Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4

PROBLEMS AND ISSUES IN IMPLEMENTING INNOVATIONS: CASE OF THE SLOVAK AGRIFOOD SECTOR

Download 2.73 Mb.

Page	38/62
Date	20.10.2016
Size	2.73 Mb.
	#5106

1 ... 34 35 36 37 38 39 40 41 ... 62

PROBLEMS AND ISSUES IN IMPLEMENTING INNOVATIONS: CASE OF THE SLOVAK AGRIFOOD SECTOR

246.Danka Moravčíková – Kamila Moravčíková - Izabela Adamičková

Abstract

Support of innovations in agriculture, food industry and biotechnologies has been defined as one of key priorities within the Smart Specialisation Strategy for the Slovak Republic for period 2014-2020 in direct relation to the Europe 2020 strategy and the Innovative Union initiative. Importance of innovations in agrifood sector is underlined also by the fact that food security represent a contemporary global problem. The authors describe the situation of thirty five agrifood SMEs in Slovakia regarding the problems and related issues in the process of implementing innovations and innovation-driven entrepreneurship. The data from questionnaire survey and information from interviews conducted in 2015 are interpreted in a case study paper. Majority of responded SMEs identified a lot of barriers, particularly financial and institutional. On one hand, they declared willingness to manage the innovations but on the other hand they declared non-readiness to cooperate with R&D institutions and universities in the field of technology transfer. The research was realized within the project of Establishing AgroBioTech Research Centre and research findings have been used for purposes and activities of the Transfer Centre at the Slovak University of Agriculture in Nitra.

Key words: innovation, agrifood sector, SMEs, innovation management, innovation implementation
JEL Code: O30, O32

247.Introduction

The field of innovation represents a fundamental challenge for the European agriculture and food industry, involving not only technical or technological approaches, but also strategy, marketing, organisation and design. The innovation process in SMEs differs substantially from that of large firms. In contrast to many large firms, SMEs often do not have a structured R&D process, nor people working on innovation on a permanent basis. Some authors address a set of characteristics of SMEs that can be considered as special potential for innovation (e.g. highly motivated personnel, effective internal communication, little bureaucracy, and much internal flexibility). However, SMEs are traditionally confronted with many obstacles to innovation and therefore they usually establish relations with external actors. There are specific drivers for SMEs to move towards an open innovation strategy, that may be different from the drivers towards open innovation in large firms. (Battering 2009; Menrad, 2004; Hoffmann and Schlosser, 2001; Rogers, 2004; Nooteboom, 1994)

In fact, innovation results from different forms of “entrepreneurial” thinking and doing things, as well as recombining existing knowledge in an innovative way. Innovation means more than just the creation of new products, processes and services and may also include innovation of business models, management techniques and strategies and organizational structures. (Fortuin, 2007; Hamel and Prahalad, 1994) Innovation is about solving problems and taking advantage of opportunities, and is characterised by a combination of technical, economic, organisational and external drivers. Innovations in agrifood sector are rather young policy issues, they has become an important objective of national and regional development policies. They face new challenges, including climate change, impacts of financial and economic crisis as well as energy crisis. Innovation includes a wide range of different actors which have different interests and objectives and belong both to the public and private sector. (Moravčíková and Adamičková, 2014)

248.1 Agrifood Sector within the Slovak Economy

In general, the Slovak SMEs lag behind the EU average and this situation is primarily caused by low costs into research and development and also by the focus on activities with lower added value. The conditions on the market with agro-food products have changed dynamically over the past two decades. Transformation of ownership relations in the business base was the most influencing factor followed by penetration of foreign investors into particular fields in food industry. Formation of business environment has been significantly affected by the accession of Slovakia to the EU in 2004, what have brought the need to adapt to new conditions of unified market. In the past, Slovakia was considered as agricultural country, mainly from production point of view. However, it is possible to say that role of agriculture in Slovak economy is fading – industrial production is preferred and agriculture has been declining. It has also affected decrease in rural employment. The situation in agriculture is opposite to trend in national economy and GVA decreased. When we deal with shares of GVA on economy, it is possible to see that in the case of food industry this share is twice as low as in the case of agriculture. On the other side, macroeconomic situation in food industry is more or less stable, although the development trend is decreasing. Its cause may be the trade liberalization, high import of food products or pressure from suppliers.
Tab. 1: The share of agriculture and food industry in basic economic indicators in Slovakia in period 2009-2014

Indicator Year	Share in %						Δ 2014 – 2013
Indicator Year	2009	2010	2011	2012	2013	2014
Share of agriculture on:
Gross value added (CuP)	2.53	2.08	2.57	2.70	3.10	3.74	0.64
Employment	4.56	4.39	3.31	3.12	3.37	3.28	-0.09
Average wage	78.6	76.98	78.77	79.13	77.67	79.95	2.28
Share of food, beverage and tobacco production on:
Gross value added (CuP)	1.68	1.61	1.56	1.56	1.34	1.18	-0.16
Employment	1.78	1.71	2.06	2.06	1.95	1.85	-0.10
Average wage	91.45	90.77	89.19	90.06	88.96	89.96	0.9
Share of foreign agro-food trade on:
Export	4.87	4.59	5.14	6.01	5.01	4.24	- 0.77
Import	7.17	6.65	6.68	7.06	6.5	6.3	- 0.2

Source: Own processing. Data obtained from Ministry of Agriculture and Rural Development (2009-2015)

Note: CuP – current prices; CoP – constant prices

Derived from the Table 1, it is possible to see that there was also negative balance of foreign trade in case of agrifood companies, what confirms the high rate of import. As it could be seen in the table, the average monthly wage increased in both, agriculture and food sector, although its level is still low in comparison with average wage in economy.

Structure of business environment in Slovak agriculture, agricultural services and food industry is created by a wide range of business entities. However, their amount, share and size structure have been changing constantly as well as their share in the area of cultivated land. Whole agricultural sector is influenced by the EU Common Agricultural Policy (CAP), Slovak agrarian policy (state aid) and development in social and political area. According to the latest available data from Farm Structure Survey 2013, their amount has decreased by around 149 companies (1.8 %) in comparison with 2010. However, this decrease is smaller when compared to period 2007-2010, since there were 650 farms less (7.3 %). The biggest increase in amount of holdings (29.6 %) was in case of commercial companies. This trend has copied its previous development in the period 2007–2010, as we can notice increase by 18 %. The amount of commercial has risen mainly due to the increase in amount of limited liability companies - in 2013, there was 444 more companies than in 2010. It is possible to notice similar situation in the case of other legal entities – where their amount increased by 20.7 %. On the other hand, opposite situation is in the case of cooperatives, where their share in total amount has been continually decreasing. In comparison with 2010, their share dropped almost by 3 % in 2013. Generally, the total amount of companies in agriculture decreased. The biggest share on this decline can be assigned to registered physical entities, since within three-year period, their amount decreased by 619 entities.

In terms of food industry, we can also notice decrease of companies since 2010 - there were 119 companies less in 2013. However, the biggest drop (45 %) of food companies happened in 2011. After one year, small increase was observed but it did not remain on this level and the amount of food holdings has started to fall again. In 2014, there was only 5.2 % companies less on the year-on-year basis. This fall was mainly affected by significant decrease of limited liability companies (33.1 %) and legal entities (26.5 %).

249.2 Methods and sampling

Conducted innovative audit represents the first period of the ongoing survey. This thematic area is not well known, therefore the combination of quantitative and qualitative methods was used. The first one was a questionnaire survey carried out by electronic questioning, within which individual subjects were directly addressed through telephone call and two electronic calls. When approaching companies for survey, we created the database of 205 agricultural companies and 125 food enterprises using sources as Slovak Agriculture and Food Chamber (SPPK), Agroportal.sk, Agroregister of the SR, catalogues and other information portals (some contacts were inactive). The aim was to prepare a database of existing SMEs that operate in the observed field. The realization of the first period of the questionnaire survey was preceded by the selection of individual SMEs, which demonstrated the interest to communicate and the willingness to respond. The questions asked were constructed without using any complicated terminology and most of them were constructed as semi-open questions. The qualitative part of the survey was realized through personal interviews with representatives of 11 selected enterprises in order to map particularly the area of innovation management and evaluation of innovation. The interviews lasted between 30 and 45 minutes and were organized during two events in Nitra region - International Agricultural and Food Exhibition Agrokomplex 2015 and National Field Days 2015.

Another important step was the segmentation of selected businesses, thus not only the identification of individual SMEs but also identification of enterprise groups according to various characteristics. When segmenting SMEs, the following aspects were taken into account:

Geographical coverage - companies from all over Slovakia were chosen for the analysis.
Size of the enterprise - SMEs were the main subject of the analysis, with regard to the number of employees to 250, in accordance with definition of the EU.
Sector - selected were enterprises from the agricultural sector with a focus on relevant applied research, according to the topics of newly established Research Centre AgroBioTech, particularly in the areas of agriculture and food industry.

The individual subjects were addressed directly during the months of June, July and August 2015. Altogether, 35 enterprises participated in the research. In terms of size, mainly small enterprises employing up to 50 people participated in the survey. 82 % of the participants were agricultural enterprise. Legal form of enterprises were primarily the cooperatives, mainly focusing on crop and livestock production, processing of milk, meat, services in agriculture, precision farming, or the operation of the biogas plant. Selected were those entities that can be considered as innovative representatives of the business sector with high potential for possible future cooperation.

250.3 Innovation and the Slovak Agrifood SMEs

3.1 Area of decision-making

Deciding whether to implement certain business idea or thought and then its translation into innovation depends on many factors. Therefore, the aim of this part of the questionnaire was to find out what is the incentive for innovation activities and what are the reasons for their initiation. Based on the results of this scaling question (options degree of importance from 1 to 5, where 1 meant the least significant and 5 meant the most important factor), it is apparent that improving the quality of production is of the most importance in the initiation of innovation activities (average degree of importance 4.8). Furthermore, increase of companies´ competitiveness and cost savings are as well very important for respondents (average degree of importance 4.4 and 4.6). On the contrary, entering new markets is the least important factor for the companies to initiate innovation (average degree of importance 3.0).

The next question maps the barriers to develop innovation activities in similar manner:

Tab. 2: The barriers for innovation in SMEs

What prevents your company to innovate?	Average degree of importance*
lack of finance for innovation	4.60
innovation processes are usually associated with high costs	3.75
malfunction of technology transfer from the research and development centres’ environment	3.40
lack of sufficient qualified employees	3.20
lack of partners on innovation, and problematic collaboration with partners	3.20
unwillingness of universities and scientific research institutions to cooperate	3.00
lack of information about new technologies	2.60

* 1 – the least significant, 2 – less significant, 3 – neutral answer, 4 – significant, 5 – the most significant.

Source: Own processing based on the questionnaire results.

Based on the results, it can be assumed that if a company undertake innovation activities, it is so mainly because of financial or capacity reasons. Companies that does not innovate did not take part in the questionnaire survey, since it was irrelevant for them. At this stage, it was not possible to determine how such companies perceive barriers to innovate and what are the main factors that would stimulate their innovation activities. Therefore, there arises a question arises: how much would companies be willing to pay for services related to supporting of heir innovation activities. For companies within this area, it is crucial that they have simple access to the solution of a problem or the innovation itself and that outputs related to the payment of particular services are applicable in practice.

3.2 Area of Innovation Implementation

This section of the questionnaire examined the innovation activities in terms of material, financial and human resources implementation. The first issue was dedicated to ascertain whether companies have introduced some innovations in the last three years, particularly new products and new technologies. Altogether, 37 % of companies indicate they introduced a new product and new technology as well. 18 % of respondents in both cases stated they introduced a new product or a new technology. In addition, 27 % of companies said they have not introduced any innovation during the last three years. Answers of respondents again implies active innovative activities of land management companies as well as their interest to develop their technology and product portfolio. During the cooperation, it is necessary to apply an individual approach for various types of companies and so to take into account all of individual needs and specificities.

Other two questions dealt with the material aspect of the innovation process. Companies were asked to indicate whether they have established the Department for Innovation, respectively own research and development base. In line with the results of the issue dedicated to self-development of the companies, most of the companies in this case also stated that they have not set up any special innovation department or laboratory, testing, etc. It thus confirms the result that SMEs mostly do not implement own research and development. Only one respondent stated that the company set up a laboratory equipped with the necessary human resources to realize its own development activities. It was a food medium-sized company (up to 250 employees), which deals with the pastry production.

In case of implementation of innovation from financial point of view, the resources the companies use to finance innovation were mapped. The answers showed that companies usually do not use only one source to finance their innovations, but rather a combination of several sources. These include in particular the EU funds, which had 91 % in responses. In addition, companies use also own resources, since 82 % of the respondents indicated this option. In many cases (55 % of respondents), companies use also bank loans. Resulting from this, companies often rely on their own resources, but to large extent use other external sources, usually because their own are not sufficient. Other sources, such as risk capital were not mentioned despite the fact that they are as well considered as a promising form of support of innovative activities. However, when financing innovation, risk capital is used to very small extent in Slovakia in overall situation.

The other two questions were dedicated to innovation support services. Based on the answers, the most important service was consulting the use of EU funds, as well as advice on financing the business plan. Almost 64 % of companies marked them as very significant activities. In case of 36 % of respondents, the answers often indicated that training and development of employees in the field of innovation, support of collaborative research with universities, exchange of information with other entities, and the creation of partnerships are very important to companies as well. The responses of food companies included also the options associated with patent protection and intellectual property protection. This area is more important the food makers than for agricultural companies, since it is more typical for food industry that the outcomes/results produced more often require some form of intellectual property protection (e.g. formulas, technological processes, etc.).

As for the real use of services for promoting innovation, 91 % of companies answering this question has previously used advisory services regarding the EU funds. The next most frequently used service (with representation in more than 73 % of answers) was consulting for the financing of the business plan. In about 55 % of responses occurred activities such as the support of the information exchange and networking, and establishment of partnerships. Regarding the use of external competences and resources while implementing the innovation, companies were asked to indicate what is the need for these resources, and to what extent they are willing to invest time and money into this form of cooperation. The results show that companies usually need external resources, are willing to invest time and money, but usually are not willing to pay for the service at current market prices. This is especially true when using services related to project development and the development of market analyses. Only a small percentage of the companies indicated that they might be willing to accept those services at current market prices. Based on these results, it is also necessary to appreciate services of the transfer centre in such way that it is accessible for entrepreneurs, and thereby stimulate the demand for such services.

The questions related to the implementation of specific innovation projects funded by national or other sources, nearly 82 % of companies that participated in the survey said they have experience in project implementation. Usually it was projects related to the modernization and renewal of technological equipment and facilities, purchase and implementation of new technologies, improving production quality, the use of renewable energy, or projects that lead to increase the overall competitiveness of business through better use of production factors by the application of new technologies and innovations.

3.3 Area of Innovation Management and Evaluation

Within this area, more than 80 % of companies stated that they have not established system of management innovation. Even though, more than half of enterprises (55 %) are actively involved in the questionnaire survey uses information technology for support and automatization of the innovation process. In regard to intellectual property protection, it is usually implemented by food companies. In case of farmers, not even one indicated they carry out activities connected to the protection of intellectual property. The reason may be that they are too expensive and too administratively difficult processes that require personnel, time and financial capacity. An important role here can be in hands of transfer centre, for example through licensing or consulting in the field of intellectual property.

The final part of the questionnaire contained three questions. The first was concerned with the means how to measure the success of innovation. Most frequently, companies evaluate this innovation through rate of return of invested resources. On the other hand, only 45 % of companies do not deal with the success of their innovations. It is not easy for the companies to assess whether a particular innovation activity ended unsuccessfully. In the majority of the answers, respondents have not experienced unsuccessful innovations - reported by 82 % of the companies. The reason may be that companies are mostly venturing into relatively certain and low risk innovation. Even in the case failure occurs, it was rather in the terms of the expectation of payback period that was greatly extended, in case of innovations considered as partly unsuccessful.

Finally, respondents were asked to indicate whether they use the results of innovation projects in further activities and whether it brings them the expected return on investment. Results of the survey show that 73 % of businesses uses these results. Regarding investment returns, the answers were very different. It depends on the particular activity or project, and on many other factors. An important role is played again by the riskiness of innovation to which the entrepreneurs enter.

251.Conclusion and Recommendations

Globalization is also affecting the agricultural sector – therefore, agrifood companies cannot be successful without implementing innovations. Innovations interfere into their activities despite the fact that companies and their management often do not even realize it. Innovation often emerges from the resolution of certain problem with which companies encounter in their daily activities, sometimes it may be targeted efforts to modernize and reconstruct technological equipment, facilities, or the production process and so on. Based on the results of the questionnaire survey, it is possible to distinguish three groups of the companies:

Group A consists of the companies that are innovative and simultaneously cooperate with various subjects when developing their innovations.

Group B includes companies that are innovative, but have not cooperated with other subject till now. Despite this, they are interested in cooperation.

Group C involves companies that are currently not interested in the cooperation respectively have not expressed interest in innovation.

Based on the assessment of the application potential of the Research Centre AgroBioTech on one side and innovation demand of the business sector on the other side, it is clear that the Transfer centre will play a crucial role in linking and strengthening the mutual cooperation between the two spheres and in the transmission and exploitation of knowledge. Within the partner organizations in the project, there are considerable experiences in the transfer of knowledge into the practice, and as shown also by the questionnaire survey, the entrepreneurs have extensive experience of cooperation with scientific and research entities. However, the activities of cooperation should be continuous in the future and to develop them in the future, along with the support modern innovation and cutting-edge equipment and facilities.

252.References

Batterink, M. (2009). Profiting from external knowledge. How firms use different knowledge acquisition strategies to improve their innovation performance. Wageningen: Wageningen Academic Publishers.

Fortuin, F. (2007). Strategic alignment of innovation to business. Balancing exploration and exploitation in short and long life cycle industries. Wageningen: Wageningen Academic Publishers.

Hamel, G., Prahalad, C.K. (1994). Competing for the Future. Boston: Harvard Business School Press.

Hoffmann, W. H., Schlosser, R. (2001). Success factors of strategic alliances in small and medium-sized enterprises - An empirical survey. Long Range Planning, 34, 357-381.

Menrad, K. (2004). Innovations in the food industry in Germany. Research Policy, 33(6-7), 845-878.

Moravčíková, D., Adamičková, I. (2014). Innovation as a key factor in sustainable rural and agricultural development. ICABR 2014, 668-678. Retrieved March 27, 2016 from http://www.icabr.com/fullpapers/icabr2014.pdf

Nooteboom, B. (1994). Innovation And Diffusion In Small Firms - Theory And Evidence. Small Business Economics, 6(5), 327-347.

Rogers, M. (2004). Networks, firm size and innovation. Small Business Economics, 22(2), 141-153.

Statistical Office of the Slovak Republic. Farm Structure Survey 2013. Retrieved March 10, 2016 from https://www7.statistics.sk/
Contact

Danka Moravčíková

Department of Social Sciences, Faculty of Economics and Management, Slovak University of Agriculture in Nitra

Tr. A. Hlinku 2, 949 76 Nitra, Slovakia

danka.moravcikova@uniag.sk
Kamila Moravčíková

Department of Management, Faculty of Economics and Management, Slovak University of Agriculture in Nitra

Tr. A. Hlinku 2, 949 76 Nitra, Slovakia

kami.moravcikova@gmail.com

Izabela Adamičková

Department of Economics, Faculty of Economics and Management, Slovak University of Agriculture in Nitra

Tr. A. Hlinku 2, 949 76 Nitra, Slovakia

izabela.adamickova@uniag.sk

Directory: wp-content -> uploads -> 2015
2015 -> Police Militarization
2015 -> 2015 ihbb championships: hs history Bowl Round 4 – Prelims First Quarter
2015 -> Wrtp/big step · 3841 W. Wisconsin Ave., Milwaukee, wi 53208
2015 -> Rao bulletin 1 December 2015 html edition this bulletin contains the following articles
2015 -> Darton College
2015 -> Training Workshop on Planning and Implementation of Multi-Sectoral Development Programme (MsDP) in Bihar Date : 6th
2015 -> Rao bulletin 15 June 2015 html edition this bulletin contains the following articles
2015 -> Rao bulletin 1 September 2015 html edition this bulletin contains the following articles
2015 -> Rao bulletin 1 August 2015 html edition this bulletin contains the following articles
2015 -> Science, and transportation united states senate

Download 2.73 Mb.

Share with your friends:

1 ... 34 35 36 37 38 39 40 41 ... 62