The Front End of Innovation in Converging Industries: The Case of Nutraceuticals and Functional Foods

Industry Convergence - as the coalescence of previously separated industry sectors - can be observed in various areas of economic activity and therefore is a phenomenon of growing relevance. Convergence can be induced by the application of technologies across industry sectors or by converging trends regarding the demand side of different industry sectors. However, it results in the development of products, which combine features of different industries. The area of functional foods and nutraceuticals for instance, is an expression of the increasingly blurring boundary between the nutrition and pharmaceutical sectors. In particular, the area of functional foods is a striking example of industry convergence, as it shows converging trends between a technology-driven and a market-driven industry sector. As the term nutraceutical indicates, innovation projects in the context of industry convergence do not seem to follow the conventional path of innovation, but require resources and competences of different industries. The reasoning is that firms in different industries have developed along certain learning paths which have lead to the creation of an idiosyncratic set of competencies. Such a path dependently developed competence base seems not sufficient in times of convergence, where hybrid innovations require competencies and resources rooted in different industries. Generally speaking, firms are confronted with new areas of knowledge which becomes increasingly relevant to their innovation system. Industry convergence, thus, presents a context for innovation management, which not only seems to be a very interesting area of research but alsO is of increasing importance from a business perspective.