Innovation in European food SMEs: determinants and links between types

Abstract

The food sector has traditionally been considered one with the lowest research and development expenditure to value added ratio. In recent decades, however, the business environment has become more demanding in terms of technological inputs for reasons related to food safety, quality and also the globalisation of the food market. This provides a strong incentive to innovate, especially for small and medium-sized enterprises (SME) seeking to remain in business. Most businesses operating in the food sector belong to the SME category which, based on the literature, tends to have a low level of research capacity. This study seeks to identify determinants of the types of innovation adopted and associations between them by analysing a sample of European food SMEs. For this purpose a non-parametric analysis, namely the classification tree technique, is carried out. The main finding is that due to the technological factors inherent in the food industry, a tight linkage exists between product, process and market innovation. Moreover, the study shows that collaboration between competitors encourages SMEs to engage in market, process and business model innovation. Conversely, synergy with suppliers and customers supports product innovation.