Profitability differences in aquaculture firms of the Nordic and Mediterranean-EU regions

Abstract

The purpose of this work is to analyze the differences in profitability between European aquaculture firms of the Nordic and Mediterranean-EU regions, as well as the factors that are relevant to explain these differences. In addition to traditional factors proposed by theory to explain profitability differences among firms such as size, efficiency, or capital structure, we also include in this analysis the strategies of product differentiation and diversification through vertical integration. A sample of aquaculture firms of the Nordic and Mediterranean-EU regions that were operating over the 2012–2019 period are identified in the Orbis database and selected for this research, employing an unbalanced panel made up of 5,427 observations. To carry out this analysis, we propose a random-effects model of firm profitability that allows to test the effect of the different explanatory variables as well as their regional differences. The findings of this research support that Nordic and Mediterranean-EU aquaculture are two business models with different characteristics, what is reflected in the economic performance of their firms.

Keywords:

• Differentiation strategy
• Mediterranean aquaculture
• Nordic aquaculture
• profitability
• vertical integration

JEL CLASSIFICATIONS CODES:

• D22
• L25
• M21
• Q22

Disclosure statement

No potential conflict of interest is reported by the author(s).

Notes

1 According to the Scientific, Technical and Economic Committee for Fisheries, the EU aquaculture sector reached 1.2 million tons in sales volume and €4.1 billion in turnover in 2018, whereas the total number of firms in the sector was estimated to be around 15 thousand and the number of employees around 69 thousand (STECF, 2021).

2 Orbis is a database of Bureau van Dijk, a recognized international provider of standardized and comparable data from firms, that contains economic and financial information on about 400 million companies worldwide based on their annual reports.

Additional information

Funding

This study was carried out with the financial support of the European Commission’s Horizon 2020 Research Program, Grant Agreement [635188], SUCCESS (Strategic Use of Competitiveness toward Consolidating the Economic Sustainability of the European Seafood sector).