Drivers and Barriers to Innovation in the Food Processing Industry Continued. A Comparison of the Netherlands and the Shanghai Region in China

This paper aims at comparing the innovative potential of leading food processing companies inemerging and developed economies. We asked ourselves how the clearly differing economicand social conditions of two areas that are only comparable in terms of their number ofinhabitants (about 16 to 18 million), namely a fast growing emerging economy (the Shanghaiarea in China) and a developed economy (The Netherlands) affect competitiveness and innovationof their leading prospector companies. Our study population consisted of 31 respondents(CEOs, CTOs and R&D directors) from 18 leading prospector companies in the food processingindustry: nine in the Netherlands and nine in Shanghai. We focus on how the combination ofexternal forces exerted by actors in the network (competitors, suppliers and buyers) and internalforces (especially innovation capabilities) affect competitiveness and innovation performanceof these companies. A 52-item research questionnaire, based on industrial organization theoryand the Resource-Based-View, was designed for this study, including quantitative questions oninnovative input and output and business performance, and qualitative questions about competitivepressure and the quality of the innovation process.Interesting findings are that both innovative as well as business performance are predominantlyrelated to the companies’ internal (innovation) capabilities. As expected, clear differences betweenChinese and Dutch companies were found regarding the external forces as well as in theinternal capabilities they deploy to survive The pressure from the external environment,especially the power of buyers and the threat of new entrants is clearly felt more strongly by theDutch companies than by their Chinese counterparts. The Chinese companies report to significantlyuse more KPI’s to monitor the R&D process, whereas the Dutch companies are significantlymore active in stimulating an innovative culture. Interestingly, however, neither ofthese differences leads to significant differences in business or innovation performance betweenthe two groups in our study.The answer to the question whether agri-food companies in developed economies still have acompetitive edge compared to those in emerging economies, such as China that emerges fromthe data collected so far points in the direction of the disappearance of the traditional advantageof the companies from developed economies: no significant differences could be found neitherin innovation performance, nor in business performance among the companies from the Netherlandsand the Shanghai region in China.