Does Eco‐Efficiency Pay in a Fragmented Food Industry? A Simultaneous‐Equations Analysis of Accounting‐Based Resource Productivity and Profitability in the Italian Dairy Sector

ABSTRACT This study asks whether eco‐efficiency and environmental investment relate to firm financial performance in the Italian dairy industry, and whether that relationship is reciprocal rather than one‐directional, across the 2020–2024 energy‐ and input‐price cycle. Using audited AIDA accounts for the population of 466 limited companies in ATECO division 10.5 (463 firms with usable accounts, 2278 firm‐years; 324 industrial processors and 138 artisanal dairies), it measures eco‐efficiency through an accounting‐based resource‐productivity proxy (revenue per unit of tangible capital), complements it with process‐modernisation capital and recorded green‐innovation intensities and with external life‐cycle benchmarks, and estimates a two‐equation simultaneous system by three‐stage least squares with equation‐specific instruments that pass over‐identification tests, firm‐clustered standard errors and controls for cooperative governance, PDO area and product segment. The sector is extremely fragmented (Herfindahl–Hirschman index 0.013), and one third of its firms are producer cooperatives. The estimates are consistent with a reciprocal relationship: Resource productivity is robustly associated with higher return on assets across pooled, fixed‐effects and first‐difference instrumental‐variable estimators, whereas the feedback from profitability to resource productivity holds in levels and within firms but not in first‐difference instrumental‐variable estimates, so the reciprocal reading is supported but not established. Process‐modernisation capital shows no contemporaneous association with margins, recorded green innovation is negligible (zero in 90.6% of firm‐years), and cooperatives are as resource‐productive as investor‐owned firms but retain none of the gain as margin, in line with the member‐price‐maximisation logic of cooperative governance. Unlike neighbouring shock‐hit food chains, dairy delivered growth with margins. The paper contributes a full‐population, audited‐accounts test of the eco‐efficiency–performance relationship in a cooperative‐dense, fragmented food industry, documents a measurement inversion in balance‐sheet innovation proxies, and derives implications for environmental strategy, green‐capital allocation and the territorial dairy system.