Strategic decisions for green innovation R&D in agribusiness: Comparing competition and co-opetition under R&D risk, demand uncertainty, and information asymmetry

Abstract

1. Introduction In recent years, growing environmental concerns and global sustainability pressures have pushed the agricultural sector to adopt green innovation strategies. For agricultural producer countries such as New Zealand, this transition is particularly crucial. Because New Zealand’s economy relies heavily on agricultural exports, its international brand is built on a “clean and green” reputation. However, this reputation is now under strict scrutiny. As global markets and consumers are looking more closely at the true environmental footprint of agricultural production, such as low greenhouse gas emissions and high standards for water quality(Bhatti et al., 2024; Wuijts et al., 2021). For New Zealand, failure to lead in green innovation poses a direct threat to its primary economic. The primary responsibility for driving this innovation falls on agribusiness firms. However, firms face a profound strategic dilemma: whether to pursue high-risk green research and development (R&D) alone or to engage in co-opetition with other firms, including direct competitors. In an increasingly complex supply chain network, the decisions of whether, when, and how to co-operate have significant consequences. Faced with the core challenges of high R&D risk, information asymmetry, and demand uncertainty, acting alone may lead to competitive failure and prevent the entire industry from achieving its expected goals. Conversely, co-operation is not perfect either, as it brings a set of risks related to opportunistic behaviour and instability. Therefore, understanding the strategic decisions that firms make is of critical importance. This study seeks to address this dilemma by answering two key research questions: (1) How do demand uncertainty, R&D failure risk, and cost asymmetry influence the strategic R&D investment decisions of competing agribusinesses in the context of green innovation? (2) Under what conditions do agribusinesses transition from competitive to co-opetitive strategies for green R&D, and how do these co-opetitive structures help manage risks and improve outcomes?