Evaluating the financial performance of agri-food firms: a multicriteria decision-aid approach Nikos Kalogeras a,b , George Baourakis c , Costantin Zopounidis d, * , Gert van Dijk a,b a Marketing and Consumer Behaviour Group, Department of Social Sciences, Wageningen University, The Netherlands Hollandeseweg 1, 6706 KN, Wageningen, The Netherlands b The Netherlands Institute for Cooperative Entrepreneurship, Nyenrode University, The Netherlands Business School, Straatweg 25, Breukelen, The Netherlands c Department of Business Economics and Management, Mediterranean Agronomic Institute of Chania, P.O. Box 75, 73 100 Chania, Crete, Greece d Department of Production Engineering and Management, Financial Engineering Laboratory, Technical University of Crete, 73 100, Chania, Crete, Greece Received 15 September 2003; received in revised form 13 January 2004; accepted 14 January 2004 Available online 21 November 2004 Abstract Food economists and financial researchers have long been preoccupied by the issue of evaluating the performance of agri-food firms. As the financial restructuring of the agri-business sector during the past two decades or so reflects sweeping changes that have occurred worldwide, questions have arisen regarding the application of the most suitable financial decision-making tools. This paper introduces a new financial decision aid approach, which is based on data analysis techniques in combination with a multicriteria analysis method (PROMETHEE II). Several notions and concepts forming the financial engineering methodological framework are adopted for the design of this approach. For illustrative purposes, the case of Greek agri-businesses is used. The analysis results in an overall ranking of the examined firmsÕ performance. Finally, given the limitations of the current study, a research agenda is proposed. Ó 2004 Elsevier Ltd. All rights reserved. Keywords: Financial performance; Data-analysis; Multicriteria decision-aid 1. Introduction The aim of this article is to shed light on the fact that from the earliest days, purely quantitative sciences have played a more crucial role in agricultural and food deci- sion-making processes as a field of study than in any other area of applied economics. A large body of litera- ture exists in the field of decision-making in agricultural and food economic studies, both at the theoretical and empirical level. Overview of the application of decision analysis for agricultural and food enterprises are pre- sented by Anderson, Dillon, & Hardaker (1977), and Barry (1984). Within the theory of organizational eco- nomics there also, exist formal measures of performance which are well established (a.o. see Ferrier & Porter, 1991; Porter & Scully, 1987). Among the various pro- posed evaluation and measurement tools, the Opera- tional Research (OR) methods seem to be one of the most powerful ones for the analysis of resource alloca- tion choices at the firm and sector level and, also, for the assessment of financial risks (Zopounidis, 1998). The problem with evaluating the financial perfor- mance of the agri-food industry and firms is considered as a classic one in the financial, agricultural and food 0260-8774/$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.jfoodeng.2004.01.039 * Corresponding author. Tel.: +30 821 37236; fax: +30 821 69410. E-mail address: kostas@ergasya.tuc.gr (C. Zopounidis). www.elsevier.com/locate/jfoodeng Journal of Food Engineering 70 (2005) 365–371