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Profitability differences between MNE subsidiaries and domestic firms: The case of the food industry in Greece

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  • George Anastassopoulos

    (Department of Business Administration, University of Patras, University Campus, GR-26500, Patras, Greece., E-mail: g.anastassopoulos@aegean.gr)

Abstract

This report analyzes determinants of profitability differences between subsidiaries of Multinational Enterprises (MNEs) and Domestic Enterprises (DMEs) in the Greek food industry using company level data. Previous studies have tested the hypothesis that ownership-specific advantages are a major determinant of performance differences. This study analyzes the processed food sector (SIC = 20), using a panel data set for 75 firms and 5 years. The model is evaluated using a random effects model. The results indicate that the determinants of profitability differ between MNEs subsidiaries and DMEs. MNEs' profitability depends on their market share, knowledge, and experience of the local market; training intensity; and product differentiation through the use of technological inputs from abroad and local advertising. DMEs' profitability depends on their market share and product differentiation, through local advertising and local R&D. Size has a negative effect on profitability for both groups of companies. Even after allowing for all of these determinants of profitability, ownership has an independent effect on profitability (namely higher for MNE subsidiaries than DMEs). [EconLit citations: F23, L66, L69]. © 2004 Wiley Periodicals, Inc. Agribusiness 20: 45-60, 2004.

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  • George Anastassopoulos, 2004. "Profitability differences between MNE subsidiaries and domestic firms: The case of the food industry in Greece," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 45-60.
    • Handle: RePEc:wly:agribz:v:20:y:2004:i:1:p:45-60
    DOI: 10.1002/agr.10082
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    1. Lucian Belascu & Alexandra Horobet & Georgiana Vrinceanu & Consuela Popescu, 2021. "Performance Dissimilarities in European Union Manufacturing: The Effect of Ownership and Technological Intensity," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    2. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
    3. Rama, Ruth, 2023. "Technological Transfer Channels of Food and Beverage Processing Multinationals to Host Countries: An Empirical Analysis," MPRA Paper 118162, University Library of Munich, Germany.
    4. Pascal L. Ghazalian, 2016. "Processed Food Trade of Greece with EU and Non-EU Countries: An Empirical Analysis," International Journal of Food and Beverage Manufacturing and Business Models (IJFBMBM), IGI Global, vol. 1(2), pages 15-30, July.
    5. Barbara Grabinska & Marcin Kedzior & Dorota Kedzior & Konrad Grabinski, 2021. "The Impact of Corporate Governance on the Capital Structure of Companies from the Energy Industry. The Case of Poland," Energies, MDPI, vol. 14(21), pages 1-25, November.

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