Adaptive Technology Strategies and Technical Efficiency: Evidence from the Sri Lankan Agricultural Machinery Industry
Recent research has highlighted the importance of technology strategies in influencing the economic performance of firms in developing countries. Attention has focused on two types of strategies; the first which involves adopting technologies developed elsewhere without undertaking any modifications and the second which involves investing in such technologies but adapting them to suit firm-specific needs and circumstances. Whilst it has been indicated that the second type of adaptive strategy is likely to lead to higher productivity gains than the first, this hypothesis has not been tested econometrically. Using survey data, this paper undertakes an econometric analysis of the effects of these alternative technology strategies on firm-level technical efficiency in the agricultural machinery industry in Sri Lanka. Controlling for other possible determinants, it finds that adaptive strategies have a significant positive effect on efficiency in this industry.
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