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

102 Pages Posted: 3 Aug 2015 Last revised: 8 Jan 2023

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)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2015

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 clear net benefits 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 a month's earnings, conditional on 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. The results suggest that misalignment of incentives within firms is an important barrier to technology adoption in our setting.

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 (July 2015). NBER Working Paper No. w21417, Available at SSRN: https://ssrn.com/abstract=2638968

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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National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://www.nber.org/people/amit_khandelwal

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

Duke University
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Jameel Poverty Action Lab (JPAL) ( email )

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Eric A. Verhoogen

Columbia University - School of International & Public Affairs (SIPA) ( email )

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IZA Institute of Labor Economics

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Centre for Economic Policy Research (CEPR) ( email )

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