The front end of innovation in an era of industry convergence: evidence from nutraceuticals and functional foods

TLDR

Industry convergence blurs sector boundaries, as seen in the nutraceuticals and functional foods sector at the food‑pharma interface, where technologies and consumer demands overlap. The study investigates how firms with diverse R&D competences can engage in front‑end innovation, asking how they seize opportunities arising from convergence. Analysis of 54 R&D projects shows that firms either follow existing front‑end processes or depart from them, requiring partners to fill identified gaps.

Abstract

Industry convergence, defined as a ‘blurring’ of boundaries between industries, induced by converging value propositions, technologies and markets, appears to be a pervasive phenomenon leading to the emergence of inter‐industry segments. A current example of convergence can be witnessed in the nutraceuticals and functional foods sector, emerging at the boundary between the food and pharmaceutical industries. Not only technologies blur, but there is also a convergence of demand structures: consumers try to satisfy different needs in one transaction. In this context, this paper explores how actors from different industry‐specific resource backgrounds can engage in an innovative activity requiring new technological and marketing competences. Given that absorptive capacity is limited by existing competences, this paper asks how organizations with different R&D competences are able to seize opportunities for innovation emerging from convergence. Empirical findings based on primary data collected from 54 R&D projects of a nutraceutical cluster show that there are different approaches of front end decision making: while some firms follow existing processes for front end decision making, others leave existing paths and need partners to fill in gaps already identified at the front end of innovation.