Innovation Scope and the Performance of the Firm: Empirical Evidence from an Italian Wine Cluster

Introduction

Innovation is undoubtedly one of the most studied topics in management. From Schumpeter’s (1942) pioneering contributions onwards, innovation has been tackled as a multifaceted concept with meaning extending well beyond the narrow boundaries of technological innovation. The Oslo Manual (OECD, 2005: 46) shares the same vision and defines innovation as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations”.

Despite significant research, the relationship between innovation and performance remains an open issue. Findings from field research conducted at both the firm and the regional level suggest a need for further investigations (e.g., Garcia & Calantone, 2001). The majority of studies carried out at the firm level are grounded in the resource-based theory of the firm. They are mainly interested in finding meaningful correlations between performance and the possession of innovation-related resources, such as investments in R&D activities or innovation-related capabilities, such as the degree of innovativeness of the firm (Barney, 1991; Amit & Schoemaker, 1993; Hamel & Prahalad, 1994). One one hand, some of those studies highlight a positive effect exerted by innovation-dedicated resources and capabilities on performances (e.g., Hall & Mairesse, 1995; Adams & Jaffe, 1996; Chesbrough, 2007). However, other studies highlight that investing in innovation could be a necessary but non-sufficient condition to get better results at the economic and competitive level (Kafouros et al., 2008; Rosenbusch et al., 2011; Lazzeri & Piccaluga, 2011).

Fewer studies that explore the innovation construct examine the various sides that comprise the innovation activity and connect them to the performance of the firm (Sawhney et al., 2006). However, studies carried out at the regional level are mainly focused on the so-called “agglomeration effect” and its impact on firms. The agglomeration effect is supposed to be positive for clusters according to the Marshallian view and the extant literature on Regional and National Innovation Systems (Cook et al., 2007; Camagni & Cappello, 1997). However, the validity and consistency of the agglomeration-effect have been heavily discussed in recent literature (Malmberg & Power, 2005; Grandinetti & De Marchi, 2014). Within this puzzled framework, this chapter aims to deepen our understanding of this relationship in a particular sector— the wine sector. The results of our study refer to a homogeneous territorial area that is known as the Friuli Wine Cluster (Venier, 2013). The cluster takes its name from the Friuli Venezia Giulia region which is located in the northeast of Italy. Hence, despite being based on primary data direct from firms, our research put together two levels of analysis: the firm level and the cluster level.

Empirical results support the view that the most successful wine makers are those who considerably revised their innovation-related processes in a more market and experience-related way in recent years. Furthermore, despite being more open to foreign markets, the most successful companies are also the ones that have more intimate relationships with other firms and public and private institutions inside the cluster.