Vertical integration and profitability of the agrifood industry in an economic crisis context

Grau, Alfredo J. ^[1] ; Reig, Araceli ^[1]
1. [1] Universitat de València
  
  Universitat de València
  
  Valencia, España
Localización: Spanish journal of agricultural research, ISSN-e 2171-9292, ISSN 1695-971X, Vol. 13, Nº. 4, 2015
Idioma: inglés
Enlaces
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Resumen
- In a setting of economic and financial crisis, most companies experienced a reduction in their profitability. Thus, our study allows us to identify vertical integration strategies developed by companies to overcome the crisis. This paper is aimed at unveiling the determining factors of the profitability of Spanish agrifood firms, depending on whether they are backwards vertically integrated or not. In order to attain our objective, we implemented a first difference regression model. The main contributions of the article lie in the incorporation of a variable that distinguishes integrated firms from the rest and the separate analysis of the two groups of firms. The results suggest that firms that seek to differentiate themselves, either through offering a specific product or through providing higher quality with a view to maintaining their reputation, are more likely to adopt vertical integration due to the higher transaction costs of relations with suppliers. The grouping carried out in this study is shown to be highly relevant as asset structure implies different strategies for actions aimed at increasing profitability.