Combining tradition and innovation in food companies’ business models. An empirical study on Italian food firms

Abstract

Firms' strategic choices have a significant impact on economic and financial performance. The links between strategic choices in terms of innovation and tradition and companies' growth and profitability performance have gathered increasing interest in recent research.

Starting from a sample of 306 firms operating in the Food and Beverage sector included in the "Food Industry Monitor" database, we collected financial data over a period of nine years, which allowed us to define the companies' performance with respect to growth and profitability.

The database was integrated with information from a questionnaire administered to the companies of our sample, which provided us with both quantitative and qualitative data. Key characteristics associated with innovation and tradition were linked to firms, investigating whether they are associated with better growth and profitability, as well as a competitive advantage in the sector.

We identified five factors as explanatory variables: Tradition, Territorial Connection, Innovativeness, Craftsmanship, and Corporate Social Responsibility (CSR). Firms were then attributed to five clusters based on the association with the aforementioned factors. An ANOVA test on the dependent variable’s variance allowed us to analyze the association between firms belonging to specific clusters and economic performance. Companies with a strong orientation towards tradition exhibit a stronger growth performance and profitability (ROS). Additionally, innovation-oriented firms show a higher profitability in terms of Return on Sales (ROS).