Developing agribusiness innovation systems

Certain developing countries have experienced a recent increase in their agribusiness sector. While agribusiness is believed to benefit such economies, a need also exists for dynamic innovation processes due to international competition and other pressures.

The EU-funded CABIS (Capacity and dynamics of agribusiness innovation systems) project studied factors limiting innovation, in particular agribusiness innovation systems (ABIS). Employing various economic-sociological concepts, the study addressed how institutional environments influence innovation practices. Additionally, the work defined the connection between innovation practices and institutional and business environments, and showed how such practices affect innovation in Tanzania and Vietnam.

Results indicate that uncertainties caused by institutional voids promote strong short-term innovation in both countries' ABIS. However, in the Vietnamese case, the socialist environment leads to clashing innovation orientations among various players. The Tanzanian political and economic context means resistance to innovation proactivity. In both cases, value chain actors encounter problems in gaining resources for innovation from public sources. Hence, such actors' innovation practices are driven by informal institutions such as social norms, trust and sentimental relationships.

Relationships between players are characterised by mutual influence. Particular players often act individualistically, without much organisation or business rationality. Such practices negatively impact innovation competence and jeopardise business performance. While Vietnamese ABIS would apparently benefit from participants moving beyond social norms, Tanzanian organisations need greater proactiveness.

The study concluded that, for various reasons, both countries experience limited innovative capacity and innovation competitiveness.

CABIS advanced understanding of the possibilities for agribusiness innovation in Tanzania and Vietnam, while also illustrating innovation as a product of the social environment. Other outcomes include establishment of networks pertaining to policy dialogue and research.