Innovation and Value Creation in Emerging African Commercial Agriculture

This empirical study investigates the extent to which Ugandan flower exporters are creating value and increasing their profitability through innovation activity. It uses a survey questionnaire and semi-structured in-depth interviews of managers. Primary and secondary data is used to develop financial models to estimate profitability from different combinations of innovations. Evidence shows that lines of business that are associated with the highest profitability in one period change over time, thus confirming the need for and potential benefits to be gained from innovation. It also shows that while most innovations were yielding improved profitability, others recorded lower profitability than existing business lines, an indication of value destruction from such innovations. It further demonstrates that limited progress has been made in penetrating premium export market segments. Additional results show that there is significant disparity in the ability of exporters to create value from innovation activity. The results of this study offer scope for future application of the methodology developed, provide insights on what managers should do in order to obtain the best possible financial returns from innovation activity as well as areas in which public research bodies can help exporters to reduce risks and enhance returns to innovation activity.