A heuristic perspective on factors that drive governments' approval of genetically modified crop commercialization

• Published date: 01 June 2023
• Author: Lailani L. Alcantara,Nir Kshetri
• Date: 01 June 2023
• DOI: http://doi.org/10.1111/basr.12311

ORIGINAL ARTICLE

A heuristic perspective on factors that drive

governments' approval of genetically modified

crop commercialization

Lailani L. Alcantara

1

| Nir Kshetri

2

1

Ritsumeikan Asia Pacific University,

Beppu, Oita, Japan

2

University of North Carolina-

Greensboro, Greensboro, NC, USA

Correspondence

Lailani L. Alcantara, Ritsumeikan Asia

Pacific University, 1-1 Jumonjibaru,

Beppu, Oita, Japan.

Email: lanipark@apu.ac.jp

Funding information

Japan Society for the Promotion of

Science KAKENHI, Grant/Award

Numbers: 22H00883, 16K17191

Abstract

While there is abundant research on innovations, we

know little about why and when the commercialization

of highly contested innovations, such as genetically

modified (GM) crops, is approved by governments. In

this paper, we argue that governments' decision to

approve the commercialization of GM crops is

influenced by heuristics based on the decisions of other

governments with which they have greater trade, the

gap between country performance and aspiration, and

governments' prior decisions on GM crops field trials.

We further propose that the effect of these heuristics

weakens when the government operates in countries

with higher governance quality. Using data on

approval of GM crop commercialization between 1991

and 2016, we found support for these arguments and

suggest the joint effects of heuristics based on the deci-

sions of trade partners and governance quality on gov-

ernments' approval of GM crop commercialization.

KEYWORDS

bounded rationality, commercialization, genetically modified

crops, government, heuristics

Received: 15 May 2022 Accepted: 26 April 2023

DOI: 10.1111/basr.12311

© 2023 W. Michael Hoffman Center for Business Ethics at Bentley University.

Bus Soc Rev. 2023;128:305–329. wileyonlinelibrary.com/journal/basr 305

1|INTRODUCTION

Chinese firms first gained regulatory approval for the commercialization of genetically modified

(GM) crops in 1992, and Canada and the Unites States started large-scale planting of such crops

in 1996; the number of countries cultivating GM crops had reached 28 as of 2015 (James, 2015).

As reported by the International Service for the Acquisition of Agri-biotech Applications

(ISAAA), the economic benefits gained by countries planting GM crops have reached a total of

US$186.1 billion from 1996 to 2016, and the number of approved GM crop seed developers has

increased to 57 amid critics' and governments' concern about the safety and profitability of GM

crops. GM crops have diffused faster than any other crop technology in recent years. The

amount of lands worldwide on which such crops have been planted increased by a factor of

113 from 1996 to 2018, from 1.7 million hectares to 191.7 million hectares (Genetic Literacy

Project, 2019). A July 2019 report by the World Resources Institute (WRI) argued that genetic

modification could be a key technology that will make it possible to feed the world population,

which will reach 10 billion by 2050 (Shanker, 2019).

Nonetheless, little is known about the factors that drive countries' regulatory approval of

GM crop commercialization, which largely determines the future of the GM crop industry. This

situation can be attributed to the fact that the impacts of GM food on the world population are

far from clear. Thus, there are some well-founded rationales for and against GM crops as well

as a number of misinformed and ill-guided viewpoints. Whereas the critics of GM crops exag-

gerate the costs of genetic modification, its supporters inflate the benefits (Shanker, 2019).

According to a survey conducted by the Pew Research Center, 49% of respondents in the

United States viewed foods containing genetically modified organisms (GMOs) as worse for

health than non-GMO foods (phys.org, 2019). Unsurprisingly, some governments' actions

against GMOs have contributed to national competitiveness of the food industry. For instance,

GMO-free status has been a key component of food brands from the Australian state of Tasma-

nia and a source of international reputation of its food products (Breen, 2019).

The government is among the most powerful institutional actors because violations of regu-

lations may lead to legal and regulatory sanctions (Groenewegen & Van der Steen, 2007). More-

over, prior research has noted that a policy on important issues adopted by a state is

subsequently likely to diffuse internationally (Porter, 1990; Porter & van der Linde, 1995). GM

crops' diffusion trajectory is thus largely affected by how governments respond to this issue.

Despite the theoretical and practical interest in GM crops and government's key roles in affect-

ing their diffusion, very little research has explored this phenomenon.

The purpose of this research is to fill that gap by examining the rate of governments'

approval of GM crop commercialization and to develop a theoretical framework that explains

governments' response to the opportunities and risks associated with GM crops. While some

have argued for the enormous benefits of GM crops, such as increased crop productivity and

enhanced crop quality, some have claimed that GM crops are harmful and pose threats of

health and environmental side effects (Zhang et al., 2016).

A main assumption in the paper is that a government's decision to approve the commerciali-

zation of GM crops is shaped by bounded rationality. Building on organization studies under

the conditions of bounded rationality, we claim that governments' approval of GM crop com-

mercialization is an outcome of their reactive response to performance–aspiration gaps and

resource exchanges with other countries and their proactive response to innovation. This paper

contributes to the literature in the following ways. First, most previous studies on innovation

diffusion have focused on the adoption of decisions by corporations and individuals as opposed

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