Innovation in the Spanish food and beverage industry: an integrated approach

Abstract

This paper examines the contributing factors to the innovation process in the Spanish food and beverage industry. We present a model that integrates the theory of industrial economy and the theory of resources and capabilities; this model explains that technological innovation at a firm level is affected by environmental and firm internal factors. We also analyse the investment in R&D and the probability of generating process or product innovations, independently of whether or not the companies invest in R&D. The empirical analysis shows that internal and external factors affect investment in R&D but only internal factors are related with innovation performance. The main conclusion is that neither external factors nor R&D expenditure influence the probability that a company generates innovations. We argue that there are two reasons to conclude this: firstly, the Spanish food and beverage industry generates product differentiation innovations. These kinds of innovations do not require large R&D investments. On the other hand, the sector incorporates other industries' advances in research, so it could be considered a free rider. Consequently, the food and beverage industry in Spain needs internal capabilities to adapt the mentioned external knowledge.