Revisiting firm flexibility and efficiency: Evidence from the EU dairy processing industry

Stefan Hirsch; Ashok Mishra; Niklas Möhring; Robert Finger

doi:10.1093/erae/jbz003

Revisiting firm flexibility and efficiency: Evidence from the EU dairy processing industry

Stefan Hirsch, Ashok Mishra, Niklas Möhring, Robert Finger

Agribusiness, Morrison School of

Research output: Contribution to journal › Article › peer-review

31 Scopus citations

Abstract

We analyse the flexibility of EU dairy processors to adjust production to fluctuating economic conditions. For a set of 2,186 firms, we derive production flexibility measures representing the effect of output variations on costs. The results reveal that flexibility is highest in Poland and Italy and lowest in Spain. Several firm-specific factors, such as size and age of the firm, are found to affect firm flexibility. Moreover, we detect a tradeoff between flexibility and technical efficiency for large firms indicating that a sole focus on firm efficiency can be insufficient. Finally, the results show that during economic crisis flexibility can help to sustain profitability.

Original language	English (US)
Pages (from-to)	971-1008
Number of pages	38
Journal	European Review of Agricultural Economics
Volume	47
Issue number	3
DOIs	https://doi.org/10.1093/erae/jbz003
State	Published - Jun 15 2020

Keywords

Production flexibility
dairy industry
financial crisis
flexibility-efficiency tradeoff

ASJC Scopus subject areas

Agricultural and Biological Sciences (miscellaneous)
Economics and Econometrics

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10.1093/erae/jbz003

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abstract = "We analyse the flexibility of EU dairy processors to adjust production to fluctuating economic conditions. For a set of 2,186 firms, we derive production flexibility measures representing the effect of output variations on costs. The results reveal that flexibility is highest in Poland and Italy and lowest in Spain. Several firm-specific factors, such as size and age of the firm, are found to affect firm flexibility. Moreover, we detect a tradeoff between flexibility and technical efficiency for large firms indicating that a sole focus on firm efficiency can be insufficient. Finally, the results show that during economic crisis flexibility can help to sustain profitability.",

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Revisiting firm flexibility and efficiency: Evidence from the EU dairy processing industry

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