A case study of open innovation in the Hungarian Wine Sector
Background Information:
This section will help explain the role of open innovation in the food & beverage industry, specifically in the Hungarian Wine industry. The research was conducted Lisbeth Dries, Stefano Pascucci, Aron Torok and Jozef Toth and published by the Agricultural Economics Society and the European Association of Agricultural Economists. The information contained herein is reproduced from their research and journal article.
General definition of Open Innovation:
Examples of Open Innovation in Food & Beverage industry:
Open innovation in the Hungarian wine sector :
Results from survey data & analysis (2006 survey from 22 wine regions)
Policy implications for Innovation and research policy
- Research and development in the agri-food sector distinguishes between supply side R&D and demand side R&D.
- Supply-side R&D is targeted at improving innovations in the agricultural sector.
- Demand-side R&D is aimed at improving marketing innovations to enhance the promotion of food products.
This section will help explain the role of open innovation in the food & beverage industry, specifically in the Hungarian Wine industry. The research was conducted Lisbeth Dries, Stefano Pascucci, Aron Torok and Jozef Toth and published by the Agricultural Economics Society and the European Association of Agricultural Economists. The information contained herein is reproduced from their research and journal article.
General definition of Open Innovation:
- Open innovation means that company is increasingly using external knowledge to speed up its own, internal innovation process.
- Open innovation can also be defined as, the proportion of innovations generated in cooperation/collaboration with universities, research organizations, customers, suppliers, other agri-food companies, venture capitalists, and industry/cluster association or business assistance centers as opposed to innovations that are entirely generated within the company.
- Open innovation can occur at different stages of innovation from the idea generation phase, development phase to commercialization phase.
Examples of Open Innovation in Food & Beverage industry:
- Unilever has introduced a renewed innovation platform focused on open innovation approach.
- Heinz has established its open innovation platform including all relevant stages of food production.
- Academia Barilla (from the Barilla Group - one of the largest pasta-makers in Europe), an open, web-based platform to collect traditional recipes from the Italian cuisine and to use them to produce high quality food products.
- Dynamic Capabilities - Subset of competencies and resources which allow the firm to create new products and processes and respond to market changes.
- Adaptive Capabilities - Equates to the ways in which companies are able to explore and exploit external opportunities in the market.
- Absorptive Capabilities - Corresponds to the ways in which companies create and absorb, integrate and re-configure external knowledge from other organizations.
Open innovation in the Hungarian wine sector :
- In the wine industry, innovative marketing strategies have to be combined with sometimes secretive recipes which makes the quality of the products unique.
- One critical question to be answered by wine companies is how to arrange external ties with other companies and research organizations for leading to a successful innovation system without compromising unique assets.
Results from survey data & analysis (2006 survey from 22 wine regions)
- Degree of openness decreases as we move through the different stages of the innovation process. 63% percent occurred in the idea generation phase while it was only 43% in the commercialization phase. It was concluded that companies are inclined to be open throughout the innovation process but more so in the beginning phase.
- Firms which engaged in an open innovation process at the idea development and commercialization stage were likely to experience an average increase in turnover in the previous 3 year than those which were closed innovators at the same stage.
- Open innovation in the commercialization phase is stimulated by information flows between wine companies and downstream buyers. Where open innovation in the idea generation phase is more likely to occur in the presence of intensive information exchanges with suppliers.
- Other dynamic capabilities that play a role in explaining the degree of openness include the skill level of the labor force and the degree of in-house specific knowledge. Companies adopt open innovation process more often when they have access to a well-educated workforce and a higher share of English-speaking employees. This points towards the importance of the flow of new ideas that come from global trends and from dealing with foreign companies and stakeholders.
- Access to own specific know-how in the company and reciprocity in information exchange with competitors is negatively correlated with the openness of the innovation process.
- Larger and younger firms are more likely to adopt an open innovation process. Private partnership companies are less likely to engage in open innovation.
- Even in a relatively closed sector such as the wine industry in Hungary, the degree of openness of companies in the different stages of the innovation process is surprisingly high.
Policy implications for Innovation and research policy
- The findings are supportive of policy strategies toward creation of business parks and rural clusters, where farmers, processors and tech companies can establish joint ventures and networks to create new products and/or processing technologies.