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Grapes grow better in the backyard

Grapes grow better in the backyard This paper aims to study the effects of innovation on the profitability of large wineries. In particular, organic growth is evaluated versus external growth.Design/methodology/approachData from balance sheets over more than a decade are used. The analysis is limited to large Italian wineries to include firms that constantly invest in R&D in the sample. The analysis focuses on 25 Italian wineries observed over eight years. Panel data estimation is used to analyse these data.FindingsThe paper shows that investments in R&D increase the profitability of innovative wineries in the long run but decrease it in the short run. Moreover, because of financial constraints, some wineries may invest too few resources in R&D.Research limitations/implicationsThe main limitation is that the focus is restricted to large wine producers, while many small producers that do not generally invest in R&D exist in the market. The practical implication is that governments should support R&D investments of wineries.Originality/valueThe main contributions are to show empirically the effects of investing in R&D on the profitability of large wineries and to highlight the possible presence of severe financial constraints, which require policy interventions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Wine Business Research Emerald Publishing

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1751-1062
DOI
10.1108/ijwbr-11-2017-0069
Publisher site
See Article on Publisher Site

Abstract

This paper aims to study the effects of innovation on the profitability of large wineries. In particular, organic growth is evaluated versus external growth.Design/methodology/approachData from balance sheets over more than a decade are used. The analysis is limited to large Italian wineries to include firms that constantly invest in R&D in the sample. The analysis focuses on 25 Italian wineries observed over eight years. Panel data estimation is used to analyse these data.FindingsThe paper shows that investments in R&D increase the profitability of innovative wineries in the long run but decrease it in the short run. Moreover, because of financial constraints, some wineries may invest too few resources in R&D.Research limitations/implicationsThe main limitation is that the focus is restricted to large wine producers, while many small producers that do not generally invest in R&D exist in the market. The practical implication is that governments should support R&D investments of wineries.Originality/valueThe main contributions are to show empirically the effects of investing in R&D on the profitability of large wineries and to highlight the possible presence of severe financial constraints, which require policy interventions.

Journal

International Journal of Wine Business ResearchEmerald Publishing

Published: Jun 12, 2019

Keywords: Innovation; Wines; Econometric model; Italy; Competitive strategy; Time series; L66; M11; O30

References