Understanding the role of social capital in adoption decisions: An application to irrigation technology. (May 2017) - Hunecke, Claudia
Abstract: Recently, social capital has gained importance in explaining technology adoption decisions by farmers. In this paper, we examine the impact of social capital on the adoption of irrigation technology and irrigation scheduling among wine producers in Central Chile. We propose three hypotheses: that trust and networks affect positively the adoption of both technologies (H1 and H2) and that trust is positively related to networks (H3). First, we identify seven different components of social capital: general trust, trust in institutions, trust in water communities, norms, formal networks, informal networks, and size of networks. Second, we estimate two Partial Least Squares models using as endogenous variables irrigation technology adoption and adoption of irrigation scheduling. Both models tested confirm the relevance of our interpretation of the use of social capital and its implications in understanding producers' behaviour towards adoption of technologies. The three hypotheses tested positive. Trust in institutions, and formal and informal networks have a positive impact on the adoption of both technologies. General trust has a positive relationship with formal and informal networks. Human capital also has a strong relationship with networks, which allows us to argue that networks are the main catalysts of social capital. As expected, physical and human capital have a positive and significant relationship with adoption. Our results support that extension efforts should consider social networks, not just economic or individual-level predictors, in promoting agricultural innovations. Highlights: Social Capital is significant in explaining adoption of irrigation technology. Trust and human capital have a positive effect on formal and informal networks. Results allow arguing that networks are the main catalysts of social capital. Results confirm the relevance of social capital to understand producers' behaviour.