1 Industry, firm, year, and country effects on profitability in EU food processing This paper decomposes the variance in food industry return-on-assets into year, country, industry, and firm effects. Besides these main effects, we include several interactions and discuss their theoretical foundations. After determining effect significance in a nested ANOVA with a rotating pattern of effect introduction, we estimate effect magnitude using components of variance in a large sample of corporations. The results show that firm characteristics are more important than industry structure in determining food industry profitability in Europe. Main effects and interactions of year and country membership are weak, indicating that performance differentials can poorly be explained by macroeconomic and trade theory. Key words: ROA, decomposition, variance components, MBV, RBV.Running head: Industry, firm, year, and country effects on profitability JEL: L00, C22 Introduction 'There are many theories because each is based on different assumptions about the world; it is theirrelevance rather than their logic which is in dispute. ' (Cook, 1958: 16).In a perfectly competitive market, firm performance that deviates from the average should not exist in the long run. However, such deviations are not an exception to the rule but in fact the norm, especially in industries characterized by high sunk costs or other impediments to competition as the food sector seems to be. The ability of firms to 2 earn returns persistently above the norm has been widely analyzed.1 While the so-called 'market-based view', which draws heavily on Industrial Organization (IO) theory, mainly attributes such 'abnormal' profits to industry characteristics, proponents of the 'resource-based view' assume that performance differentials can be better explained by firm properties. 2 In order to resolve this debate, a series of contributions following Schmalensee's (1985) seminal paper has used components-of variance analysis (COV) and nested (i.e. hierarchical) analysis of variance (ANOVA) techniques to decompose the variation in firm profitability into firm and industry specific effects. Subsequent papers have also looked at the impact of year and, more recently, of country effects on firm profitability. While the influence of country and country-industry interactions on the variation in profitability can be explained by models developed in trade theory, the aforementioned body of literature has paid little attention to the theoretical foundations 1 (e.g. Barney 1991, Bowman and Helfat 2001, Brush, Bromiley and Hendrickx 1991, Geroski and Jaquemin 1988, Gschwandtner 2005, Goddard and Wilson 1999, Mahoney 1995, McGahan and Porter 1997, 1999, 2003, Mueller 1977, 1990, Odagiri and Maruyama 2002, Roquebert, Phillips and Westfall 1996, Rumelt 1991, Schmalensee 1985, Teece, Pesano and Shen 1997, Waring 1996, Werenfelt 1984.2 Examples for studies that support the 'market-based view' are: Caves and Porter (1977), McGahan and Porter (1999), Schmalensee (1985), Slat...

Purpose -Expert wine awards are commonly used by consumers to reduce complexity in wine choice but little is known about expert vs non-expert perceptions of sensory wine quality. This paper aims to examine if expert ratings are suitable quality indicators for consumers and whether there are certain groups of consumers that find expert awards more useful than others. Design/methodology/approach -The paper compares German consumer ratings obtained in a sensory laboratory with German Agricultural Society's quality competition awards. it tests for the correspondence between expert and non-expert ratings and for the concordance within the nonexpert group. Estimation of a linear mixed model serves to identify consumer-side variables with an influence on individual rating distance. Findings -Correspondence between expert and non-experts and concordance within the non-expert group were found to be insignificant. Experienced wine consumers with sufficient specific knowledge and superior self-reported sensory skills better replicated expert ratings. Research limitations/implications -With 216 wine ratings obtained from 36 German consumers, the number of observations is small. Future research should verify above findings by considering more consumers and the stability of ratings across time. Practical implications -The findings suggest that although some consumer segments may find expert awards to be useful decision cues, for a large portion of the market, there is demand for a more consumer-orientated system of sensory quality evaluation and labelling. Originality/value -This paper is the first to address the usefulness of expert ratings to novice and experienced wine consumer populations. The statistical procedures employed (including linear mixed modelling) are shown to be useful techniques to handle the repeated measurement nature of the data.

Since the 1980s economic researchers have applied variance decomposition methods such as ANOVA or components-of-variance (COV) in order to determine the importance of different effects for firm profitability variation. Nevertheless, these studies either focus on entire manufacturing sectors or on the U.S. food sector. This article, therefore, aims to determine the sources of firm profitability variation for EU food processors using the classical approaches of hierarchical ANOVA and COV. The paper also highlights a lack of the hierarchical ANOVA effect introduction pattern that occurs throughout previous literature. The results suggest that firm-related effects are the main profit driver while industry, year, and country effects are negligible. 791 Manufacture of food products and beverages excluding tobacco in the EU-27. According to NACERev. 1.1 division DA15 or NACE Rev. 2.0 divisions C10 and C11. NACE (Nomenclature generale des activiteseconomiquesdans les commumautesEuropeeanes) is the statistical classification of economic activities in the European Community.2 According to the EU definition (European Commission, 2005), small firms are defined as having fewer than 50 employees and total assets of less than EUR 10 million.

This article aims to explain the variation in firm performance in the German food processing industry. Building on the resource-based view, both drivers and outcomes of firm performance were defined as relative concepts. Performance was measured as relative return on assets and sales, relative change in sales, and by combining these variables into an integrated performance measure. Data for the analysis was gathered in an online firm survey and analyzed by means of nonparametric correlation and regression analysis. The survey response was very low and the sample may not be a good representation of the population. However, the results indicate that the main drivers for firm advantages lie within technology and production-related areas. They further suggest that with firm-specific variables, it is possible to explain as much as two-thirds of the variation in profitability. [Q130, L250, D240]. © 2008 Wiley Periodicals, Inc.

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