Governance Structures and Innovation: The Case of the Brazilian Coffee Roasting and Grinding Industry

Abstract

This study contributes to the New Institutional Economics literature by showing that firms adopting a mixed governance structure are more innovative than those adopting a single structure. In addition, this work seeks to determine whether the complementarity between internal and external governance structures influences firms’ innovativeness. Going beyond Grandori and Furnari’s approaches (Organ Stud, 19:459–485, 2008; Structural heterogeneity, organizational robustness and innovation performance. V Research Workshop on Institutions and Organization: Goncalves, Sao Paulo, 2010), which demonstrate that there is a relation between internal governance structures and degree of innovativeness, this paper also incorporates an external framework, in which we posit that integration with other firms—in this case suppliers and customers—provides information, knowledge, and complementary resources that tend to enhance innovativeness. The innovation process involves a combination a firm’s of internal and external governance structures. We test our model based on data from a survey of 214 Brazilian Coffee Roasting & Grinding (R&G) firms. To determine the combinations of structures we used the Qualitative Comparative Analysis (QCA) software fs/QCA, version 2.0 (Ragin, User’s guide to fuzzy-set/qualitative comparative analysis 2.0. Department of Sociology, University of Arizona, 2008). By allowing us to identify the organizational requirements that create greater opportunities for innovation, these results can guide public and business policies in order to enable companies to improve their rate of innovation and competitiveness in their markets.