The Effect of Absorptive Capacity and Social Capital
on the Adoption of Agricultural Innovations
Dr. Eric T. Micheels
Depa...
Motivation



Improving Farmers’ Capacity to Innovate
Matching procedure with AAFC projects
• Survey developed in consul...
Previous research on innovation
Innovators are those with greater:



Firm size
Education
• Formal and informal




...
Insights from Other Disciplines


Ability to innovate/adopt new practices is
affected by human capital factors
• Absorpti...
Absorptive Capacity


Cohen and Levinthal (1990)
• Ability to integrate ideas from other firms depends
on how much firm i...
Social Capital


Goodwill developed through social interaction
(Adler and Kwon, 2002)
• Consists of both formal and infor...
Research Questions
1.

What are the drivers of innovative activity?
• Looking for antecedents to innovation, not
consequen...
SURVEY AND METHODS
www.usask.ca
Data


Questionnaire sent to farmers in SK, AB, and MB
in February and March of 2013
• Insightrix market research firm
• ...
Type and Degree of Innovation


Innovation measured across four categories
• Product, Process, Organizational, Marketing
...
Rate of Adoption of Various Innovations in Canadian
Prairie Agriculture

New livestock types

New livestock breeds
Some ex...
Rate of Adoption of Various Innovations in Canadian Prairie
Agriculture
Irrigation and water management practice
Fodder co...
Rate of Adoption of Various Innovations in Canadian Prairie
Agriculture

Use incentives to attract employees

Added new me...
Social Capital
Eight item scale measuring use of social contacts
(Molina-Morales and Martinez-Fernandez, 2010)
• There is ...
Potential Absorptive Capacity
Multi Item scale developed by Flatten, Engelen,
Zahra, & Brettel (2011) and Jansen, Bosch, &...
Realized Absorptive Capacity


What is the process of implementing new knowledge
into innovative activities?
• Our farm q...
Organizational Learning
Nine item scale measuring commitment to
learning and open-mindedness (Sinkula, Baker,
and Noordewi...
Factors Driving Adoption



Dependent Variable – Number of adoptions
Independent Variables
• Human Capital (Absorptive C...
Results
Dependent Variable:
Number of Innovations
F = 6.236, Sig: 0.000
R-Square = 0.372
Adj. R-Square = 0.312
N = 124

Va...
Discussion


Adoption of innovations in this sample depends
on several factors
• Use of outside consultants important
• A...
Future Research


Does innovation type matter?



Structural model to examine factors that
contribute to absorptive capa...
Questions?
Eric T. Micheels
Assistant Professor
Department of Bioresource Policy,
Business & Economics
University of Saska...
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The Effect of Absorptive Capacity and Social Capital on the Adoption of Agricultural Innovations

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The Effect of Absorptive Capacity and Social Capital on the Adoption of Agricultural Innovations

  1. 1. 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 www.usask.ca
  2. 2. 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 www.usask.ca
  3. 3. 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? www.usask.ca
  4. 4. Insights from Other Disciplines  Ability to innovate/adopt new practices is affected by human capital factors • Absorptive Capacity • Social Capital • Organizational Learning www.usask.ca
  5. 5. 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 www.usask.ca
  6. 6. 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) www.usask.ca
  7. 7. 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? www.usask.ca
  8. 8. SURVEY AND METHODS www.usask.ca
  9. 9. 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 www.usask.ca
  10. 10. 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 www.usask.ca
  11. 11. Rate of Adoption of Various Innovations in Canadian Prairie Agriculture New livestock types New livestock breeds Some extent To a great extent New crop cultivars New crop types 0% 20% 40% 60% 80% 100% www.usask.ca
  12. 12. Rate of Adoption of Various Innovations in Canadian Prairie Agriculture Irrigation and water management practice Fodder conversion use and practice Pasture type Grazing management practice Livestock feeding practice Livestock handling practice Livestock health practice Some extent Pest-related natural resource management To a great extent Other crop practices Weed-related natural resource management Soil-related natural resource management Use of new cropping equipment New approach in fertiliser application Change in soil management practices Change in weed, pest and disease management practices 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% www.usask.ca
  13. 13. Rate of Adoption of Various Innovations in Canadian Prairie Agriculture Use incentives to attract employees Added new members with additional expertise on the farm management team Some extent To a great extent New approach to labour use New approach to marketing farm’s production 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% www.usask.ca
  14. 14. 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. www.usask.ca
  15. 15. 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. www.usask.ca
  16. 16. 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. www.usask.ca
  17. 17. 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.” www.usask.ca
  18. 18. 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) www.usask.ca
  19. 19. Results Dependent Variable: Number of Innovations F = 6.236, Sig: 0.000 R-Square = 0.372 Adj. R-Square = 0.312 N = 124 Variable (Constant) Organizational Learning Absorptive Capacity (18 items) Social Capital (8 items) Innovation Barriers Alberta Manitoba Livestock Mixed Trk_prd_perf_yes Trk_prd_perf_help AcctSys_Decision_yes AcctSys_Decision_help Successor Outside_Financial_Some Outside_Financial_Great Outside_Crop_Great Outside_Crop_Some Total land (Acres) Total Employees Age of Principal Operator Experience B -5.948 .037 .063 .130 .024 -1.581 -2.667 -.456 3.526 .969 3.257 2.079 2.472 .838 1.680 1.111 .319 1.303 .000 .063 .031 -.006 t-stat Sig -2.333 .021 .796 .427 2.059 .041 2.062 .040 1.021 .308 -2.025 .044 -3.035 .003 -.356 .722 5.444 .000 .781 .435 2.057 .041 2.388 .018 2.405 .017 1.417 .158 2.535 .012 .957 .340 .264 .792 1.934 .054 -1.672 .096 .772 .441 www.usask.ca .857 .392 -.191 .849
  20. 20. 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 www.usask.ca
  21. 21. Future Research  Does innovation type matter?  Structural model to examine factors that contribute to absorptive capacity and adoption  Do adopters have better performance measures? www.usask.ca
  22. 22. Questions? Eric T. Micheels Assistant Professor Department of Bioresource Policy, Business & Economics University of Saskatchewan 3D14 Agriculture Saskatoon, SK S7N 5A8 Email: eric.micheels@usask.ca Twitter: @ericmicheels www.usask.ca

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