Academic journal article Agricultural Economics Review

Behavioural Drivers of Business Competitiveness in Agriculture

Academic journal article Agricultural Economics Review

Behavioural Drivers of Business Competitiveness in Agriculture

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The concept of business competitiveness is ambiguous and difficult to define as a consequence of its multiple dimensions. Nonetheless, this concept is normally associated with economic performance. In this context, a firm that performs well under some criterion such as profitability for example, is said to be competitive (Wagner and Schaltegger, 2003; Wagner, 2007). Nowadays, the linkage between economic performance and competitiveness has been internalised by the academic community and they are normally used as interchangeable terms. This is clearly identified in a current debate on corporate sustainability performance which refers to the social, environmental and economic performance of sustainable development. According to Wagner (2011), the problem that researchers aim to solve in this area is how to implement corporate sustainability performance without affecting economic performance and competitiveness. In this context, Schaltegger et al. (2012) use the terms economic performance and competitiveness as interchangeable: "This 'traditionalist' view argues that firms face a trade-off between (better) environmental or social performance on the one hand and (worse) economic performance or competitiveness on the other" (p. 99).

In considering performance as a proxy of business competitiveness, researchers have identified a number of determinants of competitiveness. Some of them are described as follows.

In the 1980s the research on competitiveness was focused on the relationship between performance, investment and R&D (see for example Hoskisson and Hitt, 1988). This pure economic perspective has been extended in posterior years to explore how performance is influenced by other less direct factors. For example, Abeson and Taku (2009) found that information and knowledge obtained by owners of small firms from their social networks (e.g. colleagues, salesmen, trade publications, family members, and social contacts) helps the firm to be competitive. In this regards, some studies have found that effective acquisition and use of knowledge "is associated with enhanced quality performance, in terms of decreased process variation, increased product quality and reliability, reduced process defects, cost and cycle time and increase worker morale" (Abeson and Taku, 2009, 89). Other investigations have analysed the issue of basic skills (e.g. numeracy and literacy) as drivers of competitiveness. According to Addis (2003), basic skills affect competitiveness because they are associated with personal development, occupational skills and informational technology skills. These skills can be obtained from training, education and formal qualification (Gibb, 1997). Finally, work practices have also been identified as drivers of competitiveness. For example, Black and Lynch (1997) found that the higher the average educational level of production workers within a plant, the more likely the plant has performed better than average over a determined period of time. Likewise, the higher the proportion of non-managerial workers who use computers, the higher is firm productivity (this has also been identified by Krueger, 1993). In contrast, these researchers did not find evidence supporting a significant relationship between performance and training variables.

These studies have provided important insights of the factors that explain firms' business competitiveness from a traditional point of view based on the assumption of rational individuals. However, alternative investigations have revealed deviations from rationality that are not explained by the traditional tradition. This is the subject of the Behavioural Economic approach which objective is to study and explain deviations from rational choice theory. For example, deviations may arise when individuals are unable to process all available information; the strategy spaces is large and complex enough to rely on optimization processes; they don't have control over some situations; they have social preferences that deviate from self-interest such as reciprocity, altruism, paternalism, and aversion to inequality; and when decision making is influenced by emotional and psychological impulses, among others (Shogren and Taylor, 2008; Kovacic and Cooper, 2012; Crawford, 2013). …

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