Borderless ideas – open innovation in the Hungarian food chain

The purpose of this paper is to investigate the innovation performance in the Hungarian food chain using the concept of open innovation.

Empirical analysis is based on the data from a 2014 survey of more than 300 small- and medium-sized agricultural producers, food processors and food retailers. The authors analyse innovation performance taking into account not only the direct impacts of external knowledge inflows and absorptive capacity, but also the indirect effect of external knowledge inflows mediated by the existence of potentially complementary internal resources (absorptive capacity). The authors determine the impact of open innovation and a company’s absorptive capacity on innovation performance employing two stage approaches. First, the authors apply a semi-non parametric probit model. Second, the authors run cluster analysis to categorize companies based on their open innovation, absorptive capacity, firm and managerial characteristics.

Results imply the openness along the food chain may decrease the introduction time of innovation in all areas of innovation, as well the innovation propensity. The openness towards competitors may decrease the introduction time of innovation with regard to technological innovation, but it may increase with regard to product innovation, as well the innovation propensity. The absorptive capacity decreases the introduction time of technological product, organizational and market innovation. There is a positive relationship between the use of external knowledge (when it is defined as openness with competitors) and own innovation capacity with regard to innovation propensity, but not when it is defined as openness along the food chain. The enterprises of the sample are dividing into two groups: innovative (dominated by processors) and not innovative ones (dominated by producers and retailers).

Some limitations of the paper are worth mentioning. The study is limited in its scope with regard to the research setting and the unit of analysis (Hungarian food chain). With regard to the former, our sample consists of 302 SMEs along the food chain, almost equally distributed as producers, processors and retailers. At the end of 2014 in Hungary there were 7,766 producers, 2,681 processors and 6,420 retailers in this category, which means 1.3 – 3.7 per cent coverage (Agrárgazdasági Kutatóintézet, 2014). Regarding the latter, the paper defines food chain in a narrow sense (three levels); therefore, the results represent the perspectives of a limited number of food chain partners (producers, processors, retailers). Were the definition to be widened, input from additional members would be necessary (such as suppliers of suppliers, customers of customers, third parties or competitors). Nevertheless, although the scope may be narrow, it is appropriate for our objective. Future research is recommended to overcome the paper’s limitations (i.e. extend its scope to other countries, sectors and levels of chain).

The analysis provides valuable inputs for policy makers and SMEs along the food chain that wish to build and improve (open) innovation system. Policy makers would need more targeted innovation development programmes in order to solve the tight innovation bottlenecks. These programmes should target first of all at expanding the absorptive capacities of the food chain’s enterprises. The authors also need further research in order to investigate how much the restricted use of open innovation systems in the Hungarian food enterprises is linked to the cost and benefits of creation such systems.

The authors analyse innovation performance taking into account not only the direct impacts of external knowledge inflows and absorptive capacity, but also the indirect effect of external knowledge inflows mediated by the existence of potentially complementary internal resources (absorptive capacity).