Agribusiness Firm Reactions to Regulations: The Case of Investments in Traceability Systems

Abstract

The regulatory framework of food production has changed a lot in recent years. As a result, traceability of food products has become mandatory in the European Union, nonetheless leaving room for more advanced solutions.
This study answers the question what exactly determines firms' investments in traceability systems by first developing a theoretical framework - the so-called Tracking and Tracing System Investment Model - and then analyzing empirical data from the German food industry that provide in-depth insights into companies' investment behaviour.

Altogether, 234 companies representing more than fifteen different sub‐sectors of the food‐processing industry participated in an online survey. The results show that German food firms can be divided into four clusters based on their dominant motives for investing (or not investing) in traceability systems. Moreover, the results of a partial‐least squares (PLS) analysis provide a good understanding of the major factors influencing the investment behaviour of companies concerning tracking and tracing systems.