Does Internet use improve technical efficiency? Evidence from apple production in China

• Published in: Technological forecasting & social change 2021-05, Vol.166, p.120662, Article 120662
• Main Authors: Zhu, Xiaoke, Hu, Ruifa, Zhang, Chao, Shi, Guanming
• Format: Article
• Language: English
• Subjects: Agricultural extension; Agricultural production; Analysis; Apple; Bias; Business schools; Efficiency; Endogenous switching regression model; Farms; Households; Internet; Modes of production; Regression models; Selectivity; Self-selectivity bias; Technical efficiency
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2021.120662

•Over half of farm households use the Internet to acquire technological information.•An endogenous switching regression model is used to solve the self-selectivity bias.•There is large room for improving technical efficiency in apple production in China.•Internet use can significantly increase technical efficiency in apple production. This study aims to investigate the impact of Internet use on technical efficiency in apple production in China using a unique cross-sectional dataset covering 479 apple-producing farm households. The stochastic frontier analysis is used to calculate technical efficiency in apple production, accounting for the endogenous issues of intermediate inputs. The endogenous switching regression model is employed to examine the impact of Internet use on technical efficiency, accounting for the self-selectivity bias arising from observable and unobservable factors. The survey reveals that 52.4% of the sample farm households use the Internet to acquire technological information. On average, technical efficiency in apple production for the sample farm households merely equals 0.63, indicating substantial room for further improvement. After accounting for the self-selectivity bias, the Internet users would reduce technical efficiency by 30.3% if they had not used the Internet to acquire technological information. The robustness check using the treatment effects model reconfirms that Internet use can improve technical efficiency in apple production. Policy implications for developing an Internet-based agricultural extension system in China are also discussed.