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Slides from presentation at Canadian Agricultural Economics Society Annual Meeting in Washington, DC.
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The Effect of Absorptive Capacity and Social Capital on the Adoption of Agricultural Innovations Dr. Eric T. Micheels Department of Bioresource Policy, Business & Economics
CAES Organized Symposia August 5, 2013 Washington, DC
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Motivation Improving Farmers’ Capacity to Innovate Matching procedure with AAFC projects
• Survey developed in consultation with economists in the Research and Analysis Directorate/AAFC
Funded by SPAA
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Previous research on innovation Innovators are those with greater: Firm size Education
• Formal and informal
Experience Number of employees Absorptive Capacity Organizational Learning Social networks
How do these increase innovative capacity?
How do these factors fit within an agricultural context?
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Insights from Other Disciplines Ability to innovate/adopt new practices is
affected by human capital factors • Absorptive Capacity • Social Capital • Organizational Learning
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Absorptive Capacity Cohen and Levinthal (1990)
• Ability to integrate ideas from other firms depends on how much firm invests in innovation
• Agricultural context is somewhat different • Farms do not have R&D expenditure • Other means to acquire and assimilate information
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Social Capital Goodwill developed through social interaction
(Adler and Kwon, 2002) • Consists of both formal and informal networks as well
as shared norms (van Rijn, Bulte, and Adekunle, 2012) • Firm-level knowledge is a function of collaboration
between individuals in communities of practice (McElroy, 2002)
• Closer relationships have been shown to increase adoption of innovations (Vinding, 2006)
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Research Questions 1. What are the drivers of innovative activity?
• Looking for antecedents to innovation, not consequences of innovation
• Are these things that can be managed? • What role do absorptive capacity and social capital
play?
2. What are the drivers of absorptive capacity?
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SURVEY AND METHODS
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Data Questionnaire sent to farmers in SK, AB, and MB
in February and March of 2013 • Insightrix market research firm • Online and telephone
• 2400 in AB, 1600 in MB, 450 in SK
• Draw for an iPad as incentive
506 usable responses • 224 from AB, 81 from MB, 201 from SK
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Type and Degree of Innovation Innovation measured across four categories
• Product, Process, Organizational, Marketing
Respondents were asked about their level of adoption regarding different agricultural practices • Not at all • Some extent • To a great extent
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New crop types
New crop cultivars
New livestock breeds
New livestock types
Rate of Adoption of Various Innovations in Canadian Prairie Agriculture
Some extentTo a great extent
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Change in weed, pest and disease management practices
Change in soil management practices
New approach in fertiliser application
Use of new cropping equipment
Soil-related natural resource management
Weed-related natural resource management
Other crop practices
Pest-related natural resource management
Livestock health practice
Livestock handling practice
Livestock feeding practice
Grazing management practice
Pasture type
Fodder conversion use and practice
Irrigation and water management practice
Rate of Adoption of Various Innovations in Canadian Prairie Agriculture
Some extentTo a great extent
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
New approach to marketing farm’s production
New approach to labour use
Added new members with additionalexpertise on the farm management team
Use incentives to attract employees
Rate of Adoption of Various Innovations in Canadian Prairie Agriculture
Some extentTo a great extent
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Social Capital Eight item scale measuring use of social contacts (Molina-Morales and Martinez-Fernandez, 2010)
• There is an informal network among customers, suppliers and competitors.
• You consider that other firms feel a special duty to stand behind you in times of trouble, so you consider it only fair that your company should also give support to other firms.
• Your company has received considerable information about products and markets from local institutions.
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Potential Absorptive Capacity Multi Item scale developed by Flatten, Engelen, Zahra, & Brettel (2011) and Jansen, Bosch, & Volberda, (2005) How do firms acquire and assimilate knowledge?
• People on our farm have frequent interactions with business partners to acquire new knowledge.
• We collect industry information through informal means (e.g. lunch with industry friends, talks with trade partners).
• We quickly recognize changes in technical possibilities.
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Realized Absorptive Capacity What is the process of implementing new knowledge
into innovative activities?
• Our farm quickly recognizes the usefulness of new external
knowledge to existing knowledge. • We convert external information directly into new business
applications to be used on our farm. • Application of external information to our farm contributes to
our profitability.
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Organizational Learning Nine item scale measuring commitment to learning and open-mindedness (Sinkula, Baker, and Noordewier, 1997)
• The sense around here is that employee learning is an investment, not an expense.
• Learning in my farm is seen as a key commodity necessary to guarantee organizational survival.
• We encourage employees to “think outside of the box.”
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Factors Driving Adoption Dependent Variable – Number of adoptions Independent Variables
• Human Capital (Absorptive Capacity, Learning, Social Capital, Barriers to Innovation, Experience, Employees)
• Farm Characteristics (Size, Type, Location, Successor, Operator Age)
• Management tools (Track performance, Use of consultants)
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Results
Dependent Variable: Number of Innovations F = 6.236, Sig: 0.000 R-Square = 0.372 Adj. R-Square = 0.312 N = 124
Variable B t-stat Sig (Constant) -5.948 -2.333 .021 Organizational Learning .037 .796 .427 Absorptive Capacity (18 items) .063 2.059 .041 Social Capital (8 items) .130 2.062 .040 Innovation Barriers .024 1.021 .308 Alberta -1.581 -2.025 .044 Manitoba -2.667 -3.035 .003 Livestock -.456 -.356 .722 Mixed 3.526 5.444 .000 Trk_prd_perf_yes .969 .781 .435 Trk_prd_perf_help 3.257 2.057 .041 AcctSys_Decision_yes 2.079 2.388 .018 AcctSys_Decision_help 2.472 2.405 .017 Successor .838 1.417 .158 Outside_Financial_Some 1.680 2.535 .012 Outside_Financial_Great 1.111 .957 .340 Outside_Crop_Great .319 .264 .792 Outside_Crop_Some 1.303 1.934 .054 Total land (Acres) .000 -1.672 .096 Total Employees .063 .772 .441 Age of Principal Operator .031 .857 .392 Experience -.006 -.191 .849
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Discussion Adoption of innovations in this sample depends
on several factors • Use of outside consultants important • Absorptive Capacity and Social Capital also
significant • Interpretation is trickier due to summated scale
• Number of employees and presence of successor not significant
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Future Research Does innovation type matter?
Structural model to examine factors that
contribute to absorptive capacity and adoption Do adopters have better performance
measures?
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Eric T. Micheels
Questions?
Assistant Professor Department of Bioresource Policy, Business & Economics University of Saskatchewan 3D14 Agriculture Saskatoon, SK S7N 5A8 Email: [email protected] Twitter: @ericmicheels
