Determinants of Product Innovation Implementation in Japanese Agricultural Corporations

Innovation, an important component of productivity growth, is expected to contribute significantly toward changing rural and agricultural structures. The first step in understanding innovation implementation is to identify its driving factors. However, these factors remain unclear in the context of agricultural corporations. Therefore, this study aims to identify the factors associated with the product innovation implementation in Japanese agricultural corporations. A probit model was used to identify these driven factors by using the data of 308 corporations from the national survey in 2019. The results showed that 20.5% (n=63) of corporations were rice corporations. Most corporations (38.6%, n=199) generated an annual sales revenue of 100 to 300 million yen. Further, 50.0% of corporations implemented product innovation, that is, these corporations started to produce and sell new or significantly improved goods or launched new or significantly improved services. The results also show that corporations that generate high annual sales, seek high number of sales, aim for profit margins of 5–15%, and believe more strongly in their ability to innovate tend to implement product innovation. Contrastingly, corporations that have a profit margin between 1% and 10% are less likely to implement product innovation than those breaking even. Corporations that mainly deal in facility vegetables or livestock products also tend to implement product innovation less than the corporations mainly selling rice. Overall, the results suggest that a certain level of annual sales might be required for innovation, and innovating farms seek growth and set high targets. Therefore, to promote product innovation in Japanese agricultural corporations, these factors should be considered.