Determinants of investing in innovative activities by agri-food and KIBS firms in rural areas: An exploratory analysis

Abstract

ABSTRACT Using a database on innovation activities by Spanish firms, we perform an exploratory analysis on a frequently overlooked area of research: innovation investment decisions by small firms in rural areas where socioeconomic indicators are weak. We focus on two quite different sectors of interest there, agri-food and t-KIBS firms, to explore how the regional context influences the capacity and the nature of innovation. Following the TOE approach as a conceptual framework, we perform a multivariate statistical analysis based on MCA and PCA combined, to identify the most relevant factors among a list of 73 indicators in four broad domains, including innovation decisions as well as organizational, technological, and environmental determinants. The exploratory results obtained suggest an open field of research. Thus, we observe a distinctive behavior of marketing innovation by agri-food firms that is related to former ICT experience, whereas services innovation by t-KIBS would be related to the objective of entering new market niches. Some results confirm previous results for SMEs outside rural areas, such as financial constraints, lack of qualified personnel, and strong competition being relevant barriers to invest in R&D by t-KIBS firms. Contrariwise, we dispute the assertion that agri-food firms are primarily oriented toward product and process innovation: what comes together is product and organizational innovation.