Introduction
Innovation is important in both big and small agricultural companies. It is considered a relevant instrument of business performance. The main challenges that companies face when it comes to innovation include both internal and external factors. Some of the external factors are a lack of infrastructure, deficiencies in education and training systems, inappropriate legislation, and overall neglect and misuse of talent in society. Some major internal barriers to innovation include rigid organizational arrangements and procedures, hierarchical and formal communication structures, conservatism, conformity, lack of vision, and resistance to change among others. However, some elements can help with innovation in firms such as finding a skilled workforce. Large agricultural firms carry out innovations because of the tight competition, tastes, and needs of consumers change over time. It is, therefore, important for agricultural companies to adapt, develop, innovate to achieve a competitive advantage, and be successful.
Today, the capability of firms to produce new products is fundamental because the organizational environment keeps changing rapidly. Changes in the socio-economic systems, expectations, and needs of consumers are the challenges that agricultural firms face through new products. Innovations created by an agricultural company are key to the competitive advantage that determines the success of an organization. The products’ uniqueness tends to temporarily increase competitiveness. Innovation enhances the value-addition of a product and must be able to make different products that can influence customers to be more interested in buying from the firm other than the competing ones.
In numerous studies, the outcome of innovations is measured in terms of innovative outputs. Often, they are depicted in terms of the number of development projects, increase in sales from the newly, manufactured products, or the frequency of new product launches. However, it may also be okay to evaluate the impact of innovation on profit margins, total sales, and market share. After all, innovations are put in place not only to bring improvement to one or two products but also to affect a firm’s range of products. Other than this, their embrace within a firm allows for the active provision of an opportunity to create differentiation from the existing competitors. Innovations, in other words, allow for the adoption of a new paradigm that makes a firm and its products unique to consumers. At the same time, they allow for the development and improvement of the current processes to achieve the most desired outcomes. The present study seeks answers to the question as to how process and product innovations affect a firm’s innovative performance.
Literature Review
Likar et al. (2013) categorize innovation into four aspects which are product, process, marketing, and organizational innovations. Innovation can be understood as the exploitation of new ideas, in economics it can be stipulated as the first commercial transaction involving a new product, process, system, or device. The result of product innovation is the introduction of an improved good or service concerning functional characteristics or components (Likar et al., 2013). For a product to be innovated, there has to be a demand for it beforehand but in this case, the supply side could be the significant driver for the innovation as well.
The upgraded technologies, changing consumer tastes, and shortening product life cycle combined with the global competition keeps firms in check by making sure they innovate relentlessly (Auci et al., 2021). This has helped the world because process innovation has led to improvements in the methods of production and delivery of products. Other changes such as social, political that have been taking the global stage in the past decade today have no place. Auci et al., (2021) assert that People in this era recognize terms such as globalization, global warming, computer, and the internet. The changes that are taking place in organizations today are not easy rather they are tedious.
The process of innovation could be new or improved compared to the current version. Likar et al., (2013) assert that innovative firms have a competitive edge and are capable of driving out of business non-innovative ones. Innovation has also been seen as a sustainable channel that facilitates economic growth and corporate performance. Innovation nonetheless is expected to facilitate enhancements in firms’ economic performance. According to Nitiamoah et al,. (2019), innovation is an entrepreneurial activity. Thus, there is a critical relationship between innovation and entrepreneurial orientation. Additionally, entrepreneurial orientation shows the preference of seeking the growth of the firm through exploratory strategic actions for example developing new products. Having new ideas impact an agricultural firm positively as it may be able to develop new products and make profits (Nitiamoah et al., 2019). When a company is willing to take risks and proactively develop new ideas the aggressiveness will enable the business to meet dynamic consumer needs. Thus, when developing new products, firms should keep to trial and error to perform better.
Ntiamoah et al,. (2019) found that a firm’s size, investment in research, and development are key drivers of product and process innovations for both small and big agricultural corporations. The researchers also determined that product innovation appears to have an insignificant impact on innovation performance, whereas the other three types which include process, organization, and marketing innovation have more influence on marketing outcome on firms (Ntiamoah et al., 2019). Auci et al., (2021) reviewed the empirical evidence on the link between innovation and productivity. The researchers found strong evidence that shows the presence of the positive effect of product innovation on revenue. They also determined that both product and process innovation positively relate to firm performance. Research done by Ntiamoah et al. (2019) reveals that innovation is crucial to a firm in achieving a competitive advantage. Thus, this point of view adds to the existing body of knowledge that argues that firm-level innovation is a predictor of organizational performance.
Methodology
The object of research – Corteva Agriscience
The subject of research – Impact of innovation on performance
The following methods were used in developing the paper
- Theoretical methods
- Empirical methods research methods.
Theoretical background
The study was founded on one theory which is the resource-based view. It analyzes and interprets the resources of the organization to understand how organizations achieve sustainable competitive advantage. This theory focuses on difficult to imitate attributes of a company as sources of superior performance and competitive advantage according to RVB theory a company can be considered to be a collection of physical resources including human resources, physical resources, and organizational resources (Assensoh-Kodua, 2019). It is pegged on the fact that resources in a valuable company are rare, imperfectly imitable, and are the main source of sustainable competitive advantage for sustained superior performance. The study hypothesizes that increased bonding levels between product and service and technological innovations and sustainability are directly related to the performance and profitability of an organization. Assensoh-Kodua (2019) asserts that under RVB exploiting product, service, and technological innovations practices agricultural companies build capabilities of organizational performance. This theory becomes critical for the current study since it recognizes a company’s progress, sharing of knowledge, close working relationships as resources that can be used to boost organizational performance.
Findings
Corteva, Inc is an American agricultural chemical and seed company that manufactures seeds, traits, and chemicals. Corteva provides farmers with better solutions that help them produce the food that society demands and exactly the way it demands it. The company innovates relentlessly to champion the farmers to success by making seeds and crop protection products that help farmers address challenges. The company works together with the farmers by listening to them and innovating collaboratively to help them be successful.
The innovation capabilities of Corteva have had a positive effect on the competitive advantage of the firm as it drove it to innovation. The development capability has made it possible for the company to eye new methods, techniques, and the creation of new products. The firm has always been looking ahead to the next planting season. As the community is thinking about harvesting crops, the company is already putting measures and innovating new crop protection product tools for retailers and farmers. One of the innovative products is an herbicide called Resicore XL that has important ingredients that offer increased crop safety compared to other herbicides in the market (Gutterson, 2018). Given that farmers are always looking for the best innovative solutions to increase crop safety, this move will increase the profit margin for the company as sales increased. The net sales of crop protection at the company are said to have been $1.7 billion in the first quarter of 2021 which is an increase compared to $1.5 billion in the first quarter of 2020 (Corteva Inc., 2021). This increment was attributed to increases in both the volume and price of the innovated products. For the volume of the innovative product to rise, the demand had also increased across the globe.
Operation capabilities at the company have been key in its daily operations as they reflect on the effectiveness of the business operation. Corteva makes use of its previously developed knowledge abilities and technical systems to produce tradable products (Gutterson, 2018). The capabilities of the company have been able to take advantage of lower costs, flexibility, and workflow, as a result, the company managed to reduce production and manufacturing costs and increase profit margins, and produce high-quality products. The planet’s challenges, for example, climate change and the declining natural resources due to population growth have pushed the company to regular innovations (Gebauer et al., 2012). Farmers, on the other hand, have been hard-pressed to provide nutritious foods to the population each time. Corteva works together with other stakeholders to build capacity in several countries across the globe. Gebauer et al. (2012) also stipulate that Corteva’s successes have been largely due to the effective concentration on innovation. Based on a critical examination of its structures, Corteva allows for the exploration of new ideas. Gebauer et al. (2012) point out that this inclination has allowed the firm to capture new opportunities, which has also benefitted farmers through the acquisition of new and advanced products from the company. Moreover, Corteva is constantly identifying and implementing new technology and smarter agronomic practices to innovate productive and sustainable climate-smart agricultural systems.
Discussion
The objective of this paper was to determine the impact of innovation on a company’s innovation performance. The studies and company analysis have indicated that with innovation, a firm adds new capabilities to the existing system. Often, there is a positive relationship between product and technological innovation and company growth. To operate an existing system or contribute towards innovation in the company skills, knowledge and experience are required to bring the desired change. From the study, it is clear that the organization is committed to creating superior customer values so that they get to appreciate new ideas for creating new products according to the dynamics of customer needs. Continuous communication with the farmers has enabled the company to bring in new and creative ideas to the creating of new products. Besides that, being able to monitor competitors has made the company understand what they are up to. Subsequently, it can acquire relevant information that would allow for the development of strategies essential to improving the existing products. From a critical standpoint, the findings indicate that an agricultural company that continuously adheres to innovation develops and introduces new products. Other than this, it can act as the facilitator for the improvement of the existing agricultural products.
This study focuses on the impacts of innovation activities on the different aspects of innovation performance and in its turn their effect on firm performance. After data analysis, the results illustrate that process and organizational innovation have a significantly positive impact on innovative performance. More specifically, the higher the level of innovation activities the greater the innovative performance of a company. This aspect means that the larger level of process and organization innovation activities are directly correlated with the higher level of innovation performance. These elements, therefore, have a positive influence on production, market, and financial performance. To be specific, the higher the level of innovative performance, the higher the level of a company’s performance. Therefore, agricultural companies that peg their processes on continuous creativity have a higher chance of influencing critical outputs. In other terms, the findings denote that innovation allows for the improvement of agricultural underpinnings. For this reason, an agricultural company is likely to gain amidst competition in the form of having a higher competitive advantage.
Conclusion
Agricultural firms play an important role when it comes to creating employment, production of food, and sustainability. In this era, product and process innovation support firms’ sustainability as they help them maintain a competitive edge in the global and regional markets. Innovation is the main activity of any business across the globe since it is a source of competitive advantage. So, firms should embrace innovation to survive in the market for the long term. An agricultural firm has to innovate constantly and adapt to environmental changes. Listening to consumers’ voices and supporting the exploitation of new ideas, allows for advanced innovation. Additionally, facilitating the creative process as a determining factor for the success of innovation will result in the firm offering products that are unique, different from the competitors, and valuable to the customers. This study concludes that innovation is the key determinant of competitive advantage. To improve a company’s innovativeness of performance, the leadership has to concentrate on organizational, product, and process innovation activities.
References
- Assensoh-Kodua, A. (2019). The resource-based view: a tool of key competency for competitive advantage. Problems and Perspectives in Management, 17(3), 143-152. https://doi.org/10.21511/ppm.17(3).2019.12
- Auci, S., Barbieri, N., Coromaldi, M., & Michetti, M. (2021). Climate variability, innovation and firm performance: Evidence from the European agricultural sector. European Review of Agricultural Economics, 48(5), 1074-1108. https://doi.org/10.1093/erae/jbab039
- Corteva Inc. (2021). Corteva reports strong results for first quarter 2021-Increases Net Sales Guidance. Investors.corteva.com. Retrieved 27 November 2021, from https://investors.corteva.com/media-center/news-details/2021/Corteva-Reports-Strong-Results-for-First-Quarter-2021—Increases-Net-Sales-Guidance/default.aspx.
- Gebauer, H., Worch, H., & Truffer, B. (2012). Absorptive capacity, learning processes, and combinative capabilities as determinants of strategic innovation. European Management Journal, 30(1), 57-73. https://doi.org/10.1016/j.emj.2011.10.004
- Gutterson, N. (2018). The innovation engine fueling growth. S23.q4cdn.com. Retrieved 27 November 2021, from https://s23.q4cdn.com/116192123/files/doc_presentations/2018/11/08/RD-Corteva-Investor-Day-Presentation.pdf.
- Likar, B., Fatur, P., & Mrgole, U. (2013). (PDF) Innovation management. ResearchGate. Retrieved 26 November 2021, from https://www.researchgate.net/publication/292127499_Innovation_management.
- Ntiamoah, E., Li, D., & Sarpong, D. (2019). The effect of innovation practices on agribusiness performance: A structural equation modeling (SEM) approach. African Journal of Science, Technology, Innovation and Development, 11(6), 671-681. https://doi.org/10.1080/20421338.2019.1573958
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