ABSTRACT
It is generally accepted that the innovative
activities of an organization depends strongly on her ability to create and
transfer knowledge. It is a common knowledge that Agro allied food companies
in a developing country like Nigeria have not been coming up with
innovative products in the last several years This
study investigated how knowledge creation and its subsequent transfer influence
product innovation in agro allied food companies in Ondo State, Nigeria.
The survey design was adopted for this study. Six agro allied food companies with a total of 406
employees in Ondo State formed the population for the study. Total enumeration
technique was used to include all 406 employees in the study. The instrument
for data collection was a questionnaire; tagged KCTPIAFC which gave a
Cronbach alpha value of 0.89. The study’s response rate was 100%. Descriptive statistics (frequency counts, percentage
distribution, mean and standard deviation) and inferential statistics (Product
Pearson Moment Coefficient. Correlation and regression analysis) were used to analyse data.
The findings revealed that
agro allied food companies carry out both knowledge creation and knowledge
transfer activities on a high level with an overall mean of 3.6 and 3.5
respectively. These two activities has in turn improved product innovation in
agro allied food companies. The study equally shows that there was a significant positive relationship between knowledge
creation and product innovation (r = .357, p
< .05); there was also a significant positive relationship between
knowledge transfer and product innovation (r = .244, p < .05); Knowledge creation and knowledge transfer jointly
contributed 16.9% to the variation in product innovation in agro allied food
industry (R2 = .169, P<.05) therefore an increase in knowledge
creation and transfer activities will
result in an increase in product innovation among agro allied food industries.
The study concluded that product innovation in agro
allied food companies in Ondo State, Nigeria is high; knowledge creation and
transfer is also high. The study recommends; professionals
should be employed in agro allied companies to plan and execute innovative
programmes as well as the establishment of more agro allied food
industries- based training centres where leadership and managerial courses in
agricultural programmes will be taught as a means of transferring knowledge so
as to improve product innovation; equally the study recommends more research
centres to conduct research on the agro-allied industry.
CHAPTER ONE
INTRODUCTION
1.1. Background
to the Study
Historically, the
growth in agricultural output has been a key element in the successful
transformation of most economies that have seen sustained increases in their
per capita incomes (Soderborm & Teal, 2002). For instance Malaysia and
Thailand became two of the most affluent societies in the world through the
execution of sound innovation strategies clearly devised to produce high-quality
and highly-creative agro products (Kolo &
Ibrahim, 2002) Similarly, middle income countries like Hong Kong, South
Korea, Singapore, the Philippines, India, Mexico and Brazil have embraced
boosting productivity schemes as an integral part of their national planning
and today they have made significant-in-roads into the world agro allied
markets (Anyawu, n.d.).
During the first decade after independence, the Nigerian economy could
reasonably be described as an agricultural economy because agriculture served
as the engine of growth of the overall economy (Ogen, 2013:231-234). From the
standpoint of occupational distribution and contribution to the GDP,
agriculture was the leading sector. During this period Nigeria was the world’s
second largest producer of cocoa, largest exporter of palm kernel and largest
producer and exporter of palm oil. Nigeria was also a leading exporter of other
major commodities such as cotton, groundnut, rubber and hides and skins
(Alkali:15-16).
The agricultural sector contributed over 60% of the GDP in the 1960s
despite the reliance of Nigerian peasant farmers on traditional tools and
indigenous farming methods, these farmers produced 70% of Nigeria's exports and
95% of its food needs (Lawal, 2017:195).
However, the agricultural sector suffered neglect during the hey-days of
the oil boom in the 1970s. Ever since then Nigeria has been witnessing extreme
poverty and the insufficiency of basic food items. Historically, the roots of
the crisis in the Nigerian economy lie in the neglect of agriculture and the
increased dependence on a mono-cultural economy based on oil. The agricultural
sector now accounts for less than 5% of Nigeria’s GDP (Olagbaju & Falola,
2016:263) leaving the agricultural sector as one of the untapped potentials of
the Nigerian economy.
In 2010, the Central Bank of Nigeria released a
report showing that Nigeria has the third largest Gross Domestic Product (GDP)
behind South Africa and Algeria in Africa. Also, in the race towards
the fulfilment of her aspiration of becoming one of the top 20 economies in the
world by 2020, Nigeria attained a giant feat on October 20, 2016 when the
International Monetary Fund announced her as Africa’s biggest economy
(ThisDaylive.com, 2016). As good as this may sound, it only implies that Nigeria
has great economic potentials because ironically, she is still one of the
poorest countries in the world ranking 41st in terms of GDP and 161st in terms
of GDP per capita and currently eighth in the world in terms of population
(Radwan & Pellegrini 2010). In spite of its
huge potentials, including human and natural resources, Nigeria has experienced
a prolonged period of economic stagnation, rising poverty levels and
degradation of public institutions and infrastructure in the last decades owing
to the redundant state of innovation mostly in its agro allied sector (Radwan
& Pellegrini 2010). Popularly called the giant of Africa, Nigeria’s enormous
potentials can only be realized when she makes the transition to a new economy
based on knowledge, agricultural productivity, and innovation (Bartkus, 2010). This is
largely because knowledge has always been central to development, and its
creation and further transfer would only help to achieve this great vision. The
fact that the number of
agro allied food companies and the number of people employed by them is
increasing worldwide emphasize the great potentials of this sector. This is
also affirmed by the fact that the pace and size of investments to countries
outside the developed world are expanding especially in the field of food
production (Bartkus, 2010).
Ilori et al (2002), an agricultural economy
is superior to other types because it serves as a major consumer of raw
materials and energy, provides the basis for the food and other agricultural
products, produces the products for the wholesale and retail trade, produces
raw material for the various sectors of the economy and provides a major market
for the finance and service industries. In fact, agro allied industries
generate wealth to the society by providing jobs and generating a flow of
currency among companies and individuals. Unfortunately, the Nigeria
agro-allied food companies have been described as a “sleeping giant” in
terms of service delivery and capacity to satisfy the needs of her clients (Kolo
& Ibrahim, 2010). There is a consensus among academic researchers and
professionals that the Nigeria agro allied food companies are slow to
innovation (Odediran, 2012) and lack the capacity to deliver. The agro allied food sector in Nigeria has been noted to
demonstrate weakness in its contribution to national economy. This weakness is
evident in less than 10% contribution of manufacturing to the gross domestic
product (GDP); very low value of manufactured export which is less than 1% of
total export; and low level of employment in the industry, among others. The
result is that the sector is characterized by high production cost, low value
added, grossly underutilized capacity, low level of foreign investment in agro
allied food companies, high import content of industrial output, poor
maintenance culture, and weak linkage capabilities. It has wrong investment
decision-making, and inability to adapt foreign technology to suit local needs
for sustainable development (Ajakaiye & Akinbinu, 2000). These problems
have been blamed on faulty process of technology (knowledge) acquisition which
in turn is responsible for the dearth in innovation and the inability of agro
allied companies to retain path finding staff that have been well trained.
These high profile employees usually leave the companies with vital technical
knowledge that is crucial to the performance of the companies either when they
retire or disengage from the services of the organization. Invariably, reducing
poverty, improving nutrition and general well-being of the population would
imply improving the creativity of the agro allied companies and this hinges
critically on innovative performance. With
the present dwindling oil price in the global market and federal government ban
on importation of several agro allied food products, food companies are set to
be the new source of revenue and growth for Nigeria economy.
Since
time immemorial, organized business has sought a competitive advantage that
would allow it to serve customers as efficiently as possible, maximize profits
and develop loyal customers. How and where companies search for the knowledge
to fuel their innovation processes has been a focus of extensive research over
the past decade. Innovation theory has progressed through linear models, where
knowledge was pushed, or pulled into the market place, to collaboration and
open innovation theory, where knowledge flows between collaborating
organizations. These key developments in innovation theory have an important
element in common, they all hinge on the flow of and management of knowledge. Collaboration
between companies constitutes planned knowledge spillovers or exchanges, as
firms work together at particular stages in the production chain. This
collaboration may be either vertical, that is with suppliers, or intermediaries
(e.g. agro allied companies and wholesalers of products), or horizontal, with
other agro allied food companies that may be potential competitors (e.g.
engagement in common product wide marketing campaigns). Traditionally,
cultures that knew more than others were better able to adapt to their environments,
survive, and thrive. In the olden days, knowledge was spread through the most
serendipitous ways from migratory movements which equally involve cuneiform
writings to religious pilgrimages, from wars to intertribal marriages and,
thus, knowledge is transferred from one to the other across continents.
Nowadays, the Internet has become the primary mode of knowledge
dissemination—almost the entire collection of human history and knowledge is
available at the snap of a finger and at little cost through the World Wide
Web. Knowledge is becoming truly global,
accessible, and democratic. The impacts of this paradigm shift are all around
us. Countries such as the Republic of Korea, India, and the United States of
America that can harness the power of new technologies nurture a cadre of
knowledge workers that can push the productivity and innovation frontiers.
Others that fail to do so remain mired in poverty (Radwan
& Pellegrini 2010).
Innovation is therefore the effective harnessing of
new ideas to create new or improved goods and services, and this often forms
the basis of a company’s competitive edge. Organizations that often view
knowledge as their product adopt the transfer of such product (newly discovered
knowledge) as a business strategy as other competing industries will view them
as leading in discovering creative ideas. Such organizations pursue the
discovery of new ideas seriously because they consider knowledge to have significant
positive impact on their productivity and that their willingness to transfer
such idea is key to their ability to compete and grow. The benefits of
knowledge transfer between industry partners cannot be overemphasized.
Knowledge transfer allows industry partners to voice their challenges,
opportunities, and growth focuses in order to allow the entire sector to
prosper. It doesn’t imply that businesses should open their entire playbook to
their industry; there might be competitors listening after all to exploit such
opportunities. The importance is in strengthening other players in the supply
chain. If you can help other partners build a stronger supply chain to compete
on an international scale, the industry will benefit directly. Likewise, the industry
would be getting knowledge and feedback from all available relevant sources, as
well as pull insight from other industries as well. It has been discovered that
higher innovation capacity is linked to higher perceived profitability and
business growth; more intensive collaboration with other organizations along
the supply chain results in higher innovation capacity as it promotes trust and
knowledge sharing.
Knowledge
creation and knowledge transfer are tightly connected into practice.
”Successful organizational synthesis of knowledge requires discovering
knowledge as it emerges in practice” (Brown & Duguid 1998 p. 100). The
result of knowledge creation and transfer is measurable, and it results in
organizational functioning, like profit, improved efficiency, product
innovations, human capital and product- or process-oriented results. It is
commonly said that knowledge is power. In organizations, this expression has
become even more relevant than other social settings. Knowledge is a major
factor that differentiates successful organizations from the unsuccessful ones
(businesses, not-for-profit, and public enterprises).
According
to Nonaka & Tekuechi (1995), Contemporary
knowledge comes in the dimensions of explicit and tacit knowledge. Explicit
knowledge is the type of knowledge that can be verbally explained, codified or
written down in specified documents, while tacit knowledge as an intangible
knowledge is intuitive and difficult to express and practice.
The
latter comes from the individual’s mind and is based on life experiences,
reading, learning, environment, beliefs, and other background characteristics. When
different types of knowledge are understood, it becomes important to examine
how knowledge is managed. Knowledge management is defined by Stuhlman (2012) as
a conscious, hopefully consistent, strategy implementation to gather, store and
retrieve knowledge and then help distribute the information to those who need
it in a timely manner. It entails knowledge creation, internalization, use and
transfer. It is the activity for obtaining, sustaining and growing intellectual
capital in organizations (Marr & Schiuma, 2001). In the 21st century
organization, knowledge management is considered essential for growth and
productivity. Several studies have considered the transfer of knowledge within
and between organizations and their employees but not much research has
emphasized the success of such transfers (knowledge) and the possible role of
key organizational factors, especially in agro allied food industry in a
developing sub-Saharan African country.
Knowledge transfer has always been an
important process of knowledge management as organizations tend to keep new
discoveries from other companies in order to gain a competitive edge over other
parallel organizations but knowledge transfer makes it possible to connect to
cyclic time concepts in a way that both competing organizations can benefit
from. It is not easy, yet important to collect experiences and cultivate
intuitions faced in daily routines at work place in a way that does not
increase work load or lead to overemphasized control and then transfer such
knowledge to a competitor. But the gain in transferring knowledge has been seen
to be far more than what was given away in the knowledge transferred.
In
reality, knowledge is created in the organization by socialization as a result
of communication and interactions such as discussions, sharing experience,
simulation, practice observation and other social contacts that could exist
among members of an organization. Knowledge could also be created in an
organization by externalization which is a process that converts tacit
knowledge to explicit knowledge in the shapes of concept, metaphors,
hypothesis, description and models. This process occurs when a firm formally
articulates its internal rules of functioning or when it establishes its goals
explicitly (MartÃn
de Castro, 2007). The third process of creating knowledge in an organization is
by combination through a process that creates a new explicit knowledge from an
old existing explicit knowledge whereby existing explicit knowledge is merged,
categorized, reclassified and synthesized to create new explicit knowledge.
Knowledge could equally be created by the process of internalization which is
achieved through changing explicit knowledge into tacit knowledge through a
process in which abstract ideas change into concrete ones and they are finally
absorbed as an integral value. All these mode of knowledge creation could exist
in an organization either singularly or in combinations, however the mode it is
exhibited, it is paramount to make use of the created knowledge to improve the
product and service that such organization is into and to a large extent
transferred to other organization to help improve the standard and quality of
products that are released into the Nigeria consumer market.
Research and development of new technologies,
products and processes requires an enormous amount of knowledge, given the
limitations of human cognition, it is nearly if not impossible for any one
individual to be an expert in all fields of knowledge, Even within one field,
it is unlikely that one can keep ahead of all new developments so the transfer
of knowledge between companies for the purpose of knowledge creation, expansion
and development is key. Schwartz (2004) indicated that if firms are observant
and are able to leverage research and development (R&D) and convert more
meaningful arbitrary occurrences into opportunities, they may change an economy
and the world at large. Firms need to apply thinking strategies to their
surroundings, to increase collaborations and knowledge transfer while ensuring
that sufficient mutual benefits can be derived. Only firms that are able to
protect, redeploy, build, buy, combine or recombine their knowledge assets, and
then deploy them according to rapidly changing circumstances and client needs,
stand to survive and become innovative.
According to Grant (2002), a fundamental assumption
of the knowledge-based view of the firm is that knowledge has market value and
is one of the most productive resources for organizations. In addition,
knowledge is subject to economies of scale (i.e. initial creation costs are
higher than replication costs) and is a necessary resource for the production
of goods and services for the marketplace (Grant, 2002). The central importance
of knowledge to the production and the creation of value is an important area
of study for researchers. Knowledge has emerged as the most strategically significant
resource of an organization and its management is key to innovation. There has
been very little transfer of research knowledge due to the inherent barriers in
its creation, diffusion, adoption and utilization by practitioners. By
enhancing the industry orientation of knowledge transfer and adopting
systematic processes of review and dissemination, early adopters of research
findings can experiment and learn to apply theoretical knowledge, which, when
supported by other external mechanisms (institutional, communication with other
companies), of human resource management, information technology and knowledge
management (KM), can minimize or eliminate knowledge transfer gaps, leading to
improved competitiveness and performance of the firm. (Gera, 2012). In
order to maximize the benefit of knowledge transfer between firms,
a collaborative plan could
be implemented through
encouraging the interactions of
organizations, government, and
industry partners linkage as a
means of supporting the growth of
a mutually-supportive relationship in the local economy (Lungkana
Worasinchai et al., 2002).
An innovation is the implementation of a new or
significantly improved product (good or service), or process, a new marketing
method, or a new organisational method in business practices, workplace
organisation or external relations. According to literature “open innovation”
has further emphasized the importance of inter-organizational relationships in
the innovation process. Organizations increasingly rely on external sources of
innovation via inter-organizational network relationships (Perkmann &
Walsh, 2007). According to Chesbrough
(2003), “the role of internal Research
and Development is to identify, understand, select from, and connect to the wealth of available external
knowledge, and to fill in the
missing pieces of knowledge that are not
being externally developed.”
Bercovitz &Feldman (2007) argue that the collaboration between firms
is a unique mechanism for “cross-boundary learning”. On the other hand, government
plays an important role in facilitating the relationship between competing
organizations by offering collaborative incentives and infrastructures. Nohria
and Garcia-Pont (1991) have posited that through alliances, a firm can gain access to desired strategic capabilities through knowledge transfer by linking to a partner
with complementary resources and knowledge, or by
pooling its internal resources
with a partner possessing similar
capabilities. Harryson et al. (2008) further add that such alliances create
synergies between resources and knowledge that enhance or reshape competition
within the market.
According to Radwan &Pellegrini (2010), Nigeria’s innovation system
is not as well developed as those of other African comparator countries. The
country needs to strengthen the collaboration between its universities and the
private sector. Higher education institutions have few formal linkages to
industry, and as a result tend to continue teaching outdated materials and
producing graduates who are ill-equipped for the working environment. In the
21st century era of the knowledge economy, the state of the art in many
disciplines changes at a much faster pace than it did even a decade or two ago.
This is especially true in ICT. It is reported that many of Nigeria’s
universities are still teaching computer languages that are completely
obsolete, like FORTRAN and COBOL.
Radwan &Pellegrini (2010) further stressed that the first step
toward adopting an innovation culture is to adopt existing technologies and
adapt them to the local situation. As demand exceeds the supply of skilled
human resources, and labor rates in Asian economies edge upward, Nigeria has
the potential to absorb existing technologies and production systems,
especially in the services industries. Nigeria’s production systems are far
from efficient and there are great potential gains to be achieved simply by
moving toward more modern and efficient production techniques.
Inter-industry collaboration is recognized as a
critical form of learning alliance and as an
essential instrument to gain speed
and flexibility in knowledge
transfer while reducing costs
in R&D and operation but it
seems that the gap between competing industries is wide that the industry
barely know when there is a research or break through in new processes or
products conducted in a particular organization, especially in this part of the
world where there is a big enmity between organizations that are into similar
products having little or no relationship with each other within the context of
research and development. It is against this background that this explores
knowledge creation, transfer and its influence on product innovation in agro
allied food industry in Ondo state Nigeria.
1.2. Statement
of the Problem
It is common knowledge that Agro-Allied food
industries have not been coming up with innovative products in the last several
years. It is generally accepted that the innovative activities of an
organization depends strongly on the ability of the organization to create and
to transfer knowledge. Added to these is the advantage of more intensive
collaboration with other organizations along the supply chain results in higher
innovation capacity so as to promote trust and improve the industry’s productivity
at large. Several reasons are responsible for these including the way knowledge
is managed in the organization and between organizations in the industry as
well as the gap which exits between organizations preventing a healthy
cross-fertilization of ideas. This study therefore seeks to find out the degree
to which knowledge creation and transfer influence product innovation in agro
allied food industries in Ondo State Nigeria.
1.3
Objective of the Study
The main objective of the study is to examine
knowledge creation, transfer and product innovation in agro allied food
companies in Ondo State Nigeria. The specific objectives are to:
1. find
out the level of product innovation in agro allied food industry;
2. find
out the level of knowledge creation in agro allied food industry;
3. examine
the degree of knowledge transfer in agro allied food industry;
4. identify
the sources from which knowledge is transferred in agro allied food industries;
5. determine
the relationship between knowledge
creation and product innovation in agro allied food industry;
6. determine
the influence of knowledge transfer on product innovation in agro allied food
industry;
7. determine
the joint influence of knowledge creation and transfer on product innovation in
agro allied food industry and
8. find
out challenges faced by agro allied food industry in acquiring knowledge and
its transfer for product innovation.
1.4 Research Question
1. What is the level of product innovation in agro
allied food industry?
2. What is the level of knowledge creation in agro
allied food industry?
3. What is the degree of knowledge transfer in agro
allied food industry?
4. What are the sources from which knowledge is
transferred to agro allied food industry?
5. What are the challenges faced by agro allied food
industry in acquiring knowledge for product innovation?
1.5 Hypotheses
The hypotheses was tested at 0.05 level of
significance.
Ho1.
There is no significant relationship between knowledge creation and product
innovation in agro allied food industry.
Ho2. There is no significant relationship
between knowledge transfer and product innovation in agro allied food industry
Ho3. There is no joint influence of
knowledge creation, knowledge transfer on product innovation in agro allied
food industry
1.6 Scope of the Study
Staff of the Administration, marketing, sales,
research and development as well as production departments formed the
respondents for this study. This is because these are the departments mostly
involved in innovation. Staff of finance and human resource were therefore
excluded. Also, this study focused on agro-allied food companies as an aspect
of agriculture and only considers such companies located in Ondo State,
Nigeria. These include …
1.7 Significance of the Study
The findings would be very helpful for agro allied food
companies in acquiring already made knowledge from research works of other
companies in providing a product that would meet the need of the society in a
creative way thereby saving time of consumers and reducing cost of production. In
theoretical terms, the present study contributes to earlier research on
knowledge transfer behavior between firms in the food industry by building a
conceptual framework that includes several of the most significant factors
found to influence or inhibit knowledge transfer behavior in previous empirical
studies. This study extends previous research by investigating the direct
influence of these factors on knowledge transfer behaviors. In addition, there
are limited studies that consider this number of factors, or test their
collective influence on knowledge transfer behavior. The study would help the
creation of a knowledge transfer environment to drive innovation among
organizational workers and to enable government to initiate policies that would
be favorable for knowledge transfer between agro allied food industries.
The present study also extends the understanding of
knowledge transfer behavior found in previous studies. This perspective takes
into account three separate knowledge transfer behaviors, including: the
willingness of the knowledge owner to share their knowledge; the willingness of
the knowledge receiver to use the knowledge shared; and the perceived benefit
or utility of the transferred knowledge. The significance of this
research lies in
determining the gap
between knowledge generated in the research and development of
an agro allied firm and knowledge required by
a competing firm.
Determining the gap would
provide a favorable condition to
acquire the necessary information to focus on specific
knowledge required by
industry and to narrow
the gap turning some
organization’s office to a store of brilliant dissertation. It could also improve relationships and
liaisons within the industry especially the food industries.
1.8 Operational
Definitions of Terms
Knowledge: facts,
information, and skills acquired by a person through experience or education;
the theoretical or practical understanding of a subject.
Knowledge creation: Formation
of new ideas through interactions between explicit and tacit knowledge in individual
human minds. It involves socialization (tacit to tacit), externalization (tacit
to explicit), combination (explicit to explicit), and internalization (explicit
to tacit).
Knowledge transfer:
Knowledge Transfer (KT)
is the conveyance of knowledge, expertise, skills and capabilities from
universities as the academic knowledge base to companies or organizations in
need of the knowledge, such as non-government organizations, commercial and
industrial sectors, and various non-academic beneficiaries.
Innovation: is
the implementation of a new or significantly improved product (good or service,
process or methods), in business practices, workplace organisation or external
relations.
Product innovation:
is the creation and subsequent introduction of a good or service that is either
new, or an improved version of previous goods or services- with respect to its
characteristics or intended use.
Agro allied Food companies:
is a complex, global collective of diverse businesses that supply most of the
food consumed by the world population. Only subsistence farmers, those who
survive on what they grow, can be considered outside of the scope of the modern
agro allied food industry.
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