Content area
Abstract
This study empirically analyzes the economic incentives for Canadian food processing firms to adopt enhanced food safety controls and assesses the impact of firm and market-related characteristics on this behavior. The findings of the study, which uses a two-stage research program, are based on a comparison of red meat and poultry processing firms in Canada.
Stage-One entailed a series of interviews of quality assurance managers from a sample of these firms operating in Ontario. The qualitative analysis of the interview scripts clustered those incentives prevailing at the firm level into 10 hypothetical categories.
In Stage-Two, quantitative methods were used on the data collected from a questionnaire-based national survey to evaluate the mutual exclusivity of the 10 categories hypothesized and to quantify the extent to which these incentives influence firm behavior. Least square regression techniques were utilized to estimate the empirical model, in which the propensity of each firm to adopt food safety controls (dependent variable) was captured by means of an Additive and a Multiplicative index. The impacts of individual incentives were computed using Confirmatory Factor Analysis techniques. Firm and market-specific characteristics were specified using a series of dummy variables.
In contrast to the finding from previous analyses, which tended to over-emphasize the role of government regulation and the shortcomings of the market, this study suggests that market-based incentives such as: perception of adopting enhanced food safety controls is a “good practice”; sales; reputation; procedural efficiency; and commercial pressure, play a greater role than regulatory (existing and anticipated government regulations) and liability incentives. The relative effects of incentives, however, vary widely between Federally-registered and Provincially-licensed firms.
The results suggest it is imperative that regulatory systems are incentive-based, taking account of the wide range of factors that motivate firms to up-grade their food safety controls. The challenge for policy makers is to move beyond traditional regulatory modes and to implement a system that is sufficiently flexible to reflect differences in the incentive base of individual firms.
