Innovation and transactional models in agricultural firms

This paper examines the link between innovation and transactional models using the empirical example of the colombian agriculture. Transactional models may resolve coordination and linkage problems. In this research, we focus on the importance of an appropriate transactional model for firm innovation. We also study the effect of other variables that have not yet been (extensively) explored as determinants of innovation in agricultural firms. Special emphasis is put on variables such as Inter-Firm Linkages and Territorial Innovation Networks. The survey includes a sample of 459 farmers belonging to six sub-sectors or agricultural chains (tomato, potato, cut flowers, palm oil, pork and beef), in a reference period of five years (2006-2010). We use survey data to estimate a linear regression model (OLS estimation procedure). Although innovation drivers tend to be subsector-specific, interestingly we found that transactional models as well as participation of entrepreneurs in innovation networks are significant determinants of innovation in firms for most subsectors studied, with the exception of beef.

 

The econometric model confirms that there is a positive effect on innovation in almost all subsectors when firms use transactional models that differ from the traditional models (i.e. classic market). In "nontraditional" models, the firm signs contracts, performs integration or uses a combination of both strategies. According to the results, we perceive that the firm's innovation is higher when the transactional model is likely to mitigate the negative effect of the lack of coordination and articulation of the firms with the market, because otherwise the firm can hardly receive the economic benefits of investment in innovation. The remaining variables analyzed in the econometric model have changing roles and significance depending on the specific sub-sector studied.

 

The study is relevant since colombian agriculture requires innovations that represent a positive break in reference to what farmers currently do in the transactions field. The main constraint lies in the fact that actors in the agricultural innovation system, including policymakers, still have difficulties recognizing that organizational innovations are as important as technical innovations to advance the competitiveness of firms in the economy.