Reaping the benefits of value innovation: Lessons for small agribusinesses in Africa

Abstract

Small agribusinesses play a vital role in sustaining the gross domestic product (GDP) of numerous economies in Africa. The survival and continual growth of these businesses in the global economy is essential to poverty minimisation, sustaining the livelihoods of individuals and subsequently the growth of African economies as a whole. The strategy to stimulate agricultural development advocated by prominent African agricultural organisations and policy makers is to boost investments from the private sector into agriculture by getting domestic and global financial organisations to invest in agroindustry and therefore, agribusiness. This paper argues that such a strategy has the potential to increase the debt of African countries and proposes a more effective alternative. By adopting the strategic logic of value innovation, African small agribusiness owners and/or managers can use and even reduce their current resources or create new ones that can lower their costs substantially, and at the same time, allow them to differentiate themselves. This approach, which has the potential to transform the industry, has had very little exposure in terms of its application in the agricultural industry in Africa. Also, very limited research on value innovation in the context of small agribusinesses in Africa exists. A theory building study was conducted using empirical evidence from a theoretical sample of cases. Reasons why value innovation as strategy is not utilised by small agricultural businesses in Africa were identified and a theoretical modelthe awakening modeldeveloped to assist small agribusinesses in Africa to adopt this logic and boost their growth and increase their profits for a more prosperous Africa.

Value Innovation Strategies and Sales Growth of Food and Beverage Firms in South-South Nigeria

“…Examples of value innovation include: moving from radio to television, moving from desktop computers to laptops, moving from video cassette to floppy disks, moving from floppy disk to CD-ROMs, from CD-ROMs to flash disks and the emergence of Walmans to Discmans and then to mp3. This implies that there is always a room for the creation of new and uncontested markets (Jacobs & Zulu, 2012).…”

“…Value innovation is a strategy where a company launches a new product or service into the market which the industry has never seen before (Carter & Diro, 2008). It involves creating a new and uncontested markets to render competitors inconsequential (Jacobs & Zulu, 2012). Value innovation strategy requires companies to turns away from competing for position in a declining or shrinking market and focus at creating new and uncontested markets known as "blue ocean."…”

“…This strategy demands that companies should innovate their offers (product or service) and create a new and uncontested market that will render their competitors irrelevant. Jacobs and Zulu (2012) noted that there is always a room for new markets to be created as conventional logic which advocates competitive advantage will not provide organic growth and sustainable profits for businesses in the long-run. Value innovation disassociates itself from conventional logic which advocates competitive advantage and aligns itself with strategic logic which requires companies to escape from the trap of red-ocean and adapt to a new and uncontested blue ocean where they can breathe in fresh air and creates a new lease which the industry has never seen before.…”

Value innovation activities in the wireless telecommunications service sector: A case study of the Malaysian market

“…Kim and Mauborgne (1997) emphasized that the logic of value innovation is not restricted to company's size, wealth, type, location or high technological capabilities; it occurs only when a company is able to properly align innovation with utility, price, and cost position (Kim & Mauborgne, 2005). Moreover, Jacobs and Zulu (2012) looked at value innovation beyond industry boundaries by investigating five dimensions of strategy, customers, assets and capabilities, product and service offerings.…”

Geographical indications contributions for Brazilian agribusiness development

“…By qualifying intangible assets that are difficult to transfer to other territories, GIs can be conceptually understood as a catalyst for processes and endogenous territorial development (Allaire and Sylvander, 1997;Cerdan and Vitrolles, 2008), establishing itself as a counterpoint to general dynamics of the agri-food system in terms of standardization, globalization and market concentration (Benko and Pecqueur, 2001;Azevedo et al, 2012;Jacobs and Zulu, 2012).…”