Internationalization Strategies in the German Dairy Industry and their Influence on the Economic Performance of Firms

Abstract

Growing milk production, stagnating domestic consumption and ongoing liberalization of the worldwide milk market have led to the increasing export of milk and milk products out of Germany. This situation increases the competition for German dairies’ market share on foreign markets. The German dairy industry, which comprises of some international corporations but also many medium sized companies, including both cooperatives and privately owned companies, therefore has to find strategies to compete successfully on international markets. This study analyses the German dairy industry in the view of different internationalization strategies and their influence on the economic success of the firms. 18 German dairy companies are analysed. We identified different internationalization strategies in reference to Perlmutter’s EPRG model. To measure economic success, we analysed annual reports from the dairy companies observed over the years 2010 to 2017 and so calculated different key figures. The influence of different internationalization strategies on economic success is analysed by a random effects model where the EBIT-margin is the dependent variable in our model, representing economic success. We found out that the companies of the German dairy industry pursue different internationalisation strategies and that these have a different influence on the economic success of the companies.