Concepts and Methods
4.1 Conceptual Framework
Chapters 2 and 3 presented a detailed review of relatively new concepts that have appeared in usually separate branches of the scientific literature. The detail given in these chapters is greater than needed in the present empirical analysis; the extra material was kept in this report, however, because it is a useful review of topics that are not always easy to access.
These concepts are the basis of the con- ceptual framework used in the institutional analysis of the PFs. This framework views organizations as complex organisms influ- enced by the interaction between motivation and capabilities. Motivation results from the opportunities for change: in private firms these are mainly market or technological opportuni- ties; for civil society organizations, the main driver is a sense of duty and the importance of the socioeconomic problems being addressed. The capabilities determine how organizations respond to emerging opportunities. Capabilities are constructed through sustained investments
S
ocial processes can be analyzed as complex systems in which different actors interact through multiple channels that include positive and negative feedback loops. Additionally, these interactions and their intensities change over time, often in unpredictable ways (see Section 2.1.1). The study of such processes requires flexible approaches to discover the emergence of new actors and changes in the patterns of interaction. Section 4.1 presents the conceptual frame- work used in the empirical analysis. Section 4.2 reviews the role of quantitative and qualitative methods in the analysis of complex social processes, and Section 4.3 describes the methodology used in the empirical analysis.and depend on a number of factors, including the organization’s past, its culture, governance structures, the presence of innovative individu- als, and the environment in which the organi- zation operates. Each factor’s influence on the organization’s dynamics changes over time, so that variables that have a positive effect at a particular point in time can be detrimental later (Christensen and Raynor 2003; Davila, Epstein, and Shelton 2006).
The dynamics of organizational capabili- ties and their interaction with external factors can be explained by the properties of CASs. These systems evolve through the interactions among a large number of actors of different types, conditioned by the process’s history, the socioeconomic environment in which they operate, and random events (Kauffman 1995). In the case of agricultural innovations, the actors may include farmers, private firms, researchers, NGOs, farmers’ associations, financial institutions, and policymakers. This section discusses organizational innovations
as complex processes, the nature of organi- zational capabilities (especially the role of learning, institutional cultures, and gover- nance structures), and the role of networks in innovation processes.
4.1.1 Organizational Innovations as Complex Processes
Innovation processes are an example of CAS. Self-organization is one of the key features of CAS: properties that do not exist at smaller scales emerge at larger ones from the actions and interactions among different actors (Kauff- man 1995; Axelrod and Cohen 1999; Crutch- field and Schuster 2003). For example, life results from a huge number of chemical reac- tions, but each reaction is not alive. The inter- action between self-organization and random events is the main reason that CASs are un- certain and unpredictable.
The most important instrument to influence a CAS is the creation of variation combined with effective selection mechanisms. In natu- ral systems, variation is random, and selection is based on reproductive efficiency. Human interventions operate on both mechanisms, modifying them in a directed fashion, as exem- plified by plant breeding (see Box 2.2). The effectiveness of this method depends crucially on having appropriate selection mechanisms. Because of the system’s complexity, though, there are no optimal selection mechanisms: appropriate solutions can only be found with a directed trial-and-error approach based on strong learning capabilities (Crutchfield and Schuster 2003).
Organizational strategies can be of two types: deliberate and emergent. Deliberate strat- egies are those consciously defined by the orga- nization, whereas emergent strategies are those that result from the day-to-day, decentralized actions of all decisionmakers in the organization (for example, top and middle managers, sales people, and floor workers). These actions tend to be tactical and include, for example, resource allocations within divisions or deciding which
clients should be prioritized. The accumula- tion of these operational decisions results in the organization’s actual resource allocation, which may differ from the allocation decided in the deliberate strategies (Christensen, Anthony, and Roth 2004). Without strong leadership and effective learning mechanisms, emergent strate- gies dominate the evolution of organizations. In such cases, organizations cannot operate con- sciously to take advantage of emergent opportu- nities. The PFs evolved through a combination of emergent and deliberate strategies, whose relative importance changed on several occa- sions over time.
4.1.2 Organizational Innovative Capabilities
Three of the most important institutional fea- tures that influence organizational innovative capabilities are learning mechanisms (because they determine how fast new information can be developed and used), organizational culture (because it determines the often “unconscious” factors that influence innovation), and gover- nance structure (because it defines the flexibil- ity an organization has to organize its activities and resolve conflicts).
Organizational learning. Innovation pro- cesses are complex because if they could be planned in detail, they would be routines, not innovations. Innovations result not only from variation (trying new things) but also from directed selection (finding things that are bet- ter than those in use). Managing variation and selection depends on the innovators’ ability to test new things until a solution to a prob- lem or opportunity is found (Crutchfield and Schuster 2003). This ability, in turn, depends on the capability to integrate into innovation networks and the network’s ability to facilitate the exchange of resources and information. In other words, innovations depend on the interaction between individual and collective (organizational) learning capabilities (Dosi, Nelson, and Winter 2000).
Individual abilities result from the combina- tion of a person’s innate talents and learned abil- ities (Renzulli 2003). In contrast, organizational capabilities result from the interaction among the organization’s resources (individuals’ abili- ties and fixed capital), processes (the mecha- nisms agreed on by the organization for doing things), and values (including the institutional culture and long-term goals). In new organiza- tions, most capabilities reside in the resources, especially their people (including managers, technical support personnel, and line workers). The incorporation or departure of a key person can have a major influence on the probability of success. In time, the capabilities of successful organizations are transferred to processes and values (Christensen and Raynor 2003). Because of the crucial importance of individuals in the organizations’ early life, this report explores how innovators interacted among themselves and reacted to external influences to create strong innovative capabilities and set the basis for the institutional culture.
Organizational capabilities must be built through sustained investments, strong leader- ship, and adequate selection of those respon- sible for new projects. It is also necessary that top managers install a vision of the chang- es to be introduced, conduct many trials to reduce uncertainty, develop effective feedback mechanisms, and foster discussions to reach a consensus about what is desirable and accept- able (Levinthal 2000; Crutchfield and Schuster 2003; Davila, Epstein, and Shelton 2006). The effectiveness of learning and feedback mecha- nisms is fundamental, because the number of options that can be tried is limited by coordina- tion problems in the organization, the resources available for exploration of alternatives, and organizational capabilities (Dosi, Nelson, and Winter 2000). Learning is also important to define effective deliberate strategies.
Usually organizations find it difficult to learn and innovate. Successful routines hamper testing potentially better approaches to prob- lem solving, and managers and employees are absorbed by routine activities (Dosi, Nelson,
and Winter 2000; Christensen and Raynor 2003). This difficulty also affected the PFs at some stages of their development, but most of the times they were able to develop new inno- vative capabilities.
Learning takes place basically at three levels: individual, organizational, and network. Learning begins at the individual level, enabling people to process information to build concep- tual frameworks. Individual learning is also a collective process, because what an individual learns largely depends on what is known by other members of the group and what the orga- nization allows in terms of experimentation (Von Krogh, Ichijo, and Nonaka 2000; Bailey and Ford 2003). Organizational learning is the process whereby knowledge is created and distributed across the organization, communi- cated among its members, and integrated into the organization’s operations (Dodgson 1993; Dosi, Nelson, and Winter 2000). Network learning involves several individuals and orga- nizations creating shared knowledge and is a special case of organizational learning.
Learning can occur through several mecha- nisms; for the analysis of the PFs, the most important mechanisms are learning by doing, from hiring key individuals, from interacting with partners, and from information searches. Organizational culture. An organizational culture is a series of basic assumptions, values, and beliefs largely developed during an orga- nization’s early life. Organizational cultures determine, to a great extent, what is accept- able within an organization (Schein 1996). Some cultures facilitate individual learning, whereas others foment organizational learning. Some emphasize vertical and centralized man- agement, whereas others promote horizontal decisionmaking. Two of the basic types of cultures identified in the literature are used in the analysis of the organizational culture of the PFs (Handy 1995; see also Section 3.2.3): • Power, Club, or Zeus culture is oriented
als within the organization depends on their relationship with the highest level of man- agement and is based on empathy and trust. • Task or Athena culture is focused on work
activities, integrated by interdisciplinary groups organized around solving specific problems. Power is based on knowledge in a quite decentralized structure.
No type of culture is absolutely better than the others; some types are better in particular situations and can be a liability in others or as the organization matures. The cultures of the PFs were developed by two distinct groups, the presidents and the managers, and their interac- tion was a major influence on how the PFs evolved and learned.
Governance structure. The analysis of governance of the PFs focuses on three dimen- sions: (1) structure (distribution of functions and coordination), (2) process (communication– coordination–harmonization, leadership, learn- ing policies, and operative processes), and (3) the strategic axis (mission, shared vision, and strategic lines and plans of action). The structure defines authority, jobs, functions, responsibilities, and nexuses of communica- tion among the organization’s parts; processes are recurrent activities that use organizational resources; and the strategic axis defines the objectives and action plans.
Whereas organizational cultures change very slowly and are mainly an emergent prop- erty of the organization’s evolution, gover- nance can change relatively rapidly and as a result of deliberate action (Mintzberg 1999). 4.1.3 Innovation Networks
Individual actors (including firms) generally do not possess all the resources they need to inno- vate; therefore, actors integrate into networks that facilitate the interchange of knowledge, abilities, and resources (Powell and Grodal 2005). The evolution of innovation networks is determined by the changing relationships among agents, technologies, markets, the for-
mal and informal rules that regulate people’s behavior, and the complexity and maturity of the innovations. For relatively simple or mature innovations and markets, networks are rather lax; members often relate formally or are medi- ated by markets because each agent has a relatively good understanding of the needs of partners and customers, and of the technologi- cal and market opportunities. In contrast, in the case of complex or new innovations, partners have to interact informally, often, and intensely in order to overcome emergent hurdles. Because most of the innovations are radical and/or the markets change rapidly, these networks face great technical and commercial uncertainties, which prevent effective contracting: successful collaborations are based on trust. In fact, the degree of formality varies along a continuum that goes from completely formal to absolutely informal. Moreover, the characterization of a market or innovation as simple and formal or complex and informal can change, reflecting new technologies or commercial opportunities: as the markets evolve, membership in the net- work changes, reflecting changes in the agents’ objectives and emerging technological chal- lenges (Rycroft and Kash 1999).
A catalyzing agent is one of the most important factors in the emergence and con- solidation of innovation networks. This agent induces partners to invest time and resources in the network. Once the network is consolidated, the importance of the catalyzing agent dimin- ishes, because other actors are more willing to participate when the benefits of participation become clearer and the interaction rules are known to all partners.