Investigating the Effect of Digitalization on the Profitability of Food Industry companies in Mashhad City
Subject Areas : Agricultural Economics ResearchParisa Alizadeh 1 , Hamed Ghaderzadeh 2 , Mahmood Haji-Rahimi 3
1 - Assistant Professor of Agricultural Economics, University of Kurdistan
2 - Asscociate Professor of Agricultural Economics, University of Kurdistan
3 - Assistant Professor of Agricultural Economics, University of Kurdistan
Keywords: Digitalization, Profitability ratio, Food industry, Ordered logit, Mashhad,
Abstract :
Introduction: Population growth, demand fluctuations and the continuous change of consumer needs have made food industry companies face major challenges. One of the ways to properly respond to these environmental changes and maintain competitive advantage is to take advantage of digital transformation in companies. It is possible to use digital technologies in different stages of production and distribution of product and provide after-sales services to consumers, and it plays a significant role in understanding consumer behavior and satisfying them, which can affect the profitability of companies.
Materials and Methods: In this study, the effect of digital transformation and personal characteristics of managers of Mashhad food industry companies on the profitability of these companies have been investigated using the ordered logit model. Therefore, after estimating the ordered logit model, in order to check the assumption of equal effect of independent variables for all categories, parallel regression test has been done. Finally, the marginal effects of independent variables have been estimated for each category.
Findings: The results of the parallel regression test confirm the reasonableness of the assumption of the equality of parameters for all groups in the estimated model. Also, the results of Pearson and Deviance goodness of fit tests show the high predictive power of the model. On the other hand, the significance of the likelihood ratio statistic indicates the significance of the whole regression and the high values of the coefficients of determination indicate the appropriate explanatory power of the estimated model. The results of calculating the marginal effects of the explanatory variables for the ordered logit indicate that the increase in each of the variables of manager's education, use of information and communication technology and advertising intensity, reduces the probability of the company being placed in the group with low and medium profitability ratio and increases the probability of being placed in the group with high profitability ratio.
Conclusion: It is recommended to use information and communication technology in different stages of production and marketing of products to improve the profitability of companies. It is also recommended to select young managers with university education for food industry companies.
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