Innovative activity in Canadian food processing establishments: the importance of engineering practices

This paper examines the factors contributing to innovative activity in the Canadian food processing sector. Several factors relating to innovation are considered. Firstly, it focuses not only on the importance of research and development activity but also on advanced business practices used by production and engineering departments. Secondly, it examines the extent to which a larger firm size and less competition serve to stimulate competition the so-called Schumpeterian hypothesis. Thirdly, the effect of the nationality of a firm on innovation is also investigated. Fourthly, industry effects are examined. The paper finds that business practices are significantly related to the probability that a firm is innovative. This is also the case for R&D. Size effects are significant, particularly for process innovations. Elsewhere, their effect is greatly diminished once business practices are included. Foreign ownership is significant only for process-only innovations. Competition matters, more so for product than for process innovations. Establishments in the 'other' food products industry tend to lead the industry average when it comes to innovation, whereas fish product plants tend to lag behind the industry average.