Innovation behavior and sustainability performance: Empirical evidence on the farming sector

Modern agriculture faces the challenge of supplying a growing world population with high-quality products while minimizing negative environmental and social impacts of its production and ensuring economic viability. Innovation is often considered key to achieving these goals, but its effectiveness remains an empirical question. Our study investigates how the adoption of new technologies affects farm sustainability with respect to its economic and environmental and one indicator of the social dimension. We use a comprehensive dataset on Dutch dairy and arable farms comprising financial and environmental data along with data on innovation activity that allows for a differentiated view on the effects of various innovations. First-difference estimations reveal that simultaneous positive effects across all three sustainability dimensions are not guaranteed. For example, new buildings show a positive association with economic indicators of dairy farms, but the associations between other innovation activities and other economic, environmental, and the social indicator remain inconclusive.