failure. In industries that are more concentrated the incentives to invest in their own research is
considerably higher.
R&D efficiency and effectiveness determine the ultimate costs and success of the R&D
activity undertaken. These two performance indicators are assumed to be roughly the same for
projects within an organization, but different between R&D organizations and even more so between
countries. Weak R&D performance usually reflects weak organizational capability in a society in
general. Idachaba (1998), for example, documented how the late and very erratic release of
government funding places a major constraint on the performance of agricultural research
organizations in Nigeria. Overstaffing is another phenomenon that often negatively affects the
performance of agricultural research organizations in developing countries. After all salaries have
been paid, hardly any budget is left for operating expenses or capital investments (Pardey, Roseboom,
Beintema, and Chan-Kang 1998).
Because of incomplete or slow adoption, not all potential benefits of an innovation may
materialize. For example, a new maize variety could potentially be grown by 70% of the farmers, but
past adoption rates indicate that only half of them will actually grow it. Hence the technical, ranked
distribution of R&D projects must not only be corrected for scale, structure, and R&D efficiency and
effectiveness, but also by a factor that reflects the adoption or diffusion rate of the proposed
innovation. Low adoption rates can be thought of as being caused by weak institutions and high
transaction costs - problems that are particularly prevalent in developing countries.
Crucial to the adoption of new technology is how information about the new technology is
packaged and transferred to farmers and how farmers assess the new technology in their own specific
situation. Farmers may know about the new technology and be convinced about its superiority, but
they may face other constraints, such as lack of capital or credit, lack of required inputs at given place
and time, land tenure issues, and seasonal labor shortages, to name just a few as listed by Pinstrup-
Andersen (1982). Government policies targeting these constraints play an important role in improving
rates of adoption and, hence, shifting the distribution of R&D projects to the right on the ERR scale.
Being an inherently risky and uncertain activity, research is at odds with the risk-averse
nature of humanity. Hence, private individuals and companies will, depending on how averse to risk