The Impact of Integration Strategies on Food Business Firm Value

Abstract

The objective of this study is to analyze whether a discount or premium exists for coordination strategies in food processing, wholesale grocery, retail supermarkets, and restaurants. Significant premiums are found for food processor and restaurant vertical integration or diversification strategies. Significant discounts are found for food wholesaler and retail supermarket integration or diversification strategies. Food processors are found to be integrating toward retail supermarkets during this time period.

Persistence of firm‐level profitability in the European dairy processing industry

“…At the same time, several studies show that diversification in sectors that are not directly linked to the primary area of operation can lead to a negative impact on profitability and thus lower long‐run persistence. Dorsey and Boland (), e.g., show that diversification of food industry firms in unrelated sectors outside the food economy has a negative impact on profitability. Thus, as far as market share is linked to diversification this could explain the obtained results.…”

“…If firms aim at growing through diversification in activities unrelated to the primary field of action, a negative effect on long‐run profitability might also be the consequence as suggested by Dorsey and Boland (). Diversification, however, should reduce risk hence leading to lower fluctuations in profits and therefore to higher short‐run persistence.…”

Is the price-cost margin affected by the market concentration? Evidence from the Czech food and beverages industry

“…Sivasubramaniam & Kara, 2015;Bothwell et al, 1984;Setiawan et al, 2012;Collins & Preston, 1966;Dickson, 2005). However, research and evidence for the agribusiness sector is yet sparse (some notable exceptions are Schumacher & Boland, 2005;Weiss & Wittkopp, 2005;Höhler & Kühl, 2014;Dorsey & Boland, 2009;Janda et al, 2013;Čechura & Hockmann, 2011) since past research has focused on entire manufacturing sectors or over broad economic sectors.…”

Sources of Firm Performance Differences in the US Food Economy

“…6 6 Diversification is expected to have a negative effect if food industry firms diversify outside the food economy (Dorsey and Boland, 2009). …”

“…Diversification is expected to have a negative effect if food industry firms diversify outside the food economy(Dorsey and Boland, 2009). 7 Ideally, more explanatory variables at the business unit level could have been used to explain firm profits, including advertising intensity and R&D intensity measured at the business unit level.…”