The purpose of this paper is to provide evidence about the role of the geography on agri-food firms’ valuations. The goal is to test clusters and agglomeration effects on the SMEs valuations.
The authors propose an empirical test applying a spatial regression analysis on a sample constitute by 306 agri-food SMEs located in two municipalities with different economic characteristics: Murcia and Madrid. In addition, the authors applied the discounted cash flow model in order to estimate the SMEs’ economic value.
The findings show the importance of the geography variables on the SMEs’ performances highlights interesting differences between territories. In particular, the results confirm that the geographical proximity between agri-food firms and between them and external agents is significant on firms’ valuations. The agglomeration effects are verified in both municipality but the density variable present a negative non-linear effect confirming previous studies which indicates that the existence of a large number of firms 05 rise competition, decreasing the economic opportunities of these companies.
This study gives interesting insights to policymakers, researchers and practitioners concerning the importance of the relationships among agents, also favoured by a developed infrastructures system in a fully connected environment.
