STRATEGIC INNOVATIVENESS OF SMEs VS. LARGE MNEs: FUNCTIONAL YOGURTS IN ITALY

PURPOSE: This study examines the similarities and differences in the strategic orientation and innovation patterns of SMEs and large companies and investigates their implications for market performance. DESIGN/METHODOLOGY/APPROACH: Miles and Snow's (1978) strategic typology is applied to 592 new products to determine their companies’ strategic orientations. Data collected over a two-year period by 62 companies in the Italian yogurt industry is analyzed. FINDINGS: The results show that, while large firms operate with a “prospector” orientation, SMEs have a “defender” or “reactor” orientation. Only a small number of SMEs can innovate successfully, and an ex post facto investigation reveals that these firms follow an "open innovation model”. ORIGINALITY/VALUE: The findings fill a gap in the literature by clarifying the similarities and differences in the strategic orientations, innovation patterns and performance of SMEs and large companies in a dynamic industry environment. The study also provides insights for managers in new food product development who are concerned about low rates of innovation and high rates of failure.