Does innovation propensity influence wineries’ distribution channel decisions?

Abstract

Purpose The aim of this paper is to analyze the relationships between distribution strategies and the level of innovation propensity in the winemaking industry. It intends to identify the existence of patterns around the way wineries innovate and the way distribution channels are used. These determinants can support or constrain wineries’ behaviors in their strategic choices related to distribution channels. Design/methodology/approach The sample comprised 191 Italian small- to medium-sized enterprises in the wine industry. First, a two-step cluster analysis was used to identify patterns in the level of innovation propensity and differences in distribution channel strategies. Second, the research question was tested using multinomial logit regression. Findings Five clusters of innovation propensity were identified, varying from “no propensity to innovate” to “propensity for radical innovation”, and three clusters of distribution channel strategies were found. A significant negative relationship between innovation propensity and distribution channel strategies was revealed. This means that the greater the propensity to innovate, the smaller the need for a wholesale distribution option. Research limitations/implications As with most research, there are limitations to this study. First, the sample is from only one country. A second limitation is the sample size (191 Italian firms). A sample including large firms can be used to further validate the findings. Linked to the sample, another possible limitation is that all respondents were small- and medium-sized enterprises from a single industry. Practical implications This study contributes to the current innovation research by showing the existence of a negative relationship between innovation propensity and the choice of distribution channel in the wine industry. This knowledge is precious to entrepreneurs and managers in the wine sector, allowing them to better consider not only the type of strategies related to distribution channels but also the importance of building the firm’s propensity to innovate into the strategic decision-making process. Furthermore, the paper provides an opportunity for practitioners to reflect upon the fact that changing the distribution channel is more than just changing the outlet for their product; it might also require a revision in their innovation propensity to better facilitate the process. Social implications There are also social implications, in particular providing an advantage for consumers. The major advantage is based on the fact that consumers are now aware that the level of innovation propensity in a wine industry is directly linked to the type of distribution channel adopted. Therefore, wines with low-innovation propensity are most likely found to adopt wholesale distribution strategy, while the more innovative wineries adopt the wine expert and direct distribution channels. Originality/value For the first time, a cluster analysis approach was used to review different typologies of Italian wineries based on their propensity toward to innovation and subsequent distribution strategies. This study further explains the direct relationship between innovation propensity and the strategic choice toward between long or short distribution channels.