The role of social networks in promoting technology adoption in rice production: evidence from panel data

Purpose. This research aims to determine the impact of social networks, including the number of household groups involved, on the adoption of technologies such as improved rice varieties, chemical fertilisers, and organic fertilisers in the rice production sector in Vietnam. Methodology / approach. This study used panel data from the Vietnam Access to Resources Household Survey (VARHS) from 2012 to 2018. After merging several files of data, the study received the panel data with 684 households for each period. This study involves establishing an internal instrumental variable to mitigate the problem of the endogeneity of social networks and measure its impact on technology adoption. In addition, several estimations, such as Instrumental Variables (IV), Fixed Effects (FE), Correlated Random Effects (CRE), and Random Effects (RE), were used to show the relationship between social networks and technology adoption in rice production. Results. The study’s results suggest that using social networks tends to increase the likelihood of using organic fertiliser in rice production. Across all model specifications, including Random Effects, Correlated Random Effects, and Fixed Effects, household participation in social groups has a statistically significant positive effect on organic fertiliser adoption. However, the difference in those models about the coefficients suggests that these standard panel estimators may underestimate the true impact of social networks. This potential downward bias highlights the importance of addressing endogeneity, reinforcing the need for Instrumental Variable (IV) approaches in such analyses. On the other hand, the research does not discover any connection between social networks and the adoption of technologies like chemical fertilisers and improved seeds. Originality / scientific novelty. This is the first study that rigorously investigates the relationship between social networks and technology adoption in rice production in Vietnam, using long panel data and an internal instrumental variable approach. While prior research in other developing countries (e.g., China, Ethiopia) has explored similar themes, our study contributes by providing country-specific evidence from Vietnam’s rice sector, a globally significant producer. Practical value / implications. In light of the findings, policymakers can leverage the positive influence of social relations to encourage more environmentally responsible farming methods in the production of rice. By prioritising the promotion of social networks, policymakers can encourage the use of organic fertilisers.