphery dynamics identified by dependency theory scholars. Of particular importance in this bilateral trade is soybean, a crop that has been consolidated as the main export for several South American countries, fuelled by growing demand from China. This article explores China's role in the global political economy as a key agri‐business player and the implications for new relations of dependency by studying the strategies deployed by Chinese firms to increase their influence in the governance of the soybean nexus.     

Vertically Differentiated Trade and Differences in Factor Endowment: The Case of Agri‐Food Products between Hungary and the EU

The paper investigates the relationship between factor endowment and vertical intraindustry trade (IIT)in agri‐food products between Hungary and the EU. Intra‐industry trade is separated into its horizontal and vertical components on the basis of differences in unit values. Three different approaches to measuring IIT are employed and these are then tested using panel regression models. Results show vertical type trade is predominant in total IIT for agri‐food products. In order to achieve more general results, we consider different types of productive factors: land, human and physical capital. Using Flam and Helpman type vertically differentiated trade models, we find a positive relationship between factor endowment and vertical IIT. More importantly, using a measure of IIT that reflects the level of trade produces better regression results than those based on the degree or share of IIT.     

Regional trade agreements and trade in agri-food products: evidence for the European Union from gravity modeling using disaggregated data

The proliferation of regional trade agreements in recent years has intensified the debate on the desirability of these agreements in themselves and their coexistence with multilateral free trade under the WTO. This study contributes to this debate by analyzing trade creation and trade diversion effects of the European Union on trade flows of six major agri‐food products from 1985 to 2000. An extended gravity model is estimated employing pooled data and generalized least squares methods. The results show that the developments in the EU since the mid‐1980s have served to boost agri‐food trade significantly among the members. Some of the growth in intra‐EU trade in agri‐food products came at the expense of nonmembers as the EU reduced the degree of relative openness to trade with nonmembers during this period and diverted trade from the rest of the world into the intra‐EU channels.     

Factors Affecting Farmers’ Participation in Agri‐environmental Measures: A Northern Italian Perspective

Agri‐environmental measures play an important role in Italian rural areas, as shown by the financial commitment to the Rural Development programmes. However, in contrast with other European Union (EU) countries, policy‐makers still have limited experience on how farmers approach environmental incentive schemes. This paper casts new light on this issue from a northern Italian perspective. The rationale of the farmers’ decision‐making process is explored using two multinomial models. The first explains the probability of non‐participation or participation in one of three specific agri‐environmental measures. The model outcomes show that labour‐intensive farming types and high dependency of household income on farming activity constrain farmers’ participation, whereas previous experience, easy‐to‐implement environmentally friendly farm practices and adequate compensation of extra costs encourage participation. The second model explores the effect of farmers’ attitudes and beliefs on their predispositions towards participation in any of the schemes. The results highlight that, besides income factors, the farm's future in the business, and the relationship with neighbouring farmers and their opinions on environmentally friendly practices all have significant effects on adoption of agri‐environmental measures. The paper concludes by suggesting that farmers’ attitudes and beliefs, as well as the local behavioural influences, have to be taken into account when designing and communicating agri‐environmental measures.     

Avian influenza,non‐tariff measures and the poultry exports of China

This paper focuses on the direct impact of avian influenza outbreaks and the impact of the consequent non‐tariff measures (NTMs) on the international poultry trade. Using monthly export data from China and its 122 poultry importing countries, a random‐effect gravity model has been adopted. Emphasising the agri‐food trade in a global value chain context, the research analysis distinguishes between ‘agri‐food goods’ (mostly uncooked poultry products) and ‘processed goods’ (mostly cooked poultry products). The results show that domestic avian influenza outbreaks have a significant negative impact on a country's poultry imports compared with such outbreaks in exporting countries. Moreover, NTMs induced by avian influenza reduce the uncooked poultry trade but temporarily increase the cooked poultry trade. However, with a time‐lag, the cooked poultry trade may soon face increasing NTMs. The results also imply that developing countries that attempt to export agri‐food products to developed countries should increase and enhance processed food production.     

The determinants of outward foreign direct investment: a firm‐level analysis of Indian manufacturing

This paper analyses the determinants of the overseas direct investment activity of Indian manufacturing enterprises. In general, several firm‐specific characteristics such as age, size, R&D intensity, skill intensity and export orientation are observed to be important explanatory factors in the outward foreign direct investment (O‐FDI) activity of Indian firms. The impact of age and size on O‐FDI has been observed to be non‐linear. The product differentiation activities and the productivity of firms are other useful factors in overseas production expansion in certain industries. The study reveals that the performance of these firm‐specific variables is subject to sectoral dynamics. Internationalization of production activities of Indian firms has been observed to be partly fuelled by policy liberalization during the 1990s.     

Country‐Specific Determinants of Horizontal and Vertical Intra‐industry Agri‐food Trade: The Case of the EU New Member States

Intra‐industry trade (IIT) has become a widespread phenomenon with a growing role in international trade, though agricultural trade is usually neglected in empirical works. This article identifies the determinants of horizontal and vertical intra‐industry agri‐food trade between New Member States (NMS) and the EU‐27 in 1999–2010, by applying static and dynamic models with different specifications to panel data. Results show that IIT is mainly of a vertical nature in the NMS, though the majority of NMS export low quality agri‐food products to EU‐27 markets. Factor endowments are negatively related to agri‐food horizontal intra‐industry trade (HIIT), but positively to vertical intra‐industry trade (VIIT). Economic size is positively and significantly related to both types of IIT, while distance and IIT are found to be negatively related in both cases. Results also suggest that HIIT and VIIT are greater if a New Member State exports agri‐food products to another NMS while EU accession has had positive and significant impacts on both HIIT and VIIT, suggesting that economic integration fosters IIT.     

Geography of plant breeding systems,agroclimatic similarity,and agricultural productivity: evidence from Nigeria

Agroclimatic conditions and agricultural research and development (R&D) including plant breeding activities by the public sector are some of the most significant exogenous factors in the agricultural sector. However, the effects of the interactions between these two sets of factors on agricultural productivity have not been studied widely in developing countries, despite potentially important implications on their plant breeding strategies. Using three‐wave panel data of agricultural households in Nigeria and spatial data on various agroclimatic parameters, we show that agricultural productivity and technical efficiency at the agricultural household level is significantly positively affected by the similarity of agroclimatic conditions between locations where agricultural households are located, and locations where major plant breeding institutes are located. These results hold after controlling for various socioeconomic characteristics of these households, including their physical distances to the breeding institutes. Findings are robust across parametric and nonparametric specifications such as Data Envelopment Method, and after addressing potential endogeneity of agroclimatic similarity and agricultural inputs variables in the production function. Productivity effects due to the locations of plant breeding institutes and resulting agroclimatic similarity can be potentially sizable given Nigeria's past productivity growth speed.     

Towards an Integration of R & D and Marketing in Production Development

Abstract

In this paper, two approaches which are characteristic for Research & Development and Marketing departments are compared. First, R&D versus Marketing orientations are explained, then the major differences between them are presented. The integration of both approaches may improve competitive advantage of the food industry. Factors stimulating such integration are presented on the basis of data from real business circumstances. Innovation is regarded as a major source of competitive advantage of company. Therefore, integration in sensory methodology, that is commonly but differently used by R & D and Marketing departments, may contribute to the improvement of innovation practices and successful business performance. Finally, the role of consumer tests, oriented for marketing and product development, is illustrated.     

The Effects of Non‐tariff Measures on Agri‐food Trade: A Review and Meta‐analysis of Empirical Evidence

The increasing policy interest and academic debates on non‐tariff measures (NTMs) has stimulated a growing literature on how NTMs affect agri‐food trade. The empirical literature provides contrasting and heterogeneous evidence, with some studies supporting the ‘standards as catalysts’ view, and others favouring the ‘standards as barriers’ explanation. To the extent that NTMs can influence trade, understanding the prevailing effect, and the motivations behind one effect or the other, is a pressing issue. We review a large body of empirical evidence on the effect of NTMs on agri‐food trade and conduct a meta‐analysis to disentangle potential determinants of heterogeneity in estimates. Our findings show the role played by the publication process and by study‐specific assumptions. Some characteristics of the studies are correlated with positive significant estimates, others covary with negative significant estimates. Overall, we found that the effects of NTMs vary across types of NTM, proxies used for NTMs, and levels of detail of studies. The estimated effects are also influenced by methodological issues and publication processes.     

What socioenvironmental impacts did 35 years of export agriculture have in Mexico? (1980–2014): A transnational agri‐food field analysis

In this article, I propose to study environmental degradation and the deterioration of the health of workers and other inhabitants in regions of Mexico where intensive fruit and vegetable production for export has been developed. My proposition is that to understand the unsustainability of such agricultural practices in all their complexity, it is necessary to analyse historically the total agri‐food field of relations established by producers, distributors, and consumers in codependency with the natural environment. This analysis of the agri‐food field allows a multidimensional and multiscale study to be conducted of the hierarchical distribution of power and of economic benefits among the different social actors of the food system. This analysis also allowed us to study the development of the capitalist regime without going into the dichotomy of centre and periphery and to propose that it is a decentralized process with a multiplicity of locations that operates on the basis of mutual associations and influences between human and non‐human elements, with the active participation of a great variety of independent, collective, and institutional actors who have differentiated motivations, ranges of power and scales of value. The case study of Mexican export agriculture was the result of long‐term research based on a wide review of regional studies, field work statistics, and archives in Mexico and the United States. This cross‐border study makes it possible to identify asymmetrical transnational relations in a context in which the Mexican government has renounced its territorial and agri‐food sovereignty and Mexican consumers face greater vulnerability.