American Journal of Applied Sciences

ECONOMIC ANALYSIS OF PROCESS INNOVATIONS IN THE MANAGEMENT OF OLIVE FARMS

Riccardo Testa, Anna Maria Di Trapani, Filippo Sgroi and Salvatore Tudisca

DOI : 10.3844/ajassp.2014.1486.1491

American Journal of Applied Sciences

Volume 11, Issue 9

Pages 1486-1491

Abstract

Within a business enterprise, process innovations lead to reduced production costs and to increased profit margins. In this study, we shall examine an olive farm that operates in a perfectly competitive market that has introduced a process innovation so as to contain labour costs and therefore production costs. So, the paper aimed at comparing economic competitiveness of an olive farm that introduced mechanical olive pickers (process innovation) for harvest respect to manual harvest. In the case under scrutiny, for the same price, the reduced production cost determined a shift from a situation of being at a loss to one of profit for the business. Economic analysis showed that introduction of mechanical olive pickers can determine a competitive advantage in small and medium-sized olive farms of Mediterranean areas which decide to mechanize the harvest.

Copyright

© 2014 Riccardo Testa, Anna Maria Di Trapani, Filippo Sgroi and Salvatore Tudisca. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.