THE ROLE OF INNOVATION IN THE COMPETITIVENESS OF BRAZILIAN ORGANIC
PRODUCTS
Adriana Miniussi
Universidade Municipal de São Caetano do Sul (USCS), Brazil
E-mail: adriana_miniussi@hotmail.com
Paolo Edoardo Coti-Zelati
Universidade Municipal de São Caetano do Sul (USCS), Brazil
E-mail: coti_zelati@outlook.com
Davi Lucas Arruda de Araújo
Universidade Presbiteriana Mackenzie, Brazil
E-mail: davi_lucas89@hotmail.com
Submission: 25/03/2015
Revision: 07/04/2015
Accept: 19/04/2015
ABSTRACT
This research aimed at identifying the influence of the innovation in
the competitiveness of organic agriculture and food industries in
Keywords: Innovation, Competitiveness, Agribusiness, Organic
Products.
1.
INTRODUCTION
The changes in consumer habits, created due to their
needs and desires, result in transformations in companies of the food and
drinks sector, which focus their management strategies to seek success
(GUNDERSON; BOEHLJE; NEVES; SONKA, 2014). The development of this theme is
motivated by the observation of changes in the feeding habits of the population
and growing concerns regarding the health of Brazilians. Thus, the population
developed a strong tendency to consume natural products, without preservatives
or agrotoxins, in order to improve the quality of their lives.
Considering the rooting of this new culture in
Agribusinesses need to understand the preferences of
these consumers and the impacts of this tendency for health and sustainability
over the shopping behaviors and decisions.
The organic agribusiness market is inside a very
competitive environment given that the characteristics of this sector are the
same for all agribusinesses, such as exemption in the purchase of fertilizers
or agrotoxins and the need of proper certification (GUNDERSON; BOEHLJE; NEVES;
SONKA, 2014).
The survival of a business is the result of proper
strategic planning for the competitive reality of the segment. The most
important point for a competitive strategic planning is seeking a position in
which the competitive strengths of the business act in its favor or finding a
better defense alternative (PORTER, 1980).
The organics market grows significantly since 2012 and
this is due to a Law 10.831 of December 23, 2003 regulated by Decree-Law 6.323
of December 27, 2007 governing the production and marketing of organics
products in
In the complex agribusiness segment, innovation has
become important for the Brazilian economy as it affects competitiveness in all
segments. This innovation standard is a characteristic of this particular
segment, presenting a positive effect and adding value to the product (FURTADO,
2004). Therefore, this study focused on the following question: how much
influence does innovation has over competitiveness in the Brazilian organic
agribusiness segment? Considering this scenario, this study aimed at answering
this question.
The study is justified by the fact that the segment of
organic products is based on the respect for the environment, discouraging the
use of agrotoxins (GIL; GRACIA; SANCHEZ, 2000). Another point that justifies
this study is the fact that 8% of the Brazilian organic products are destined
for the internal market while 92% is destined to exportation. The
Taking this into account, we established the
hypothesis to be tested: H1 – Innovation has a positive effect over the
competitiveness of companies in the Brazilian organic agribusiness segment.
This study has been structured in six sections. After
this introduction, we conduct a review of the literature about corporate
innovation and competitive strategies. Then, we present the methodology and
analyze the results. Finally, we explain the discussion and conclusions drawn
from the study and suggest future studies in the field of organic agribusiness.
2.
LITERATURE REVIEW
The existing literature was reviewed, focusing on
concepts and studies conducted on the subject of this study.
2.1.
Corporate
Innovation
According to Schumpeter (1934), economic development
is a process spontaneously initiated in a discontinued manner, spontaneously
generating the requirements for new developments. Therefore, he emphasizes the
importance of large organizations as the mainstay in for economic development
through the gathering of creativity, the gathering of non-transferable
knowledge and mainly the capacity for innovation. However, Tidd, Bessant and
Pavitt (1997) state that innovation enable changes through new ideas in the
configuration of products or services so that these may be offered in a
competitive environment.
Miranda and Figueiredo (2010) define innovation as
process rather than isolated events. It is the implementation and combination
of creative ideas inside an organization aimed at offering improvements and
advances in the internal and external markets. Organic agribusinesses, aiming
at better positions inside the market, engage in a creativity and innovation
battle focused on understanding consumers and their tendencies. Adjusting the
innovation processes to the new demands represents a great challenge for the
segment (COTI-ZELATI; BATAGLIA, 2012).
Corporate innovation has a positive impact on the
company’s performance just as a focus on corporate marketing has a positive
impact on innovations. The authors also noted that corporate learning has a
positive influence on the innovation process, directly influencing results. They
also emphasize that corporate learning has a greater impact on innovation than
a focus on marketing and that both are requirements for the innovation process
to happen (JIMÉNEZ-JIMENEZ; VALLE; HERNANDEZ-ESPALLARDO, 2008).
Also according to Jiménez-Jimenez, Valle and
Hernandez-Espallardo (2008) innovation is classified in two ways by the
doctrine: technical innovation and management innovation. This latter relates
to the new procedures, policies and forms of organizations. Innovation
technique, in turn, relates to the development of new products and / or
services, introduction of these new products to market and to adopt new
production methods, distribution and services.
The growth of the agribusiness segment demands
constant actions to implement technologies, creates national innovation
systems, creates efficient connections to exchange scientific information
focused on production and conduct research spreading scientific knowledge on
biochemical and physiological processes in the soil and in plantations (GONCHARAOV;
RAU, 2009). However, data suggests that the investment of Brazilian businesses
in innovation is focused in tangible assets such as machinery and equipment,
with only a small number of businesses dealing with research and developing a
relationship with universities (CASSIOLATO, 2004).
According to Goncharov and Rau (2009), the innovation
process encompasses the following factors: investment in technology through
R&D projects; machinery & equipment; new technologies, including
patenting rights, licensing rights and acquiring software; improvement of the
production; custom training projects; marketing researches and other types of
investment.
According to Cassiolato (2004), indicators for
corporate innovation are related to borders (technological agreements between
companies, states and countries), knowledge base (co-patenting and
co-publishing), R&D infrastructure (software development, training,
engineering projects, consulting, provision of inputs) and innovation
characteristics in businesses (exchange of information with clients,
interaction with suppliers and competitors, participation in public R&D
projects, association with unions and similar organizations, participation in
courses and seminars).
In the same line, Coti-Zelati and Bataglia (2012) have
shown that the following factors influence the process of corporate innovation:
R&D, spreading of knowledge, creation of innovative products, creation of
R&D department, changes in the presentation of products, analysis of
competition, software upgrades, introduction of new products in the market, new
internal processes, participation in training, updating manuals, innovations in
the management system and investment in processes.
On the other hand, the high level of opportunities,
the moderate degree of suitability of new technologies and the time spent with
their adaptation increase instability and promote the entrance of new
innovative companies (RÉVILLION; PADULA; FEDERIZZI; MARTINELLI JR.; MANGEMATIN,
2004; GUEVARA, 2008). Therefore, businesses focused on knowledge are
characterized by the introduction of radical innovations and products with a
short lifespan, competing for highly competitive markets with potential for
growth. Considering the pace of this technological race, decision makers are
challenged to adopt strategic stances that develop new technologies and create
marketing opportunities for their products (BIGNETTI, 2002).
2.2.
Competitive
Strategy
According to Aaker (1991), macro strategies encompass
strategies of several company departments, such as positioning strategies,
pricing, distribution and competition strategies. However, focusing on how to
compete is not the only way to be successful and obtain competitive advantages.
There are three key factors for the creation of a competitive advantage: i) the
competition base should be supported by a collection of assets and capabilities
as the advantage cannot be maintained without such support; ii) choosing the
wrong target-market for the product or service may result in failure when the
strategy is created based on assets and capabilities due to it not working in
the chosen market; iii) the company should know its competitors and assess
whether they are relatively weak or strong in terms of assets and capabilities
(PORTER, 1980).
Competitiveness is the desired result, obtained most
of the time through internal efforts, while innovation is subordinated to
corporate strategies. Case studies point towards a larger link between strategy
and innovation, with technology showing great influence over strategic
decisions (BIGNETTI, 2002). According to Porter (1980), competitive strategy
may be defined as a collection of assertive actions taken to create a favorable
position inside a given company, successfully facing competition and,
therefore, providing a larger turnover for the investment. Under this light,
strategies should be carried out carefully, using all available resources to
identify threats and make the most of opportunities in a market segment.
Still according to Porter (1980), competitive advantage
emerges from the several tasks conducted by the business, from planning to
implementation. Therefore, these tasks as whole allow represent the foundation
for creating uniqueness, such as acquiring raw-materials at lower prices or
attending to consumer needs more efficiently. As such, understanding how these
tasks are conducted and how they are interrelated is crucial to understand the
sources of competitive advantages for the business (AAKER, 1991; PORTER, 1996).
Under this light, Porter (1980) defines three types of competitive advantages:
i) cost leadership; ii) uniqueness; iii) focus.
According to Barney and Hesterly (2012), strategic
managing begins with the definition of the company mission, when it defines its
goals, what may be analyzed in the company’s internal and external environments
and the practices allowed for attaining competitive advantage.
Competitive strategy plays a key role in the success
of a business. As such, it is used by companies in their process of facing
competition, occupying a privileged position in the creation of the economic
discourse. Strategic success depends on the business’ ability to recognize its
current conjuncture, identify and neutralize threats or act on the
opportunities provided. Competitive advantage is merely the ability to generate
a larger economic value.
In the scope of agribusinesses, competitiveness is a
result of the entire process of strategic managing and the realization of a
possible competitive advantage. A business with a greater ability to generate
economic value than its competitors attains a competitive advantage in its
market (BARNEY; HESTERLY, 2012). That said, competitive advantage is born from
pressure, challenge and adversity, which are power motives for change and
innovation. In the scope of international competition, however, success is a
direct result from the ability to innovate and maintain competitive advantage
for decades under the light of external change.
Innovation in the production process and technical
investment and innovation, as well as marketing methods, are important factors
identified within competitive methods adopted by businesses (MORAES; ZILBER,
2004). One may say that the business becomes competitive when it seeks
strategies that add value to the business, strengthening or creating
competitiveness. According to Porter (1996), innovation processes in a business
may significantly affect the behavior of that market segment, positively affect
the business in the market and affect the battle for resources.
3.
Methodology
In this section the methodological procedures were
presented.
3.1.
Method
and Nature of the Study
This study employs a quantitative approach and is
exploratory. In what regards exploratory research, the main goal is providing a
general view of a given fact and formulate more precise problems or hypotheses
to be explored in later studies (BLAIKIE, 2009). This study employs a
cross-sectional research, collecting data from a single point inside a given
period of time (PINSONNEAULT; KRAEMER, 1993).
3.2.
Data
Collection and Research Subject
Data collection was conducted in a
single point in time from April 2014 to May 2014. The study encompassed the
organic agribusiness segment in the main production centers. A questionnaire
was sent by internet with multiple-choice questions adopting the Likert scale
regarding competitive strategies for companies in the segment.
The questionnaire was created based
on Moraes and Zilber (2004), who identified the following dimensions for
competitiveness: 1. cost leadership strategies; 2. differentiation strategies
and 3. focus strategy. It was also based on Coti-Zelati and Bataglia (2012),
who set dimensions for variables involved in the process of innovation basing
themselves on Jiménez-Jimenez, Valle and Hernandez-Espallardo (2008): 1.
production innovation; 2. process innovation; 3. management innovation.
3.3.
Population
and Samples
This study obtained a sample of 54
respondents distributed in 10 segments of organic agribusiness. All of them are
managers in their respective organizations. In order to account for the size of
the organizations, 50% of the samples were obtained from organizations with 500
to 1,000 employees, 30% from organizations with 1,000 to 10,000 employees, 15%
from organizations with 50 to 100 employees, 3% from companies with 101 to 500
employees and 2% from companies with more than 10,000 employees.
The average times respondents have been in
the organic agribusiness segment is 8 years and the average time respondents
have been employed by their respective companies is 4 years.
Table
1: Distribution of respondents per segment.
|
SEGMENT |
SAMPLES |
FREQ. (%) |
|
Sugar & Alcohol |
10 |
18,52 |
|
Meat |
3 |
5,55 |
|
Pasta |
5 |
9,25 |
|
Vegetables |
4 |
7,41 |
|
Coffee |
6 |
11,11 |
|
Basic Food |
9 |
16,66 |
|
Milk |
5 |
9,25 |
|
Grains |
6 |
11,11 |
|
Bread |
4 |
7,41 |
|
Sweets and Jams |
2 |
3,73 |
|
TOTAL |
54 |
100 |
3.4.
Data
Treatment
After obtained, the data was processed in
the Smart PLS 2.0 M3 software to assess the results.
In order to validate the proposed
measurement model, we used factor loading indexes, AVE, Cronbach Alpha and
composite reliability. In order to validate the structural adjustment model, we
used a correlation coefficient (R2) and the significance between variables.
In addition to these results, we also
employed descriptive analysis techniques aiming at finding a relation between
the theoretical references and the empirical study.
3.5.
Measurement
Model
According to the theoretical foundation
and to the results of the described study, we established the hypothesis to be
tested: H1 – Innovation has a positive effect over the competitiveness of companies
in the Brazilian organic agribusiness segment.
Considering the articles analyzed, this
study was based on the structural model shown in Figure 1.
H1
INNOVATION
COMPETITIVENESS
Figure 1: Structural Model.
The study employed a descriptive research
of quantitative nature. In accordance with Vergara (2010), quantitative
research is employed in studies seeking to compare the relationship between
variables.
4.
RESULTS
In order to validate the proposed measurement model,
we used factor loading indexes, AVE, Cronbach Alpha and composite reliability.
In order to validate the structural adjustment model, we used a correlation
coefficient (R2) and the significance between variables.
Factor
Loading is the correlation between the original variables and
the factors (HAIR JR.; BLACK; BABIN; ANDERSON, 2010). Data analysis considers
that close values and values over 0,5 are significant while values over 0,41
suggest moderate association, as proposed by Hair Jr., Black, Babin and
Anderson (2010).
Table 2 presents the final values regarding the factor
loadings obtained.
Table 2: Factor
Loading.
|
STATEMENT |
COMPETITIVENESS |
|
|
1. Our company conducts strategic planning. |
0,576 |
|
|
2. The company analyzes more than two action alternatives in strategic
decisions. |
0,498 |
|
|
3. Our company creates partnerships and/or alliances with suppliers to
develop new products or Technologies. |
0,675 |
|
|
4. Our company keeps clients that contribute towards the development of
new products or technologies. |
0,522 |
|
|
5. Our company always tries to improve new technologies and products. |
0,589 |
|
|
6. The increase of sales was satisfactory last year. |
0,678 |
|
|
7. The productive ability of the company increased significantly last
year. |
0,712 |
|
|
8. We know how to identify opportunities through the weaknesses of our
competitors. |
0,492 |
|
|
9. Identified opportunities resulted in competitive advantages to the
company. |
0,547 |
|
|
10. The number of competitors entering in the organic agribusiness segment
is rising in |
0,655 |
|
|
11. Other companies also make the products our company makes |
0,661 |
|
|
12. New products threaten the sales of our company significantly,
affecting our final results. |
0,701 |
|
|
13. Over 50% of our sales correspond to clients who buy from us for over 2
years. |
0,645 |
|
|
14. Our clients increasingly demand new products. |
0,871 |
|
|
15. Our company procures its main components from more than three
suppliers. |
0,890 |
|
|
16. Our company quickly adopts new technologies available in the market. |
0,805 |
|
|
|
CORPORATE INNOVATION |
|
|
17. Our company quickly restructures its internal resources due to threats
to our sales. |
0,965 |
|
18. Our company has introduced more new products than our competitors
have. |
0,887 |
|
19. Our company is a pioneer in the introduction of new products. |
0,798 |
|
20. Efforts towards innovation are divided between teams and during
training. |
0,873 |
|
21. The number of changes in the innovation process of our company has
been larger than our competitors’ number. |
0,770 |
|
22. Our company has fast responses when our competition presents new
processes. |
0,726 |
|
23. Our company has sought more innovations in the management system than
our competitors. |
0,914 |
|
24. Our company invests in new management systems. |
0,901 |
|
25. Our company is a pioneer in the introduction of new management
systems. |
0,769 |
Cronbach Alpha assesses the
consistency of the entire scale, referring to a reliability value that
determines 0,7 as the acceptance index (HAIR JR.; BLACK; BABIN; ANDERSON,
2010). The values in Table 3 have shown satisfactory values for Cronbach Alpha,
with all dimensions presenting values over 0,7 for the competitiveness factor
and over 0,8 for corporate innovation, suggesting high reliability for the
results presented, according Hair Jr., Black, Babin and Anderson (2010).
Table 3:
Cronbach Alpha.
|
DIMENSION |
CRONBACH ALPHA |
|
Cost Leadership Strategy |
0,7231 |
|
Differentiation Strategy |
0,8421 |
|
Focus Strategy |
0,7132 |
|
Product Innovation |
0,8964 |
|
Process Innovation |
0,8371 |
|
Management Innovation |
0,8106 |
AVE should be higher or equal to 0,5
to be considered acceptable (HAIR JR.; BLACK; BABIN; ANDERSON, 2010). According
to the results shown in Table 4, the values were satisfactory for
competitiveness and innovation.
Composite reliability, according to Hair Jr., Black,
Babin and Anderson (2010), should be above 0,5 to be considered acceptable.
According to Table 4, the values for composite
reliability for competitiveness and innovation are above 0,8, confirming a high
reliability.
Table 4: AVE and
Composite Reability.
|
DIMENSION |
AVE |
COMPOSITE RELIABILITY |
|
Cost Leadership Strategy |
0,6168 |
0,8892 |
|
Differentiation Strategy |
0,5720 |
0,8451 |
|
Focus Strategy |
0,7622 |
0,8949 |
|
Product Innovation |
0,8833 |
0,9129 |
|
Process Innovation |
0,7897 |
0,9155 |
|
Management Innovation |
0,8613 |
0,9044 |
Figure 2 continues the analysis of the measurement and
structural models. R2 refers to the percentage of the independent variable
in relation to the dependent variable and the value should be at least 25% (HAIR
JR.; BLACK; BABIN; ANDERSON, 2010).
The R2 value obtained for the innovation
and competitiveness variables was 0,54, as shown in Figure 2. The corporate
innovation variable explains 54% if the competitiveness variable for the
organic agribusiness segment.
INNOVATION COMPETITIVENESS
0,000
0,540
Figure
2: Structural Model (R²).
According to Hair Jr., Black, Babin and Anderson
(2010), in order to significance to exist, the value of t should higher or
equal to 1,96 or the value of p should be lower than 0.05. Figure 3 shows that
the value for the relation between innovation and competitiveness for this
study has shown to be significant, as the value of t is 36,831 (p=0).
36,831
INNOVATION COMPETITIVENESS
Figure
3: Structural Model (Significance).
5.
DISCUSSION
The results show a relation of 54% and a positive
significance (t = 36,831) between the corporate innovation construct and
competitiveness in the organic agribusiness segment. The innovation process of
a company, either in terms of products or in terms of process, creates a
barrier for the entrance of new competitors, resulting in a better positioning
of the organization in its Market (PORTER, 1996).
As pointed by this study, innovation plays a
significant role in competitiveness between companies in the organic
agribusiness segment. If the companies consider the innovation process as a
priority and observe global tendencies pointing towards the growth of the
segment for the next years, they will enjoy a competitive advantage over competitors.
6.
CONCLUSIONS
This study tried to contribute to organic agribusiness
identifying whether innovation positively influences the segments competitive
strategies. For the reason, we conducted a quantitative research with 54
professionals working directly with the segment.
After analyzing the data and the results, we could
confirm a positive influence of the corporate innovation construct over
competitiveness in the organic agribusiness segment. Therefore, the H1
hypothesis has been confirmed. The advantage attained by the organization when
allocating resources to innovation is the front door for a valuable position in
the market.
The relationship evidenced by this study shows that,
aside from the positive influence, innovation is also responsible for a large
part of the market repositioning for companies that desire to attain market
leadership in the segment. Therefore, the study enables managers to reassess
their strategic planning and change the focus of their competitive strategies
towards investment in innovation.
As described, factors such as the insertion of new
products or processes, new marketing strategies, new management models,
training, new management software, new technologies, among others, are
considered innovation. The study provides an area of discussion and a theme for
new researches regarding innovation in competitive strategies and general
knowledge regarding the segment.
As the study adopted a descriptive approach, it
considered sample interference as a limitation of the research method. The
questionnaire was sent to the managers of the chosen organizations under the
assumption that answers would be given by them themselves. Ultimately, there
may be a number of respondents below the requirement for publishing academic
studies. Despite the limitations described, the study has proved to be true and
reliable regarding the result. That is to say, the interpretation of data was
conducted based on the hypothesis found in the theoretical references.
For the continuation of this line of research, we
suggest: i) identifying the influence of imitation in the process of the
segment; ii) confirm in which specific industry of corporate innovation is more
frequent; iii) collecting longitudinal data so as to identify whether the
opinion is managers regarding the influence of innovation over competitiveness
in the segment can change over time.
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