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Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan

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  • Atkin, David
  • Chaudhry, Azam
  • Chaudry, Shamyla
  • Khandelwal, Amit
  • Verhoogen, Eric A

Abstract

This paper studies technology adoption in a cluster of soccer-ball producers in Sialkot, Pakistan. We invented a new cutting technology that reduces waste of the primary raw material and gave the technology to a random subset of producers. Despite the arguably unambiguous net benefits of the technology for nearly all firms, after 15 months take-up remained puzzlingly low. We hypothesize that an important reason for the lack of adoption is a misalignment of incentives within firms: the key employees (cutters and printers) are typically paid piece rates, with no incentive to reduce waste, and the new technology slows them down, at least initially. Fearing reductions in their effective wage, employees resist adoption in various ways, including by misinforming owners about the value of the technology. To investigate this hypothesis, we implemented a second experiment among the firms that originally received the technology: we offered one cutter and one printer per firm a lump-sum payment, approximately equal to a monthly wage, conditional on them demonstrating competence in using the technology in the presence of the owner. This incentive payment, small from the point of view of the firm, had a significant positive effect on adoption. We interpret the results as supportive of the hypothesis that misalignment of incentives within firms is an important barrier to technology adoption in our setting.

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  • Atkin, David & Chaudhry, Azam & Chaudry, Shamyla & Khandelwal, Amit & Verhoogen, Eric A, 2015. "Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan," CEPR Discussion Papers 10735, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10735
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    Cited by:

    1. Gosnell, Greer & Metcalfe, Robert & List, John A, 2016. "A new approach to an age-old problem: solving externalities by incenting workers directly," LSE Research Online Documents on Economics 84331, London School of Economics and Political Science, LSE Library.
    2. Jonas Hjort & Jonas Poulsen, 2017. "The Arrival of Fast Internet and Employment in Africa," NBER Working Papers 23582, National Bureau of Economic Research, Inc.
    3. David Atkin & Azam Chaudhry & Shamyla Chaudhry & Amit K. Khandelwal & Eric Verhoogen, 2015. "Markup and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan," American Economic Review, American Economic Association, vol. 105(5), pages 537-544, May.
    4. Andreas Menzel, 2017. "Knowledge Exchange and Productivity Spill-overs in Bangladeshi Garment Factories," CERGE-EI Working Papers wp607, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. Kenichi Ueda & Stijn Claessen, 2016. "Monopoly Rights and Economic Growth: An Inverted U-Shaped Relation," CARF F-Series CARF-F-396, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    6. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2015. "Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 409-436, August.
    7. Lorenz Kueng & Nicholas Li & Mu-Jeung Yang, 2016. "The Impact of Emerging Market Competition on Innovation and Business Strategy," NBER Working Papers 22840, National Bureau of Economic Research, Inc.
    8. Stephen Ayerst, 2016. "Idiosyncratic Distortions and Technology Adoption," Working Papers tecipa-571, University of Toronto, Department of Economics.
    9. repec:eee:deveco:v:131:y:2018:i:c:p:42-61 is not listed on IDEAS
    10. S.H.Sundarani & M. N. Qureshi, 2017. "Study Of Adoption Barriers For Flexible Manufacturing System In Industry," Working papers 2017-03-19, Voice of Research.
    11. Stephen J. Terry, 2015. "The Macro Impact of Short-Termism," Discussion Papers 15-022, Stanford Institute for Economic Policy Research.
    12. repec:iza:izawol:journl:y:2018:n:429 is not listed on IDEAS
    13. Francesco D'Acunto & Nagpurnanand Prabhala & Alberto G. Rossi, 2018. "The Promises and Pitfalls of Robo-advising," CESifo Working Paper Series 6907, CESifo Group Munich.
    14. UEDA Kenichi & Stijn CLAESSENS, 2016. "Monopoly Rights and Economic Growth: An inverted U-shaped relation," Discussion papers 16093, Research Institute of Economy, Trade and Industry (RIETI).
    15. Macchiavello, Rocco & Menzel, Andreas & Rabbani, Atonu & Woodruff, Christopher, 2015. "Challenges of Change: An Experiment Training Women to Manage in the Bangladeshi Garment Sector," CAGE Online Working Paper Series 256, Competitive Advantage in the Global Economy (CAGE).
    16. Kondor, Péter & Koren, Miklós & Pál, Jenő & Szeidl, Ádám, 2014. "Cégek kapcsolati hálózatainak gazdasági szerepe
      [The economic role of the networks of connections possessed by firms]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1341-1360.
    17. Tariq Raza, 2016. "Measuring Technology Differences Across Football Manufacturers in Sialkot," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 237-251, September.
    18. Akbar Noman, 2015. "The Return of Industrial Policy and Revival of Pakistan’s Economy: Possibilities of Learning, Industrial and Technology Policies," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 31-58, September.
    19. Florian Mayneris & Sandra Poncet & Tao Zhang, 2016. "Improving or Disappearing: Firm-Level Adjustments to Minimum Wages in China," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2016027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. Theresa Thompson Chaudhry & Mahvish Faran, 2015. "Organization, Management, and Wage Practices in Pakistan’s Electrical Fan and Readymade Garment Sectors," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 183-204, September.
    21. repec:eee:tefoso:v:131:y:2018:i:c:p:326-335 is not listed on IDEAS
    22. Theresa Thompson Chaudhry & Mahvish Faran, 2016. "Same Jeans, Same Stitch? A Comparison of Denim Production Across Three Factories in Punjab, Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 211-236, September.
    23. Dhaniel Ilyas, 2017. "Preliminary Finding of Small and Micro Firms Resilience in Indonesia," LPEM FEBUI Working Papers 201715, LPEM, Faculty of Economics and Business, University of Indonesia, revised Dec 2017.
    24. Matthew McCartney, 2016. "Costs, Capabilities, Conflict and Cash: The Problem of Technology and Sustainable Economic Growth in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 65-98, September.

    More about this item

    Keywords

    manufacturing firms; organizations; soccer/football; technology adoption;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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