Drivers of Financial Efficiency for Portuguese Food Industry Through Crises

The food industry plays a vital role in Portugal´s economy and society. This requires an analysis of the capabilities that enabled the sector to endure and thrive through economic downturns. The paper analyzes financial efficiency and its drivers in Portuguese food manufacturing firms from 2012 to 2021 using Data Envelopment Analysis and fractional regression modeling. Several tests are performed to select the most adequate model for the chosen data and provide robust results. Findings indicate a low average financial efficiency of the firms throughout the period. The COVID-19 pandemic particularly suppressed efficiency to the lowest level observed. When facing financial distress, the firm's internal resources and capabilities become the primary drivers of resilience. Firm-specific factors like age, financial autonomy, asset tangibility, and exporting display a statistically significant correlation with financial efficiency during recessions, rather than external factors like GDP growth. The paper concludes with implications for strategic emphasis on financial independence, tangible capital, exporting capability, and support for younger firms in the food industry to improve their viability under adverse situations.