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

86 Pages Posted: 4 Sep 2015

See all articles by David Atkin

David Atkin

Massachusetts Institute of Technology (MIT) - Department of Economics

Azam Chaudhry

Lahore School of Economics - Department of Economics

Shamyla Chaudry

Lahore School of Economics - Department of Economics

Amit Khandelwal

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD); Jameel Poverty Action Lab (JPAL)

Eric A. Verhoogen

Columbia University - School of International & Public Affairs (SIPA); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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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.

Keywords: technology adoption, organizations, manufacturing firms, Pakistan, soccer balls

JEL Classification: O1, O3, D2, L2

Suggested Citation

Atkin, David G. and Chaudhry, Azam Amjad and Chaudry, Shamyla and Khandelwal, Amit Kumar and Verhoogen, Eric A., Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan. IZA Discussion Paper No. 9222, Available at SSRN: https://ssrn.com/abstract=2655243 or http://dx.doi.org/10.2139/ssrn.2655243

David G. Atkin (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Azam Amjad Chaudhry

Lahore School of Economics - Department of Economics ( email )

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Shamyla Chaudry

Lahore School of Economics - Department of Economics ( email )

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Amit Kumar Khandelwal

Columbia University - Columbia Business School, Finance ( email )

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Bureau for Research and Economic Analysis of Development (BREAD) ( email )

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Eric A. Verhoogen

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