regional services branch presentation - october 1 2014
DESCRIPTION
Results from a survey of innovative activity among agricultural producers in Alberta, Saskatchewan, and Manitoba. Focus is on cultural and human capital factors that may help explain who innovates and who does not. Preliminary results. Do not cite.TRANSCRIPT
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Research on Innovation and Absorptive Capacity of Agriculture ProducersDr. Eric T. MicheelsDepartment of Bioresource Policy, Business & Economics
Presented at Saskatchewan Ministry of Agriculture, Regional Services Branch Regional Planning MeetingWanuskewin Heritage ParkOctober 1, 2014
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Innovation Change in routine (Nelson and Winter, 1978)• New to firm, not new to world• New way of thinking, doing, operating
Related to learning• Hurley and Hult (1998); Cohen and Levinthal (1990)
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Why do we care about innovation?
Productivity growth important in agriculture Increased revenues Food security aspects
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Previous research on innovationInnovators are those with greater: Firm size Education
• Formal and informal Experience Number of employees Absorptive Capacity Organizational Learning Social networks
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Research Questions1. Who are the innovators in Prairie agricultural
systems?
2. How are they different from non-innovators?
3. What factors contribute to innovation capability?
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Data Questionnaire sent to farmers in SK, AB, and
MB in February and March• Insightrix market research firm• Online and telephone• Draw for an iPad as incentive
506 respondents across the three Prairie provinces.
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What type of innovation? Innovation measured across four categories• Product• Process• Organizational• Marketing
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Degree of innovative activity 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 types
New livestock breeds
48
38
11
9
238
205
52
59
Degree of Innovative Product ActivityTo a great extent To some extent
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Use of new cropping equipment
New approach in fertiliser application
Change in weed, pest and disease management practices
Change in soil management practices
Weed-related natural resource management
Pest-related natural resource management
Soil-related natural resource management
59
64
69
75
40
30
45
205
201
265
205
192
155
197
Degree of Innovative Process Activity -- Crop Systems
To a great extent To some extent
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Livestock feeding practice
Fodder conversion use and practice
Livestock handling practice
Livestock health practice
Grazing management practice
Pasture type
Irrigation and water management practice
25
13
25
29
28
22
17
102
74
104
111
99
70
71
Degree of Innovative Process Activity -- Livestock Systems
To a great extent To some extent
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New approach to labour use
Use incentives to attract employees
Added new members with additional expertise on the farm management team
New approach to marketing farm’s production
15
13
14
44
148
68
76
238
Degree of Innovative Marketing and Organ-isational ActivityTo a great extent To some extent
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Classification of innovative activity Who are the innovators? Used similar process as that of Nossal and Lim
(2011)Innovations adopted to ‘some extent’
Innovations adopted to ‘a great extent’ None Less than 3 3 or more
None Low Moderate High
Less than 6 Low Moderate High
6 or more Moderate High High
Source: Nossal and Lim (2011)
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Low Moderate High
116
242
105
Number of Farmers by Innovation Category
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What factors matter for innovation? Structural characteristics• Size, Age, Experience, Employees, Sales, Education,
Farm income as percent of total income
Social• Number of networks, frequency, workshops
Cultural Variables• Learning orientation, Social capital, Absorptive
Capacity
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DIFFERENCES ACROSS SELECTED STRUCTURAL VARIABLES
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Low Moderate High
1606.21
2146.592257.25
Farm Size (acres) by Innovation CategoryF = 1.96; Sig = 0.143
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Low Moderate High
25.9
26.57
26.81
Experience (years) Across Innovation CategoriesF = 0.134; Sig = 0.874
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Low Moderate High
54.94
53.353.59
Age Across Innovation CategoriesF = 0.788; Sig = 0.456
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Low Moderate High
1.05
1.55
2.64
Total Employees Across Innovation CategoriesF = 7.432; Sig = 0.001
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CONTINUING EDUCATION AND NETWORKING VARIABLES
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Low Moderate High
1.92
2.25
2.74
Formal or Informal NetworksF = 3.920; Sig = 0.021
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Low Moderate High
8.37
7.18
9.8
2.52
3.96
6.17
0.781.65
2.09
Number of Contacts that you discuss your farm business with
Farmers Suppliers* Consultants*
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Low Moderate High
4.97
4.4
6.5
Days attending workshops per yearF = 2.893; Sig = 0.058
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CULTURAL VARIABLES
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Learning Orientation Cultural scale that measures willingness to learn
(and un-learn). • Nine-item scale that measures commitment to
learning, innovativeness, shared vision• Our ability to learn is the key to our competitive
advantage.• We encourage employees to “think outside of the box.”• Original ideas are highly valued on our farm.
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Low Moderate High
33.4412
36.0848
37.3012
Learning Orientation Scores Across Innovation CategoriesF = 6.078; Sig = 0.003
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Social Capital 19-item scale that measures social interaction,
trust, shared vision, and involvement in local institutions• I have an informal network among customers, suppliers and
competitors.• My farm has received considerable information about
products and markets from local institutions.• Establishing networks with suppliers and customers has had a
significant impact on developing new ideas for our farm
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Low Moderate High
24.3372
27.2261
28.9011
Social Capital Summated Scale Across Innovation Categories
F = 13.822; Sig = 0.000
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Potential Absorptive Capacity Six-item scale that measures how firms acquire
and assimilate information in order to become more innovative. • We collect industry information through informal means
(e.g. lunch with industry friends, talks with trade partners).• New opportunities to serve our business partners are quickly
understood. • We quickly analyse and interpret changing market
demands.
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Low Moderate High
17.181819.2947
21.8105
Potential Absorptive Capacity Across Innovation Categories
F = 22.225; Sig = 0.000
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Realized Absorptive Capacity 11-item scale that measures how firms
transform and exploit information in order to become more innovative• Each month we discuss with advisors how changes in the
market can be used to make changes to our farm business. • We constantly consider how to better exploit knowledge. • We convert external information directly into new business
applications to be used on our farm.
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Low Moderate High
33.1045
37.39139.9268
Realized Absorptive Capacity Across Innovation Categories
F = 13.177; Sig = 0.000
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Structure• Farm Size• Age• Experience• Coffee row
Human Capital• Employees• Suppliers• Consultants• Workshops
Rapid Recap – where are the differences across innovation categories?
Firm Culture• Learning• Social capital• Absorptive
Capacity
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Good news! The factors that are associated with higher levels
of innovativeness are those that are managers can manage!
A few questions remain• Are innovators just better at managing change?• What contributes to absorptive capacity?
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ABSORPTIVE CAPACITY AND MANAGEMENT PRACTICES
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Absorptive capacity clusters Grouped respondents into categories based on
scores on potential and realized absorptive capacity
• Looking for suspected factors that contribute to absorptive capacity
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Low; 33
Medium; 134
High; 134
Absorptive Capacity Cluster Grouping
Low Medium High
10.575817.7836
23.910421.697
34.1493
43.9254
Absorptive Capacity Scores Across Clusters
Potential Realized
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Let’s look at cluster groupings and learning activities Learning orientation Social Capital Human Capital Networking
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Low Medium High
27.5926
34.413238.8268
Learning Orientation Across Absorptive Capacity Clusters
F = 40.513; Sig = 0.000
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Low Medium High
19.2581
25.1395
30.5115
Social Capital Across Absorptive Capacity ClustersF = 78.761; Sig = 0.000
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Low Medium High
1.67
2.21
2.58
Number of Networks Across Absorptive Capacity Clusters
F = 2.557; Sig = 0.080
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Low Medium High
Farmers 3.5 6.87 8.72
Suppliers 2.32 3.41 5.19
Consultants 0.79 1.42 2.39
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
Number of Network Contacts Across Absorptive Ca-pacity Clusters
Num
ber o
f Con
tact
s
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Low Medium High
2.43
4.36
6.34
Days per year attending workshops and con-ferences
F = 4.474; Sig = 0.013
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Conclusions Human capital and culture of learning influence
degree of innovative activity• Farm size, age, and experience do not!
Suppliers and Consultants (and extension) can serve as innovation brokers
Workshops are valuable means of increasing knowledge acquisition and exploitation
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Managerial Implications Innovation is about knowledge awareness,
motivation, and capability• How can managers increase awareness?• How can managers increase motivation?• How can managers increase capability?
Extension has an opportunity to play a bigger role in this
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THANK YOU!
Contact Info:Dr. Eric T. MicheelsDepartment of Bioresource Policy, Business & EconomicsUniversity of Saskatchewan
Email: [email protected]: 306-966-8411Twitter: @ericmicheels