Intra and Inter organisational determinants of electronic-based traceability adoption: evidences from the French agri-food industry

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1 1 Intra and Inter organsatonal determnants of electronc-based traceablty adopton: evdences from the French agr-food ndustry Gallano D. 1 and Orozco L. 2 1 French Natonal Insttute for Agrcultural Research/INRA-SAE2, Research Drector, Castanet Tolosan, France 2 Unversty of Toulouse/LEREPS, PhD Student, Toulouse, France Abstract Traceablty, the ablty to trace the orgn of products throughout the supply chan, has become an nstrument to assure food qualty and safety n agr-food chans. Ths process s organzed wthn both nsttutonal and market constrants, yet t ntegrates also a technologcal sphere marked by the unprecedented development of nformaton and communcaton technologes. Ths paper analyses the factors nfluencng frms behavour, wth regards to adoptng electronc-based traceablty, n the French agr-food ndustry. These factors (mcroeconomc determnants) related to frms nternal characterstcs and the factors related to ther envronment. We use data from the ICT and Electronc Commerce survey from 2002, carred out by the French Natonal Insttute of Statstcs (INSEE). A Probt type model s used, whch allow us to take nto account the frm s determnants for ts organsatonal choce, dfferentatng from those adoptng (or not) an electronc-based traceablty tool. Our man results show that the choces of electroncbased traceablty depend on and nteract wth ther own organzatonal characterstcs and those of ther compettve, ndustral and local envronment. Traceablty technologes evdence the complementartes between organsatonal and technologcal practces. Large ndustral frms known for ther establshed dentty and a brand mage seem dstant from standard traceablty practces, contrarly to agrbusnesses, whch are subjected to regulatons and look forward to use traceablty for both complyng wth ther downstream contracts and add value to ther regonal specfctes. Keywords Traceablty, Technology adopton, Agrfood ndustry. I. INTRODUCTION Traceablty, the ablty to trace the orgn of products throughout the supply chan, has become an nstrument to assure food qualty and safety n agrfood chans. Followng the BSE crss n Europe and more recently the E-col spread on the U.S. spnach supply chan, countres and agrbusness are developng traceablty systems to assure food qualty and, at the same tme, mprove supply chan management. By the means of regulatons, and notably the European regulaton 178/2002, governments can requre agrbusness to mplement mandatory traceablty systems n order to mprove food safety (Golan et al. 2004) [1]. The process of traceablty, organzed wthn both nsttutonal and market constrants, ntegrates also a technologcal context marked by the unprecedented development of nformaton and communcaton technologes (ICT). Traceablty systems requre new ICT that guarantee the recordng and transmsson of producton data all along the supply chan. Wthn ths context, the repercussons of traceablty have rased an emprcal lterature based on ts mplementaton n supply chans. Several authors show the dversty wthn and between sectors and the ncerttude of the demand behavour. Ths dversty n the sector s confguraton could fnd ts orgns at the mcroeconomc level, and the frm s behavour on traceablty adopton, especally of an electronc-based system, seems to be an mportant precondton n order to analyze ts consequences; a subject poorly studed n the lterature. Ths paper ams to analyze the factors nfluencng frms behavour wth regards to traceablty on the French agr-food ndustry. Our goal s to show, on one hand, the determnants related to frms characterstcs (structure, organsatonal forms, product dfferentaton, etc.), and on the other, the factors related to ther envronment. To what extent the frm s sectoral, geographcal and compettve envronment, play a role on ts decson to mplement traceablty? More precsely, our am s to dentfy the frm s nternal organsatonal characterstcs, the coordnaton modes, and the envronment-related factors that are

2 2 conducve (or not) to the adopton of an electroncbased traceablty system. Our theoretcal approaches derve from nnovaton theores, enablng us to understand some of the organsatonal foundatons n the process of adoptng new technologes, and more precsely from recent works n whch spatal and ndustral economcs meet (Battst and Stoneman 2005 [2]; Gallano and Roux 2008 [3]). To test our theoretcal model and hypothess, we use ndvdual data from a natonal survey (ICT and E-Commerce 2002) conducted by the French Statstc Insttutes, whch allow us to tackle certan components of frm s nternal and external organzaton, ts ICT and traceablty capactes and ts relatons to the terrtory. Emprcally, a probt type model s used, whch allow us to take nto account the frm s determnants for ts organsatonal choce, dfferentatng from those adoptng (or not) an electronc-based traceablty tool. The paper s organzed as follows: Secton 2 surveys the theoretcal framework of traceablty and ICT adopton. Secton 3 s devoted to the presentaton of our data, the probt model and the varables. Secton 4 presents the results from the econometrc tests taken for both the entre French ndustry and for the agrfood sector, n order to hghlght ths sector s specfctes. The last secton concludes the paper. II. ICT, FIRM ORGANISATION AND THE ADOPTION OF TRACEABILITY TECHNOLOGIES: A THEORETICAL FRAMEWORK A traceablty system founds tself bounded by two major constrants: that of markets and ts falures, especally wth regards to consumer s demands; and that of nsttutonal rules and norms, whch have grown consderably n recent years (Ménard and Valceschn, 2005 [4]). They are also wthn a technologcal framework nfluenced by the development of new ICT. Traceablty systems requre ICTs that allow the regstraton, transfer and stock of nformaton and knowledge. As noted by Burh (2003) [5], IT and Informaton systems have made t economcally feasble to develop logstc management and montorng, enablng the traceablty of food products through the labyrnth of agr-food supply chan. Nonetheless, not all frms have adopted an electronc-based traceablty system (t has been mentoned that most traceablty systems reman partally supported on paper forms, FoodTrace 2004 [6]) and, at the same tme, the technologes used for ths purpose and the ntensty of use are dverse between them. What are then, at the mcroeconomc level, the factors favourng, or not, the adopton of an electronc-based traceablty system? Once we have specfed our theoretcal framework, followng the works of technology adopton models (Battst and Stoneman 2005; Gallano and Roux 2008), we present the determnants of the adopton behavour of an electronc-based traceablty system. The dea s to hghlght three major sets of varables: those related to frm s organsatonal structure, those related to ts envronment and those related to the type of technologes exstng n the frm. A. The theoretcal framework of electronc-based traceablty adopton: The adopton models The lterature from technology adopton proposes dfferent models for explanng the dffuson of technologes: the equlbrum models, where the decson to adopt s based on a cost-beneft analyss; and the epdemc models, whch take nto account the effects of nformaton spllovers on the dffuson of technologes (see Karshenas and Stoneman 1993 [7]). Thus, n the cost-beneft approach of equlbrum models, the decson to adopt s the result of an economc calculaton by potental adopters (frms), who antcpate the net costs and benefts from adoptng and usng these technologes. These models are based on the hypothess that nformaton on the technology s known and shared, and that the dfference n the adopton levels between actors s product of ther heterogenety. The expected benefts from the technology wll depend on the agents own characterstcs ( rank effects ) and on ther poston n the adopton order ( stock and order effects ). Rank effects suggest that agents dffer n ther own characterstcs. Frms dffer n characterstcs such as sze, fnancal resources, market poston, etc. They do not have the same needs and expectaton vs-à-vs the technology. In addton, as noted by several authors,

3 3 the choce and the adopton model, as well as the performance of the technology, are gong to depend on ts logc wth the frm s goals and ts coherence wth the organsatonal structures (Mlgrom et Roberts, 1995 [8]). The choce of adoptng technologes lke ICT or traceablty tools requres complementary organsatonal nnovatons by frms (Greenan 2003 [9], Bocquet et al [10]). Epdemc models emphasze the predomnance of nformaton spllovers effects on the dffuson of technologes. The greater the number of adopters, the more nformaton s avalable about the technologes and the faster the dffuson rate. These models hypothesze that a potental user becomes a user through contact wth an exstng adopter (the greater the number of adopters, the hgher the probablty of a non-adopter to be n contact wth an adopter and the hgher hs probablty of beng contamnated ). Integratng these two approaches on technology dffuson, authors obtan technology adopton models, whch take nto account the rank effects related to the frm s characterstcs, the stock and order effects n the case of nter-frms dffuson and the epdemc effects (n the absence of the adopton date, we are unable to calculate the poston of frms n the adopton order and so the stock and order effects ). Usng the model by Gallano and Roux (2008) on ICT adopton, and followng the works by Battst and Stoneman (2005), we can then descrbe the process of technology adopton, or that of electronc-based traceablty t adopton, by consderng a bnary dscrete varable d that takes value 1 f the frm possesses the new technology at tme t, and 0 otherwse. At tme t, a frm possesses the new technology f and only f the net proft t has antcpated from ts adopton n relaton to ts non-adopton s postve. The expected net proft of adopton noted θ ( x t ) s a functon of the frm s specfc characterstcs as well as those of ts sectoral, compettve, and geographcal envronments (rank effects). The frm s own characterstcs correspond not only to ts structure (sze) but also to ts organsaton (mult-unt frms, subsdary of a group, degree of product specfctes, management nformaton system (MIS), degree of codfcaton practces, etc). These varables allow us, n the dffuson model of traceablty related technologes, to take nto account the complementartes between organsatonal and technologcal practces. We now make the addtonal hypothess that spllover effects (geographc and sector related) nfluence the frm s decson to adopt the new technology. Indeed, the adopton of a new technology by other frms n the same sector, or geographcal area, generates nformaton spllovers that may lead the frm to adopt ths technology as far as these spllovers reduce the uncertanty concernng ts characterstcs. These epdemc effects are denoted t e. We consder that a frm possesses the new nt, technology at tme t,.e. d = 1, f the subjectve expected net proft (n relaton to non-adopton) s postve: π( x t, t ) ( t ) ( t e = θ x + f e) > 0 (1) The frst term represents the net profts antcpated by the frm whle the second term translates a correcton n ths percepton that nformaton spllovers have and effect over the frm s technologcal characterstcs. B. The explanatory factors of electronc-based traceablty system adopton behavour The goal of ths secton s to descrbe the dfferent factors nfluencng the adopton behavour of an electronc-based traceablty system wthn a frm. The theoretcal adopton models show two types of factors: rank effects and epdemc effects. Rank effects are related to the frm s nternal characterstcs and external coordnaton modes. They reaffrm the complementary effects between, on one hand, technologcal and organsatonal practces, and on the other, the frm s management, represented by ts MIS technologes, determnants of ts codfcaton practces. Thus, the frst three sub-sectons are dedcated respectvely to the rank effects (nternal and envronmental characterstcs), and to the organsatonal practces. Ths last pont represents, for our study about traceablty, the frm s organsatonal confguraton (nformaton management and communcaton), whch we based on the observed tools used by the frm. The fourth, and last subsecton, wll be dedcated to the epdemc effects.

4 4 The frm s nternal organsatonal characterstcs: We make the hypothess that each frm has nternal characterstcs that nfluence ts needs and capactes to adopt a technology. Rank effects related to the frm s nternal characterstcs show that not only sze but also nternal and external coordnaton modes play a role n the traceablty process. The sze of the frm: Frms have dfferent characterstcs that nfluence ther adopton behavour. Among these, the frm s sze s expected to have an effect on the adopton process. Large frms are descrbed as havng greater access to fnancal resources, beneftng from economes of scale, havng a relatvely dverse workforce n terms of sklls and havng a better access to nformaton on new technologes. They also have greater negotatng power over supplers. Authors have proposed that the sze of the frm determnes the resources employed n traceablty actvtes (Rabade and Alfaro 2006 [11]). If we consder electronc-based traceablty an ICT, the lterature shows vast evdence on the role of the frm s sze and the adopton of new technologes (Mansfeld 1968 [12]; Karshenas and Stoneman 1993; Gallano and Roux 2006 [13]). Even f ths relaton s not always lnear, traceablty systems over all tend to be adapted to the frm s sze and complexty. Internal and external organzaton: Traceablty nvolves the coordnaton of dfferent operators (Souza-Montero and Caswell 2005 [14] ; Charler and Valceschn 2008 [15]). Informaton technologes are tools to facltate communcaton and coordnaton at both ntra and nter-frm levels: the greater the montorng and coordnaton costs, the hgher the expected returns usng ICT. Ths seems to be partcularly true n the agr-food sector where traceablty, especally when supported by nformaton technologes, tend to reduce such costs (Buhr 2003). Besdes the sze of the frm, the lterature ponts out other factors related to the frm s structure that could play a role on the adopton of certan technologes, lke for example a mult-unt organsatonal form. The mult-locaton of producton unts across dfferent locatons means hgher costs of communcaton and coordnaton between them. Dfferent emprcal works corroborate that mult-unt frms (MUF) play a postve role on the adopton of ICT (Fscher and Johansson 1994 [16], Gallano and Roux 2008). Ths mght not be the case wth food safety measures. Bouhsna et al. (2002) [17], found that the number of unts wthn a frm s negatvely correlated to the probablty of adoptng a generc food qualty standard (ISO 9000 and HACCP). Product dfferentaton: It s wdely mentoned n the lterature that one of the man reasons for the mplementaton of traceablty s to reassure consumers of qualty and safety. It s beleved that new products have hgh costs related to ther marketng and that advertsng s the most wdely used tool to nform consumers about food qualty and safety (Verbeke 2005 [18]). Advertsng expendtures can gve an ndcaton on the frm s dentty and the effects of product dfferentaton on traceablty adopton. It could be used as a tool to effcently measure the dfferentaton among frms that use ther mage to promote ther products. Advertsement and traceablty can be complementary, or n competton, for reassurng consumers. Verbeke (2005) suggest that traceablty tself s not the most attractng ndcator for consumers confdence. However when t s mentoned n qualty labels t stands a good chance of beng valued by consumers. Then, based on ths relaton between advertsement and traceablty, our goal s to determne whether frms that employ a large amount of resources n advertsng have a greater probablty of adoptng electronc-based traceablty systems. The factors related to frm s envronment: sectoral, market and geographcal area: Locaton area: The general vew s that frms are nfluenced by the envronment n whch they are located, especally n ther capacty to nnovate and to adopt new technologes. The hypothess, often found n the lterature, s that urban agglomeraton economes allow the access to a varety of nfrastructures and servces actvtes (IT servces, technology supplers etc.), as well as to a qualfed workforce, whch favours the adopton of technologes by frms. The weak presence of these factors n rural areas, together wth a low technologcal level, could explan the delay by rural frms n the adopton process (Gale 1998 [19]). At the same tme, accordng to Antonell (1999) [20], the level of ndustral specalsaton n the area where the frm s located,

5 5 plays also a role because t creates a dense network of relatonshps between frms (supplers, assocated servces etc.), whch generates a need for traceablty and, favours the dffuson of nformaton and technologes. For Rabade and Alfaro (2006) the geographcal locaton of supplers determnes the degree of coordnaton between buyers and supplers n order to create strong collaboratve lnks. The frm s sector of actvty: The nfluence of the frm s sector of actvty on ts adopton behavour can be related, frst, to the techncal determnants that descrbe the ndustry, as well as the frm s downstream and upstream relatonshps, and to the regulatons exstng n the sector. The frst aspect concerns the nature of the product and the modes of organsaton between the supply chan operators. Informaton s more or less standardzed and codfed dependng on the type of product, and the type of coordnaton. The pressure from dstrbutors (downstream) remans an mportant determnant n the choce of a traceablty system. At the same tme, agrbusnesses are strongly nfluenced by laws and regulatons concernng food safety. Legal lablty costs are mportant determnants for frms to enhance traceablty (Hobbs 2004 [21]). Agr-food consttutes a sector partcularly exposed to the spread of specfc coordnaton and product normalsaton devces, as well as producton modes, whch nclude all actors from the farm to the fork. Market determnants: If downstream pressures represent a sectoral effect on supply chans, market structure and competton could be an ncentve for frms to chose, and to adopt, a new technology and an effcent traceablty system. The theoretcal lterature tends to show that the frm s capacty to nnovate and ts pace of nnovaton depend on ts poston on the market (Renganum 1989 [22]). The effects of the compettve pressure on the frm s nnovaton capacty reman somehow ambguous n the lterature; thus we assert that hgh competton could be an ncentve for frms to nnovate n order to defend ts market share. The types of tools: The type of tools used by the frm s an ndcator of ts organsaton management choce, specally the degree of formalsaton and codfcaton of practces and knowledge. These tools translate the nature of the nformaton system exstng n the frm whch supports electronc-based traceablty systems. These technologes should structure the frm s both nternal and external flow of traceablty nformaton. Dfferent authors (Van der Vorst et al [23]; Faragg 2006 [24]) have dentfed three man functons of traceablty technologes wthn a frm: ) Identfcaton and regstraton of lots; ) Management of traceablty data; and ) communcaton of traceablty data. Technologes used for the dentfcaton and regstraton of lots can range from the well known bar-coded tag to the more sophstcated Rado Frequency Identfcaton Devces (RFID), ear tags and DNA-tracng (see Brz 2003 [25]). Some of the technologes concernng the management of traceablty data that can be found on ndustral and agr-food frms are typcally Enterprse Resource Plannng System (ERP) and Warehouse Management Systems (WMS). For the communcaton of traceablty data, the tendency s to use standard electronc formats such as EDI (Electronc Data Interchange), yet Intranet and Extranet are wdely used. In the process of traceablty, the management and communcaton functons n some way condton the process of traceablty codfcaton at a tme t. Our hypothess s that the presence of management and communcaton tools favours the mplementaton of an electroncbased traceablty system n the frm. Epdemc effects related to the ncerttude of the technology (sectoral and spatal effects): Epdemc modellng emphaszes the predomnance of nformaton spllovers on the adopton of technologes. The pace and the extent of ther dffuson wll depend on the number of adopters n the frm s envronment. The more a new technology s used, the more nformaton s transferred between and wthn frms, and the lower the rsk assocated wth ts adopton. Ths effect could be analyzed at the sectoral and spatal levels. We wll analyze the nfluence of traceablty adopters n the same sector of the observed frm, and that of those located n the same geographcal area. Is the probablty of adoptng a traceablty system dependent on a sectoral or a spatal effect related to the frm s envronment? Ths queston s rarely consdered n the lterature.

6 6 A. The data III. DATA AND METHODS We use data from the ICT and E-commerce Survey from 2002, carred out by the French Natonal Insttute of Statstcs (INSEE). Ths survey gves us nformaton about the exstence of traceablty and other ICT tools, as well as ther practcal usages by French frms. We combne ths data wth the Frms Annual Survey (EAE), also carred by INSEE. Table T 1 The characterstcs of the sample (Traceablty adopton frequency by general characterstcs) Entre ndustry Entre ndustry (wthout Agr-food) Agr-food Total num. of frms Num. of adopters In percentage (%) 23,31 20,55 42,78 Sze 20 to 49 emplo. 60,43 61,10 58,10 50 to 99 16,51 16,22 16, to ,69 12,85 16, or more 9,34 9,36 9,25 Sector Agr-food 22,81 - Meat ndust. 38,79 Consumer goods 13,79 - Fshery 5,56 Automoble 2,28 - Fruts & Veg. 4,58 Equpment goods 13,39 - Olseeds 0,41 Interme. goods 47,74 - Mlk 10,56 Grans & starch 3,60 Feed 6,63 Other food nd. 19,39 Beverages 10,31 Organsatonal form Subsdary 71,00 70,66 72,10 Independent 29,00 29,33 27,86 Sngle Unt 62,66 64,48 56,47 Mult Unt 37,34 35,52 43,50 Spatal organsaton Urban area 58,68 62,41 46,00 Per-Urban area 20,74 20,25 22,43 Rural pole 10,15 07,81 18,03 Rural solated 10,42 09,51 13,50 Data manage. tools ERP 66,48 69,11 57,60 DMS 23,51 25,06 18,23 Workflow 22,79 24,58 16,74 Datawarehouse- Datamnng 24,79 25,25 23,24 Com. tools EDI 64,06 60,91 74,62 Intranet 54,39 55,32 51,20 Extranet 18,11 19,96 11,83 Source:EAE and ICT and E-Commerce Survey (2002), French Natonal Insttutes of statstcs, Authors calculaton Ths survey gves us exhaustve nformaton on the frms actvtes, structural characterstcs, number of unts, and locaton of ther man offce. The survey s based on a representatve sample, n sze and sector of actvty, of over 5000 French ndustral frms, whch n weghted data represent over frms. The Fnancal Lnks (LIFI) Survey gves us nformaton concernng the belongng of a frm to a group. Fnally,

7 7 we use data from the ZAUER zonng database (INSEE-INRA 1998 [26]) whch provdes nformaton on the geographcal area gven ts urban/rural nature. Descrptve statstcs on our sample are provded on table 1. The descrptve statstcs show the mportance of the frm s structural and organsatonal characterstcs on the adopton of electronc-based traceablty (sze, group organzaton, etc.) They also show the specfctes of agrbusness compared to the entre French producton system. Agrbusnesses seem to be the ndustral sector that uses the most the electroncbased traceablty of products. B. Methodology Based on data from these ndvdual frms, we use a Probt type model, whch allow us to take nto account the frm s determnants for ts organsatonal choce, dfferentatng from those adoptng (or not) a traceablty tool. Beyond an exhaustve statstc descrpton of traceablty on the agr-food ndustry, our man goal s to test, usng an econometrc model, the factors enablng the use of an electronc-based traceablty system. For all estmatons we use weghted data, n order to correct for samplng bas (.e. for assurng a better representaton of the ndvdual frm s dstrbuton) and provde results for the entre populaton. Probt models are used for explanng a dchotomous dependent varable wth emprcal specfcatons n terms of a latent regresson (Greene 2003 [27]): * y = β x + ε Where x s a vector of endogenous varables, β the vector of parameters and ε, the resdual error, whch s normally dstrbuted. The latent varable y * s contnuous and unobserved, and generates the observed bnary varable y where: y = 1 f y * > 0 and y = 0 f y * 0 C. Varables Ths secton presents the nature of the dfferent varables used n the model, wth the dependent varable, and secondly the explanatory varables. These explanatory varables are dvded nto three categores: the nternal characterstcs of the frm, the characterstcs of the envronment and, fnally, the type of tools supportng traceablty. Explaned varable: We estmate the probablty of adoptng an electronc-based traceablty tool. We use a dchotomous varable takng value 1 f adoptng and 0 f not. From the ICT and Electronc Commerce 2002 survey we use the traceablty tool varable, descrbed as a tool allowng the dentfcaton and the hstory of a product, supported on ICT such as barcodes, electronc tags, etc. and other dentfcaton technologes. Explanatory varables related to the frm s nternal characterstcs: Several varables found n the lterature are used to descrbe frm s nternal characterstcs. Frstly, the sze of the frm s estmated by the number of employees. Frms are dvded nto four categores accordng to the number of workers they employ (from 20 to 50; from 50 to 100; from 100 to 500, and over 500). The belongng or not to a group ndcates that frms are ntegrated to a larger network and so have a hgher probablty of adoptng ICT and specfc traceablty systems, even f ths ntegraton depends on the functonal dvson and the level of centralzaton of decson wthn the group. The spatal organzaton of the frm s determned by a mult-unt (or sngle unt) structure. Whle the product dfferentaton s measured by ts advertsement rato, the proporton of advertsement expenses over total benefts. Explanatory varables related to the frm s external envronment: These set of varables are used n order to descrbe the envronment of frms n ther dfferent dmensons: sectoral, spatal and market related. The man sector of actvty of the frm at the level 60 of the NAF 1 reveals the technologcal and economcal determnants related to such sectors n whch the frm belongs. Wth regards to the spatal envronment, we use the locaton of the head offce, accordng to the INSEE-INRA s ZAUER zonng, to dstngush three types of locatons: urban centres, per-urban, rural poles and rural solated areas (INSEE-INRA 1998). Wth respect to the market envronment, we use frst, a Herfndahl ndex of concentraton of the French 1. French Nomenclature of Actvty. For agrbusness we use the sectors at the 220 NAF s level, whch s made by: meat, fshery, fruts and vegetables, olseeds, mlk, grans and starch, anmal feed, other food ndustres and beverages.

8 8 market. It s calculated from the frms turnovers on ther man market 2. Ths ndcator s used to test the hypothess accordng to whch the frm s search for market power s a determnant of ts adopton behavour. Secondly we use the frm s rate of exports, whch reflects the frm s degree of openness to foregn markets. The am here s to evaluate how much the presence of a frm on foregn markets nfluences ts traceablty adopton behavour. Two types of epdemc effects are studed: spatal and sector related. For the former we use the level of frms traceablty adopton n the local geographc area, meanng the average rate of traceablty use by frms located n the same department 3, and for the former, we use the level of traceablty adopton n the frm s sector, thus, the average rate of traceablty use n the sector of actvty. Explanatory varables related to the type of tools used to favour traceablty: In order to outlne the frm s nformaton system, we try to dentfy the lnk between nformaton management and communcaton tools of a frm and ts traceablty behavour. Thanks to the ICT survey we can take nto consderaton the exstence of nformaton management tools (ERP, DMS, Workflow and Dataware) n the frm and ts modes of communcaton whether they are nternally or externally orented (EDI, Intranet, Extranet). IV. RESULTS: THE ADOPTION DETERMINANTS OF ELECTRONIC-BASED TRACEABILITY. THE SPECIFICITIES OF THE AGRI-FOOD IN THE FRENCH INDUSTRY For the entre French ndustral frms, the results from the econometrc model show the nfluence of both nternal and external factors on the frm s adopton behavour (table 2). They show the role played by organsatonal factors and those related to the frm s external envronment. In ths matter, the general model show the specfc and much accentuated role played by traceablty n the agr-food ndustry. Frm s belongng to the agr-food sector have hgher probablty to adopt an electronc-based traceablty tool compared to ntermedate goods, consumer goods, equpment goods and automoble. Ths result, hghly 2. Usng the sector of actvty at the NAF s 220 level 3. French admnstratve unt stuated n between regons and countes. sgnfcant and postve, tends to confrm the specfc role played by traceablty for agrbusnesses and the nterest of further studyng ther behavour compared to the rest of the ndustry. A. Frm s nternal characterstcs Concernng the organsatonal characterstcs of the frms, even though the general model shows the overall relevance of the frm s sze, and ts belongng to a group, on the adopton probablty, there are some marked dfferences between the dfferent sectors. Industral frms (others than agrbusness, model 2) have an ncreasng probablty of adopton for frms between 20 to 500 employees, not the case for those wth more than 500 employees. Large frms do not play a sgnfcant role on the adopton behavour, whch justfes the negatve role played by the frm s mult-unt structure. Ths s also renforced by the negatve and sgnfcant role played by the advertsement expendture; a measure of the frm s brandng strategy (a practce carred by large enterprses). The ndustral model becomes that of the average frm, typcally carryng standard products and nserted n vertcal relatons typcal to ts sector or the group to whch t belongs. For the agr-food ndustry, the probablty to adopt an electronc-based traceablty system s strongly and lnearly correlated to the ncrease n the frm s sze. The larger the frm s, the greater the mplementaton electronc-based traceablty system; reason why a wde number of SME rely on paper-based traceablty practces. Moreover, the belongng to a group renforces the probablty of adoptng an electronc-based traceablty tool whle the fact that the frm has a sngle or a multunt organsatonal form s not sgnfcant n the adopton process. The fact that frms possess multple unts, often seen n agrbusness as a way to beneft from both urban and rural externaltes (Gallano and Roux 2006) do not play a role n the adopton behavour. However, contrarly to the rest of the ndustry, where the brand mage n some way cancels the use of traceablty, for agrbusness the advertsement rato has a postve and non sgnfcant effect. Ths means that traceablty complements a brandng strategy, meanng that t would tend to be as much formalzed and developed for generc products

9 9 or products belongng to vertcal ntegrated supply chans (B-to-B process) as for products developng a brand name. Ths later aspect can better be developed wth voluntary labels lke AOC, PDO, PDI, etc., whch do not depend on frm s sze. Table T 2 The determnants of the frm s traceablty adopton Endogenous varable: Traceablty adopton Total (model 1) Industres (model 2) Agr-food (model 3) I. Internal characterstcs of the frm Sze 20<50 (Ref) (Ref) (Ref) 50< *** *** *** 100< *** *** *** > *** ns *** Belongng to a group *** *** *** Mult-unt spatal organzaton *** *** ns Advertsng rato ns *** ns II. Characterstcs of the envronment Frms envronment-related factors Head offce's locaton - Urban (Ref) (Ref) (Ref) - Per-urban *** *** ** - Rural pole ns ** *** - Rural solated *** *** ** Sector Agr-food (Ref) - Meat ndustry (Ref.) Consumpton goods *** (Ref) Fshery ** Automoble *** ns Fruts and vegetab ns Equpment goods *** ** Olseeds ns Intermedary goods *** *** Mlk ns Grans and starch * Feed *** Other food ndust ns Beverages ** Level of competton n the sector *** *** *** Rate of openness to nternatonal markets * *** * Epdemc effects Level of traceablty adopton n the area ns ns ns Level of traceablty adopton n the sector *** *** *** III Type of tools Data Management Tools : ERP *** *** *** DMS *** *** *** Workflow *** *** *** Datawarehouse *** *** *** Communcaton tools : EDI *** *** *** Intranet *** *** *** Extranet ** *** ** Constant *** *** *** Number of observatons R Source:EAE and ICT and E-Commerce Survey (2002), French Natonal Insttutes of statstcs, Authors calculaton

10 10 B. The envronmental factors Wth regards to the frm s envronment, results from the general model tend to show a moderate nfluence played by the spatal envronment over the sector and the market actvty. Concernng the spatal envronment, the process of traceablty s favoured by ndustral frms (other than agr-food) located n urban and per-urban areas. Per-urban frms have a hgher postve and sgnfcant probablty of adoptng traceablty tools than the others. The locaton n rural solated areas, however, plays a negatve role n the probablty of adoptng electronc-based traceablty tools for all frms n the sample. Ths result converges wth those evdenced n the lterature about the adopton of nnovatons and new technologes, where t s the urban externaltes the ones nfluencng nnovaton. For the agr-food ndustry, the model dffers gven ths sector s prvleged locaton n rural areas and ther strong nfluence from spatal externaltes, lnked to the locaton of ther head offce. Thus, the locaton n a rural pole, and n a lesser degree n a per-urban area, s more favourable than a locaton n an urban pole. Only the locaton n solate rural areas dstorts the adopton of electronc-based traceablty tools. Ths result seems to relate the low levels of technologyntensve products and labour sklls n rural areas (Gale 1998) wth the nfluence of nformaton spllovers on nnovaton. The market envronment plays dfferent roles dependng on the sector of actvty. If the exports rate, and so the openness to nternatonal markets, have a postve effect for all frms, we found that the level of competton on the frms market does not play a sgnfcant role for the ndustral frms. It s however hghly postve and sgnfcant for agrbusness. Ths tends to confrm the nfluence of vertcal ntegraton and sector-related effects on ther traceablty behavour. These results are renforced by the epdemc effects whch only play a sgnfcant role from a sector-related pont of vew. The use of traceablty n the frm s geographcal area does not play a sgnfcant role n the adopton probablty. Results show several dfferences wthn the agrfood sub-sectors. The emprcal lterature tend to show that sectors affected by santary crss and food safety ssues have a hgher probablty to practce traceablty even before regulatons were enacted n the late 90 s. As our model shows, the mplementaton of an electronc-based traceablty system mples the exstence of ncentves favourng the adopton such as the sze or the envronment. Meat ndustres are less concentrated, havng moderate szes (slaughterhouses) and most often located n rural areas. The ntegraton level n the supply chan and the pressure from downstream operators play a dstnct role n the type of tools and the degree of traceablty used. The model shows how sectors lke mlk and fruts and vegetables have smlar behavours as that of meat. However, fsh and anmal feed ndustres reman ndustralzed and have a superor probablty of adoptng an electronc-based traceablty system than meat. Vegetables and crops sectors are less nfluenced by oblgatons related to santary crss yet more nfluenced by the pressures from downstream operators. The beverage sector shows a hghly sgnfcant and postve probablty of adopton compared to the meat ndustry. Ths sector s hstorcally and hghly regulated gven the exstence of alcohol, yet t s also subjected to a strong competton and product dfferentaton. C. The type of tools Fnally, the management and the transmsson of traceablty nformaton along the supply chan between upstream and downstream partners requre frst, a seres of complementary tools for capturng and regsterng the nformaton (enterprse resource plannng ERP, supply chan management software, etc.) and second, tools for the transmsson of nformaton (Extranet, EDI, Intranet, etc.). As we have seen (table 1) the domnant tool for treatng traceablty remans ERP (66,48% of adopters) whle for transmttng we found EDI (64,06%). Nevertheless, these tools are also more or less used by frms not adoptng traceablty, whle DMS and Workflow seem to be more specfcally orented toward traceablty. In terms of communcaton technologes, we found that the use of Intranet and EDI for ndustral frms, and specfcally EDI for agrbusness, consttute the communcaton and coordnaton tools favoured for traceablty.

11 11 Thus, regardless of ts sector, the presence of these communcaton and complementary tools, representng organsatonal practces and specfc nformatonal structures, favour n a hghly sgnfcant way the probablty of adoptng an electronc-based traceablty system. Traceablty, besdes beng an ICT tool for the transmsson of the frm s producton data t s also a complex and systemc organsatonal practce, affectng the nternal and external organzaton of the frm. V. CONCLUSION Our goal n ths paper was to analyze the mcroeconomc determnants of frms behavour n the adopton of a traceablty process by agrbusness, whle explanng ther specfctes vs-à-vs the other ndustral sectors. Our theoretcal approaches derve from nnovaton theores whch enable us to understand some of the organsatonal foundatons n the process of new technologes adopton, and more precsely the respectve nfluence of frms characterstcs and envronmental factors. The man results from our emprcal model s to hghlght that the choces of electronc-based traceablty depend on and nteract wth ther own organzatonal characterstcs and those of ther compettve, ndustral and local envronment. For agrbusnesses, results tend to show the central role of the spatal, sector related and commercal envronments. The nternal organsatonal factors, beyond sze and the belongng to a group do not play a major role on the traceablty behavour. Ths dffers from ndustral frms more artculated on ther nternal needs and less exposed to envronmental effects. Large ndustral frms known for ther establshed dentty and brand mage seem dstant from standard traceablty practces, contrarly to agrbusnesses, whch subjected to regulatons constrants, look forward to use traceablty for both complyng wth ther downstream contracts and addng value to ther terrtoral specfctes. The dfferent role played by advertsement dependng on the type of frm, show the nterest of further analyss on the nteractons between organsaton dynamcs and the nsttutonal, commercal and technologcal constrants, n whch frms nteract. These results call for further research on the nteractons between frms nformaton systems and traceablty systems, specfcally on the complementartes between techncal nnovatons and organsatonal nnovatons. REFERENCES 1. Golan E, Krssoff B, Kuchler F et al. (2004) Traceablty n the US food supply: economc theory and ndustry studes. Agrcultural economc report 830, USDA, Economc research servce 2. Battstn G, Stoneman P (2005) The ntra-frm dffuson of new process technology. Int J Ind Organ 23:1-22 DOI /j.jndorg Gallano D, Roux P (2008) Organsatonal motves and spatal effects n nternet adopton and ntensty of use: evdences from the French ndustral frms. Ann Regonal Sc 42: DOI /s z 4. Menard C, Valceschn E (2005) New nsttutons governng the agr-food ndustry. Eur Rev Agrc Econ 32: DOI /eurrag/jb Buhr B (2003) Traceablty and nformaton technology n the meat supply chan: mplcatons for frm organzaton and market structure. J Food Dstrb Res 34: FoodTrace (2004) Generc framework for traceablty. FoodTrace concerted acton programme at 7. Karshenas M, Stoneman P (1993) Rank, stock, order, and epdemc effects n the dffuson of new process technologes: an emprcal model. Rand J Econ 24: DOI /s y 8. Mlgrom P, Roberts J (1995) Complementartes and ft strategy, structure, and organzatonal change n manufacturng. J Account Econ 19: DOI / (94)00382-F 9. Greenan N (2003) Organsatonal change, technology, employment and sklls: an emprcal study of French manufacturng. Cambrdge J Econ 27: Bocquet R, Brossard O, Sabater M (2007) Complementartes n organzatonal desgn and the dffuson of nformaton technologes: an emprcal analyss. Res Polcy 36: DOI /j.respol Rabade L, Alfaro J (2006) Buyer-suppler relatonshps nfluence on traceablty mplementaton n the vegetable ndustry. J Purchasng Supply Manage 12: Mansfeld E (1968) Industral research and technologcal nnovaton. Norton, New York

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