Determinants of innovation by agri-food firms in rural Spain: an MCA PLS-SEM analysis

Abstract

The development of a sustainable rural world must have an innovative agri-food industry as one of its bases. This article offers a comprehensive analysis of the main drivers of innovation by small and medium agri-food companies in Spain. A combined multiple correspondence analysis (MCA) and structural equation modelling (PLS-SEM) is performed to identify the key factors among 63 indicators in the domains of the technology-organisation-environmental approach. The results suggest an open field of research. Positively related to innovation are firm capacities and financial resources. Moreover, agri-food firms innovate in products, processes or marketing in order to increase sales, enter new markets, or increase the quality of their products. On the contrary, most of these firms did not innovate to reduce costs or time of response, meet regulatory compliance or maintain employment. Authorities should be aware that smaller and younger agri-food firms face more restrictions to innovate, and firms feel public policies could help to meet market demand as a driving force of innovation. On the contrary, essential objectives of regional development such as environmental compliance and maintaining employment seem to depend solely on public action.