The need for inter-organisational innovation activities in the agrifood industry
If one shifts focus from innovations in the agrifood industry and the generation of innovations and looks at the innovation demand of the future, various factors can be observed which influence the agrifood industry and thereby the meat industry as well.
Figure 7: Factors affecting the agrifood industry (modified after the European Foundation for the Improvement of Living and Working Conditions, 2004)
The European Foundation for the Improvement of Living and Working Conditions (2004) summarises future trends under the factors listed in Figure 7. With the help of trend analysis based on the individual factors, new and future demands on companies and production chains can be identified. Such an approach is labelled “foresight and diagnostics” (Howells, 2006). Early detection of changing conditions and with it the detection of the demand for innovation is a very essential step for competitiveness.
Below a selection of challenges with focus on the meat industry will be elaborated on. In order to ensure a global competitive advantage and thereby stay in competition with low-income countries, the European meat industry is dependent on efficient production processes, an increase in the quality of manufacturing processes as well as intermediate and end products as well as product differentiation8 (see the case of one Q-PorkChains working group) and standardisation9 (Clipson, 1991; Spiller et al., 2006; Trienekens et al., 2009). Moreover, deciding on product differentiation follows economic recommendations to improve the image of the pork sector and also meets customer demand (Trienekens et al., 2009). Product differentiation is especially seen as an opportunity for SMEs to offer products with additional features to niche markets like, for example, products produced under special ethical, ecological or sustainable conditions (European Foundation for the Improvement of Living and Working Conditions, 2004). Because of their low complexity innovation projects within the subject area of classic product differentiation can be achieved in individual companies. Innovation cooperation does not seem to be necessary. Yet as demonstrated in one Q-PorkChains pilot working group, innovation cooperation can also prove to be beneficial for innovation projects that are classified as in-house activities.
The aspects of product and process quality named above are of key significance in food production – for actors from public authorities (within the framework of preventive consumer protection) as well as production companies. Food quality and safety express the central concerns with aspects that are vital to the relationship with the consumer and the credibility of the industry. Modern quality standards are the basis, a licence to be in the marketplace, they do not bring competitiveness in themselves (SMEs-NET, 2006). However, the European General Food Law is an important cause of innovations for improvement in this area. In order to improve food safety and quality within the company or apply new quality management tools, innovation cooperation is not necessary. However if the innovation pertains to coordinated and cooperative action within the entire value chain, then cooperations are beneficial and / or necessary (Petersen, 2003; Theuvsen et al., 2007; Theuvsen, 2009).
Since, aside from the issue of food safety and quality, value chain business actors strive as much as possible for efficient and economic production, the focus is also on process innovations for increasing efficiency (time saving, reduction of by-products and waste products etc.). In accordance with this, methods, for example, to be applied at the interface between primary production and the first / second processing stage in meat production are sought after; these are used to measure natural variations e.g. in weight, product yield and product quality in “real time” (online and non-destructive). Decisions can be made based on this to sort out or initiate measures (Tunzelmann and Acha, 2005). The development of test systems which crosses over different production stages through testing technologies is increasingly called for by legal requirements, but also by quality programmes initiated in the private sector. Hereby sector-specific applications of information and communication technologies can assist in making information available across all stages (Ellebrecht, 2008; European Foundation for the Improvement of Living and Working Conditions, 2004; Petersen et al., 2002; Petersen et al., 2008; Schulze Althoff, 2006).
In this context there is a demand for cooperation to coordinate between bureaucratic and private-sector actors as well as for the collaboration of public authorities in national border regions. Collaborations of this kind can, for example, minimise economic damages in the case of an epizootic disease. Through alignment in public European contingency planning and by creating a sufficient exchange of public and private information, time can be saved. Because of this, the high risk period of animal diseases can be shortened10 (Breuer et al., 2008). In order to make relevant information available, technology supported system functionalities in inter-organisational information and communication systems for activation in the case of a crisis are in development and / or are already in use as a prototype (Ellebrecht, 2008).
It can be summarised that cooperation in the meat industry along complete value chains is essential for some innovation projects (Lambert and Cooper, 2000). The study of Pannekoek et al. (2005) focusing on the agrifood industry identified product superiority, and cooperation with value chain partners as the most important success factors for entrepreneurial innovation (Fortuin et al., 2007). This is especially important for quality management processes. For example, different companies at the level of primary production, processing and trading take responsibility regarding their own areas of accountability so as to produce high quality meat products. The majority of producing companies in the meat value chain have adopted their internal control systems as a result of legislation (the EU General Food Law) in recent years. Regarding this, one can say that the meat industry has already made significant progress in the last decade. The current challenge is to interlink internal systems on an inter-organisational level in order to create efficient quality management systems for complete value chains (Robinson and Malhotra, 2005). To improve such systems it is of high importance to implement inter-operational inspection and communication systems rather than to rely on single components and isolated applications (Trienekens et al., 2009; Schulze Althoff et al., 2005).
As a sequel to the examples described above, innovation cooperation between value chain actors in the frame of a concerted innovation process is needed to develop inter-organisational quality management systems. The various stages within the value chain – including agricultural production as well as slaughtering companies, processing plants and retailers – have to communicate and cooperate with each other as well as with suppliers of technologies and services on the one hand and with scientists on the other hand. The challenge is to combine all these actors into functioning innovation consortia. This implies that synergies will be created in the cooperation. By that, single actors (as well as complete value chains) should have more advantages than disadvantages as is expected to be shown by the joint generation of new knowledge and by finding collaborative solutions to accomplish present and future demands of the market (with respect to food safety, food quality, traceability etc.). The growing complexity and pace of industrial technological change is forcing firms to forge new vertical and horizontal alliances and to seek greater flexibility and efficiency in responding to market changes (Rothwell, 1994). Degrees of cooperation needed should be estimated as well against the background of economies of scale in product development (Clipson, 1991). In a cooperative development, costs and risks can be shared. As well as this, a considerable advantage for participating companies is the keeping up to date with the latest technological developments and to have access to new technologies and knowledge. Innovation through collaboration with competitors, suppliers and research institutions also gives new insights into the value chain. Gemünden et al. (1996) illustrated that innovation success is significantly correlated with a firm's network. However, the complexity of inter-organisational innovation projects could make it difficult for companies to participate.