AbstractThe driving factors of innovation in the Italian food sector could be identified either in internal and in external dynamics. On one hand, the responses to the competition with new actors coming from emerging countries and the reaction to high‐tech products demand evolution. On the other hand, endogenous dynamics appear to become more important for the strategic behaviour of the firms: a higher qualification of the human capital, a more clear orientation for high quality products, organization changes, and relation capacity development. Starting from these considerations, this paper developed an econometric analysis using information from one of the most important national dataset for innovation analysis. The results pointed out that a determinant to successfully develop and introduce product innovation is the capacity to built relationships on the product markets (i.e., with the modern distribution), while the territorial context determines a higher/lower relevance of each of the driving factors of innovation. [EconLit citations: L100; L200; L660]. © 2010 Wiley Periodicals, Inc.