Optimizing entrepreneurship-innovation nexus: agriculture and agro-processing sectors

Recently, it’s rare to find an agriculture article without the mention of “Agriculture and Agro-processing Master Plan (AAMP)”. This is not necessarily a bad thing considering the AAMP is the blueprint to achieve a “globally competitive and inclusive agriculture and agro-processing sectors”. However, what seems to be missing in the discourse is the in-depth appreciation of entrepreneurship towards competitive performance and transformation of the agro-food industry. Entrepreneurship involves the presence of opportunities and corresponding enterprising individuals that are identified as entrepreneurs. Entrepreneurship is centred at the nexus of uncertainty, recognition-creation of opportunities, and exploitation by entrepreneurs. According to the Global Entrepreneurship Monitor (GEM), South Africa’s total early-stage entrepreneurial activity is amongst the lowest among peer developing countries. Moreover, the entrepreneurial activity is concentrated on necessity entrepreneurship as opposed to opportunity or high growth-technology entrepreneurship. The contributing factors are limited resource endowments, intermittent and uncoordinated entrepreneurship support, fragile market relationships, and low investment levels on research for development resulting in archaic technology.  

In the current technological milieu, the traditional ways of doing agribusiness have rapidly and fundamentally transformed. The simultaneous and adverse impact of (i) COVID-19, (ii) climate change, (iii) unstable energy supply, and (iv) geopolitical conflict has forced owner-managers to find new ways of mitigating the instability. The amalgamation of new digital technology together with innovation and entrepreneurship has transformed the nature of business and allowed owner-managers to deal with uncertainty. Entrepreneurship accommodates the continuous adaptation of business strategies under dynamic shifts of technical and business architectures. Explicitly, uncertainty require agroprenurship. 

Vast scholarly research output indicates that agropreneurship is not a one-dimensional phenomenon. It includes entrepreneurial behaviour at the individual and agribusiness levels. Agropreneurs must be alert, identify, discover, create and exploit business opportunities in the market at a profit. Albeit actions rather than intent of the agropreneur catalyse the entrepreneurship process. Agropreneurs should be dynamic, flexible individuals that possess a sense of urgency. Such individuals must be prepared to take advantage of new business opportunities. In contrast, agribusinesses should appreciate that opportunities to create both broad, based and radical transformatory innovations depend more on entrepreneurial capital (education, experience, knowledge); and entrepreneurial orientation (risk-taking, innovativeness and proactiveness) than merely a tunnel focus on organisational processes. Scholars indicates that higher levels of entrepreneurial capital and entrepreneurial orientation are positively related to various financial and non-financial measures. Entrepreneurial capital and entrepreneurial orientation are not always static, they vary depending on the development stage of the agribusiness, type of agroprenuer, and interaction with factor conditions such as innovation.

A host of entrepreneurial opportunities have emerged at the intersection of innovation and entrepreneurship. Innovation is not the same as innovativeness. Innovation carries with it success and failure. Common misconception is that innovation must be perfectly novel and radical in nature. Minor incremental innovation doesn’t count. Such views are mistaken. The experimental nature of incremental innovation allows for small wins in pursuit of colossal wins. Innovation alone is not ideal to accumulate entrepreneurial orientation. Efforts to increase innovation are in vain if risk-taking and proactiveness are constrained. Instead, entrepreneurial orientation elements should be nurtured and practiced holistically if they are to have a multiplicative effect. Similarly, high entrepreneurial capital possessed by the agroprenuer is likely to catalyse high entrepreneurial orientation of the agribusinesses that enhances appetite for innovation.

Scholars indicate that entrepreneurship and innovation are positively related. The two concepts are distinct but interrelated. The interaction of these constructs drives competitive performance of agribusinesses. Hence, entrepreneurship and innovation are complimentary. Whilst innovation is viewed as risky and costly. Growth is impossible without some degree and quantum of risk. Without entrepreneurial action, the innovative idea is often relegated to inertia. Agropreneurs and respective agribusinesses should find the elusive and tricky balance between risk and innovation.

Entrepreneurship should be encouraged and supported in all types and sizes of agribusinesses. Albeit entrepreneurial activities of different types of entrepreneurs have differential effects. Agribusinesses should avoid confinement to what Schumpeter called “cluster of followers”. Such enterprises imitate others. Reproduce similar products. Cluster around local markets selling similar types of products to the same customers. The Schumpeterian entrepreneur disrupts the status-qou. Such entrepreneurs are likely to deliver new products, services and high levels of job creation. Innovation and differentiation are a source of competitive advantage.

In conclusion, optimising entrepreneurship-innovation nexus requires a mixture of cogent, coherent and responsive policy interventions. At policy level: social partners in the AAMP should identify and agree on the most applicable policy interventions that provide the greatest returns on different forms of entrepreneurial activity. Critically, a pragmatic policy on incubations to test innovative concepts, provide hands-on and industry-specific experience to prospective agropreneurs and respective agribusinesses. At a strategic level: a paradigm shift is necessary to integrate entrepreneurship into agriculture and agro-processing development space. Pedagogy programmes and agricultural extension services are generally heavy on production-oriented approaches while neglecting entrepreneurial-innovation skills, competencies and capabilities. At the operational level: agribusinesses should inculcate and foster a culture of proactiveness, innovativeness and risk-taking. At the individual level: agropreneurs should configure a combination of varied logics associated with entrepreneurship, innovation and marketing orientations.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Mzansi Agriculture Talk.

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