Chain Networks as a Leverage for Innovation Capacity: The Case of Food SMEs

Abstract

Nowadays, innovation is no longer limited to the individual firm but involves increasingly the chain network in which the firm is embedded. The chain network is considered as the place where the internal and external resources of a firm are combined and transformed, leading to innovation capacity. In the increasingly globalizing market, innovation is an important strategic tool for small and medium sized enterprises (SMEs) to achieve competitive advantage. However, SMEs are often confronted with barriers for developing and introducing innovations, such as the lack of economies of scale. Our paper investigates how the chain network is contributing to the enhancement of the innovation capacity and which chain network characteristics are crucial in this process. In contrast to previous studies at chain network level, in our research specific chain networks are investigated and compared to each other. Hence, data collection took place at different chain network levels, being the supplier, the food manufacturer and the customer, working together and consequently belonging to one specific and unique chain network.

The analysis of innovation capacity at the chain network level is realized by means of cluster analysis. This results in a three-cluster solution dividing the sample into Non-innovator chain networks, Customer-driven innovator chain networks and food manufacturer-supplier-driven innovator chain networks. Next, the influence of the chain network on the innovation capacity is examined. Thereby, the three achieved clusters differ significantly related to certain chain network characteristics. The following characteristics form an important leverage for the innovation capacity: firm size, profitability and business growth of the chain network members, as well as higher dependency, and lower levels of integration, rewarding power, social satisfaction and collaboration. The distinction of Customer-driven and food manufacturer-supplier-driven innovator chain networks reveals that the involvement of the chain network partners for the enhancement of the innovation capacity is a very important aspect. In future research, the degree of complexity of the studied system should gradually be increased, namely from a chain network of three members to more complex chain networks.