Technological-Institutional Co-Evolution in Agricultural Systems: A Unified Framework of Smart Farming, Rural E-Commerce, and Digital Governance

This study advances the agricultural systems literature by theorizing and empirically validating the co-evolution of digital technologies and institutional governance in rural transformation. While prior research has examined precision agriculture, rural e-commerce, and digital governance separately, this paper develops a unified Technological-Institutional Co-Evolution Model that positions digital governance as an endogenous, mediating force within agricultural innovation systems. Using a stratified multi-actor dataset (N = 320) of farmers, agri-tech entrepreneurs, and rural officials, the study applies a mixed-methods approach combining instrumental variable (2SLS) estimation and structural equation modeling (SEM) to address endogeneity and estimate both direct and indirect effects. Results show that digital technology adoption significantly increases perceived agricultural productivity (β = 0.64, p < 0.01) and reduces perceived operational costs (β = −0.51, p < 0.01). However, its impact on market integration is not independent; it depends on institutional capacity. Digital governance plays a significant mediating role (indirect β = 0.22, p < 0.01), acting as a “trust infrastructure” that lowers transaction costs, reduces information asymmetries, and bridges institutional gaps in rural economies. These findings challenge techno-deterministic perspectives by demonstrating that technology diffusion alone cannot ensure inclusive agricultural transformation. Instead, outcomes depend on the alignment between technological adoption, governance modernization, and human capital development, particularly in contexts with substantial digital skills gaps (60%). The study contributes to Agricultural Innovation Systems theory by integrating institutional and technological dimensions and offers policy insights that emphasize coordinated socio-technical interventions over fragmented, technology-driven approaches.