This document summarizes a study on the adoption of agricultural innovations by farmers. The study examined how absorptive capacity, social capital, and organizational learning impact innovation adoption. A survey of 500 farmers found that adoption was higher for those with greater absorptive capacity, social networks, use of consultants, and organizational learning. However, factors like farm size, employees, and operator age did not significantly influence adoption. The researchers aim to further study how different types of innovations are adopted and develop a model to better understand the drivers of absorptive capacity.

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
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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
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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?
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4. 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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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
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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)
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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?
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8. SURVEY AND METHODS
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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
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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
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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%
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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%
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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%
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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.
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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.
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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.
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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.”
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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)
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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
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.857
.392
-.191
.849

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
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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?
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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
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