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What's driving innovation in small businesses in Australia? The case of the food industry

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  • Franklin A. Soriano
  • Renato A. Villano
  • Euan M. Fleming
  • George E. Battese

Abstract

There is strong evidence that innovation is a primary driver of a nation's economic growth. As Australia continues to compete in the global economy, it is imperative that businesses should be innovative to improve their performance. In this paper, we evaluate the status and main drivers of innovation in small businesses in the food sector in Australia. Discrete choice modelling and bootstrapping procedures are applied to a panel of firm‐level data collected through the ABS Business Characteristics Survey (2006–2007 to 2010–2011 for the Australian Bureau of Statistics’ Business Longitudinal Database Confidential Unit Record File) to investigate the factors affecting the likelihood of small food businesses to innovate. Results show that businesses are more likely to innovate if they collaborate, have higher information and communication technology intensity, and use science, technology, engineering and mathematics skills. We also found that small food businesses, even at the subsector level, do combine different types of innovation when innovating. The propensity to innovate also increases for small businesses that have flexible working arrangements, face moderate‐to‐strong market competition, operate overseas and seek finance through debt and equity. The relative importance of these factors was found to vary between agricultural and nonagricultural food subsectors.

Suggested Citation

  • Franklin A. Soriano & Renato A. Villano & Euan M. Fleming & George E. Battese, 2019. "What's driving innovation in small businesses in Australia? The case of the food industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), pages 39-71, January.
    • Handle: RePEc:bla:ajarec:v:63:y:2019:i:1:p:39-71
    DOI: 10.1111/1467-8489.12284
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    Cited by:

    1. Siddarth Roche & Sizhong Sun & Riccardo Welters, 2022. "Do Financial Constraints Reduce Process Innovation? Evidence from Australian Firms," The Economic Record, The Economic Society of Australia, vol. 98(323), pages 335-353, December.
    2. Muhammad Masood Azeem & Syed Fazal‐e‐Hasan & Leopoldo Gutiérrez & Derek Baker, 2022. "Does functional diversity in interfirm collaborations lead to innovation diversity? Firm‐level evidence from the Australian food industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(3), pages 612-637, July.

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