ABSTRACT

The focus of this chapter is on the nature and determinants of product innovation in the food industry. Contrary to a widespread and long-standing view, according to which the food industry is regarded to be a low-technology industry, this chapter starts from the fact that, indeed, it is characterized by relevant and increasing flows of product innovations. We develop two main hypotheses to explain these patterns. The first hypothesis is that product innovation is essentially incremental in this industry. This hypothesis has received increasing attention in the economics of food innovation over the past few years (Galizzi and Venturini, 1996; Traill and Grunert, 1999; García Martinez and Briz, 2000; Alfranca, Rama, and von Tunzelmann, 2002, 2003). In this chapter we reexamine the conceptual framework and the empirical evidence supporting this view. In particular, we show why R & D intensity as a measure of innovative outcome is misleading and unable to capture the actual relevance of product innovations in this industry.