Innovation heterogeneity and resilience pathways in South African Agri-businesses

Structural rigidities and resource constraints in South Africa's agri-business sector have created uneven innovation pathways, concentrating technological progress among dominant firms and widening disparities between large- and small-scale operations. These dynamics raise concerns about resilience and equitable growth in a sector critical to food security and economic development. The study aimed to investigate the heterogeneity of innovation and resilience pathways within South Africa's agri-business sector, focusing on how structural factors influence firms' innovative conduct and performance. Using secondary data from 532 firms collected through the Human Sciences Research Council's Agricultural Business Innovation Survey (2019–2021), the analysis employed Bayesian Structural Equation Modelling to examine structure–conduct–performance relationships, dimensionality reduction techniques to identify innovation clusters, and network analysis to assess connectivity and vulnerability within the sector. The findings revealed significant innovation heterogeneity, with clusters differentiated by firm size and strategic orientation. Network analysis uncovered a hub-and-spoke structure dominated by large firms, which, while efficient, exhibited low modularity and transitivity, making it vulnerable to systemic shocks. Bayesian SEM indicated a negative relationship between structural rigidity and innovative conduct, and a positive link between conduct and performance, suggesting that structural constraints hinder innovation while proactive conduct enhances turnover. Despite stable employment and rising turnover, innovation adoption remained concentrated in process improvements and soil fertility priorities, constrained by barriers such as water scarcity, limited finance, and restrictive policies. The sector thus reflects a duality between entrenched conventional practices and emerging niche innovations shaped by structural rigidities. These insights underscore the need for targeted, system-level interventions to address structural rigidities, strengthen innovation capabilities, and enhance resilience in South Africa's agri-business sector. Aligning with the Agriculture and Agro-processing Master Plan, policy efforts should focus on expanding and maintaining water infrastructure, providing financial incentives for digital and climate smart technologies including artificial intelligence applications, and fostering collaborative platforms to promote inclusive innovation and resilience across firm sizes. Such measures would help reduce network fragility, broaden participation in higher-value innovation activities, and support a more inclusive, competitive, and adaptive agri-food system. • Turnover grew between 2019 and 2021, employment stable, but innovation barriers persist. • Clusters by agribusiness size show heterogeneity. • Large agribusinesses dominate hub-and-spoke networks. • Structure hinders conduct and conduct boosts performance. • Policy needs water and AI incentives.