The adoption of new technologies by manufacturing firms is central to industrialisation and growth, however, the process has been puzzlingly slow in some lower-income countries. A number of explanations have been advanced, for example: a lack of competition in product markets leading to weak incentives for managers; complementarities among technologies, which require multiple simultaneous changes in production processes; and organisational frictions resulting from misaligned incentives for employees. But there have still been surprisingly few studies of the determinants of adoption at the micro-level in manufacturing firms. This project will examine another possible determinant of adoption, the beliefs of managers about the efficacy of new technologies.
Chaurey et al. will conduct an RCT with leather goods manufacturers, providing them with information in varying intensities about a more efficient motor for stitching machines. The researchers will test the extent to which providing information about (i) the ease of installation of servo motors on existing machines, and (ii) the associated electricity cost savings leads to (a) higher take-up of servo motors, (b) changes in the willingness to pay for servo motors, and (c) changes in beliefs about associated cost savings. The evolution of managers' beliefs and willingness to pay will be analysed over time to understand the dynamics of learning about the new technology.
This project will yield insights into how best to promote the adoption of new technologies. In this sense, it speaks directly to a core policy concern in Bangladesh and other low- and middle-income countries. The Government of Bangladesh is keenly interested in diversifying the country’s export basket away from ready-made garments and encouraging technology adoption will help promote long-term sustainable growth in other targeted sectors such as leather goods and footwear. In addition, the government places strong emphasis on the adoption of technology and innovation in manufacturing as part of the effort to create jobs and accelerate development.
