LOCAL INNOVATIVE CAPABILITY AND INNOVATIVE ADOPTION IN AGRICULTURE - COMPUTERS ON ITALIAN FARMS

The paper examines the role of the local environment in determining fa rmers innovative behaviour. The local environment embodies an innovati ve capability that helps farms to bridge the knowledge gap associated with innovation adoption. This capability is generated by the formal a nd informal relationships established by the economic units and instit utions within the local environment, which allow the creation and circ ulation of new knowledge and skills. Local innovative capability is de fined through composite variables identified by applying principal com ponent analysis to a set of variables,measuring characteristics of loc al society, production systems and agriculture. The model Mras tested by analysing computer ownership by Italian farms at provincial level. Empirical analysis confirms the importance of the local innovative cap ability for farmers' innovative behaviour. The propensity to innovate is further enhanced if farm structures are well endowed.