The social influence of investment decisions: A game about the Dutch pork sector

Abstract

Policy makers and researchers foresee four investment strategies for conventional pig farmers in contested pork production regions: (1) continue with a cost-price reduction strategy through modernisation and scale enlargement; (2) convert to an intermediate market segment with higher requirements as to animal welfare and environment than conventional; (3) convert to a niche market segment with higher requirements as to animal welfare and environment than intermediate; or (4) quit farming. For policy makers, it is interesting to gain insight in intensive livestock farmer's perceptions regarding these investments and in processes of social interaction that influence farmer decision-making and the potential diffusion of investment strategies over time (Edwards-Jones, 2006). The aim of this explorative study is to analyse the effect of social interaction on diffusion of investment strategies in capital-intensive livestock production systems with groups of Dutch pig farmers, using a simulation game. The game is designed in such a way that contextual factors do not provide a limiting factor. Furthermore, the game is constructed to stimulate interaction and to trigger imagination of participants. Our main research questions for the analysis of the results of the game sessions were: (1) ‘what are differences in diffusion of investment strategies between sessions?’, and (2) ‘to what extent does social interaction affect diffusion of investment strategies?’ A total of seven sessions were played, with 4–8 pig farmers and/or participants who were affiliated to the sector as advisor or successor. All game sessions were video- and voice- recorded, and interaction between participants was transcribed per game session. First, differences in diffusion of investment strategies between sessions were explored. Second, the causes for differences in diffusion between sessions were explored, by looking at the type of investment strategy, communication between participants, and processes of influence. Special attention was given to the influence of opinion leadership. The results of this research show that (1) only investment strategies with a financial benefit did, under influence of social interaction, result in high adoption; (2) for high adoption to occur, communication between participants was necessary; (3) opinion leaders played an essential role in high adoption of investment strategies; and (4) there was a common understanding among participants that favoured scale enlargement. The gaming methodology triggered participants to communicate their tacit knowledge, i.e. assessment criteria that are important in real-life investment decisions, and to experiment with investment strategies.