Abstract
Within a business enterprise, process innovations l ead to reduced production costs and to increased profit margins. In this study, we shall examine an olive farm that operates in a perfectly competitive market that has introduced a process innovation so as to contain labour costs and therefore production costs. So, the paper aimed at comparing economic co mpetitiveness of an olive farm that introduced mechanical olive pickers (process innovation) for h arvest respect to manual harvest. In the case under scrutiny, for the same price, the reduced productio n cost determined a shift from a situation of being at a loss to one of profit for the business. Economic analysis showed that introduction of mechanical olive pickers can determine a competitive advantage in small and medium-sized olive farms of Mediterranean areas which decide to mechanize the harvest.
Highlights
As well as providing employment in terms of total labour hours involved in performing farming tasks
Our study focused on answering the following question: In a situation where average costs, at the starting point, are greater than marginal revenues, how can an enterprise achieve positive profit margins, given the modest size of most firms, which tend to discourage, from an economic point of view, their engagement in the entire production process? Data was collected through direct interview of the entrepreneur (Tudisca et al, 2011)
Since the aim of this analysis concerns whether this process innovation in olive growing determines an economic advantage, we have considered only the olive-growing facet of the enterprise, ascribing joint costs to the wine-growing segment as reported in the literature (Prestamburgo and Saccomandi, 1995)
Summary
As well as providing employment in terms of total labour hours involved in performing farming tasks. Cultivation practices for olive trees are characterized by facilities that are more than a century old and that are difficult to modify structurally (Vossen, 2007) This situation involves the increase of entrepreneurial risks and, subsequently, it is necessary adopting strategies in order to reduce them (Lupo, 2013a; Certa et al, 2012). Technical progress determines a lowering of the cost curves and guarantees that a firm may operate with greater production capacity This corresponds to a dynamic economic model in which entrepreneur can take advantage of technological innovations, access to new markets and change organizational modalities of production according to consumer preferences (D’Amico et al, 2003). Entrepreneur could obtain an increase of farm competitiveness and positive effects on the territory (Lanfranchi and Giannetto, 2013)
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