Start-ups' innovation processes and performance in the food industry: a stochastic frontier analysis

Abstract

PurposeThe food industry has always been supplier dominated, characterised by low research intensity, product line extensions and me-too products. However, recent changes have led new firms operating in the food industry to invest in research and development (R&D) activities in order to introduce innovations into the market and achieve superior performance. This paper aims to verify whether these changes are noteworthy by investigating whether and which innovation-related factors (investments in R&D activities, qualified scientists/engineers and holding a patent) can affect the performance of food start-ups.Design/methodology/approachA sample of 108 innovative start-ups operating in the food industry in Italy was selected, and a stochastic frontier analysis was carried out. This methodology was chosen because of the factorisation of the error term, which is divided into a unilateral component (revealing the inefficiency of the statistical model) and a symmetric component (revealing random gaps).FindingsStatistical elaborations provide two interesting results. One concerns the error term (only random inefficiency affects results) and the other relates to innovation-related factors. Only investments in R&D activities positively affect the performance of innovative start-ups in the Italian food industry.Originality/valueResults confirm the relevance of investments in R&D activities for Italian start-ups aiming to achieve superior performance in the food industry. These results confirm relevant changes are occurring in what was a supplier-dominated industry and disclose how start-ups should master the dynamics of innovation and allow for speculation on future industry trends.