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

Stefan Hirsch, Ashok Mishra, Niklas Möhring, Robert Finger

Research output: Contribution to journalArticle

5 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 languageEnglish (US)
Pages (from-to)971-1008
Number of pages38
JournalEuropean Review of Agricultural Economics
Volume47
Issue number3
DOIs
StatePublished - Jun 15 2020

Keywords

  • dairy industry
  • financial crisis
  • flexibility-efficiency tradeoff
  • Production flexibility

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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