Impediments to the Ability of Canadian Food‐Processing Firms to Compete: Evidence From a Survey on Innovation

Abstract

ABSTRACTFactors that impede Canadian food‐processing firms’ ability to compete in domestic and international markets are explored. Business micro‐data were obtained from the Survey on Innovation in the Food Processing Industry in 2004 (n = 809). A higher Canadian dollar against the U.S. dollar was judged to be the most severe of the 10 impediments to the ability of Canadian food processors to compete. Two broader categories of the 10 impediments emerged from a principal component analysis. One category of the impediments relates to private and public standards, while the other relates to vertical and horizontal market power issues. The severity of these impediments is not significantly different among the different size classes of food processors. Subsequent clustering procedures based on these impediments found that the food processors in one cluster were more constrained by all these impediments than their counterparts in the other cluster. Establishment characteristics, such as food subsector classification, and firm strategies, such as export orientation and engagement in R&D activities, were systematically associated with a firm's likelihood of being in the cluster that perceived the impediments to be more severe. Exporting firms are more likely than other firms to perceive each one of the impediments as a constraint. [EconLit Subject Matter Areas: D220; L200; L660].