External and Internal R&D, Capital Investment and Business Performance in the Spanish Agri‐Food Industry

Abstract

We examine the effects of external and internal expenditure on research and development on the business performance of industrial agri-food enterprises. For this purpose, a data sample from the Encuesta de Estrategias Empresariales en Espan˜a (Survey of Business Strategies in Spain) was used, which includes information on more than 400 businesses over the period 2000-2008. The econometric analysis uses quantile regressions to address the vast asymmetry of the variables and to identify non-linear relationships. The results reveal interesting new findings on the impacts of R&D on the agri-food industry. The most evident, although not the most immediately apparent, relationship concerns the positive effects of external R&D on business performance. Internal R&D was also revealed to be an important way of enhancing the productivity of SMEs. In addition, the modernisation of the production process through investment in capital goods continues to be the main path to improve competitiveness. However, support was found neither for the inverse relationship, that is the most profitable firms are those that spend the most on R&D, nor for complementarity between external and internal R&D. The latter would imply that the bulk of Spanish agri-food firms have at most the capacity for only one type of R&D.

Determinants of Agri‐food Firms’ Participation in Public Funded Research and Development

“…As we said previously, some authors detected a positive relation between larger firms and innovation, because of improved access to human, financial resources and profit persistence (Bayona et al,2013;Karantininis et al, 2010;Laforet, 2008;Lin & Lin, 2012;Naranjo-Gil, 2009;Segarra & Arauzo, 2008;Hirch & Gschwandter, 2013;Triguero et al, 2013). On the contrary, other authors underline the ability of SMEs firms to innovate, based on their flexibility, interpersonal communication, etc (Bayona et al, 2001;;O'Regan et al, 2005;Maravelakis et al, 2006;Pla-Barber & Alegre, 2007;Alarcón & Sánchez, 2013). Some other authors do not detect relation between R&D and firm size (Pisano, 1990;PlaBarber &Alegre, 2007 andRobertson &Gatignon, 1998), so the impact of size on R&D is a question that needs further research, as it is undertaken in this paper.…”

Successful in the Long Run: A Meta‐regression Analysis of Persistent Firm Profits

“…With regard to analyzed economic sectors, a large portion of studies concentrates on entire manufacturing industries. A few articles also focus on manufacturing subsectors such as the food industry (Alarcon and Sanchez, ; Hirsch and Gschwandtner, ) or are restricted to publicly quoted firms (Schmidt, ). Initiated by Goddard et al .…”

“…Table reveals that 37.0% of the refer to the banking sector. Another sector that has attracted notice is the food industry (e.g., Alarcon and Sanchez, ). Hirsch and Gschwandtner () find for the EU food industry a low degree of profit persistence and conclude that this sector is characterized by extreme competition and market saturation.…”

R&D and Innovation in Food Processing Firms in Transition Countries

“…Innovation is one principal strategy through which food processing firms can respond to this liberalised economic environment. Indeed, the essential role of innovation in promoting the competitiveness of food processing firms in domestic and international markets is well documented in the literature (Grunert et al ., ; Furtan and Sauer, ; Rama, ; Drivas and Giannakas, ; Karantininis et al ., ; Alarcón and Sánchez, ). We examine the implications of the liberalised economic conditions associated with the economic transformation in transition countries for innovation in the food processing sector.…”

“…A strand of empirical literature examines the factors influencing R&D and innovation (henceforth, R&D/innovation) activities in food processing firms in different countries and regions (Avermaete et al ., ; Capitanio et al ., ; Karantininis et al ., ; Ghazalian, ; Alarcón and Sánchez, ; Fearne et al ., ; Triguero et al ., ; Domenech et al ., ). This empirical literature reveals varying qualitative and quantitative relationships between firm characteristics and R&D/innovation activities across countries and regions.…”