A conceptual framework was developed for categorizing innovation environments and applied to the agricultural sector in Ontario, Canada. Literature pertaining to innovation and profit theory was explored to identify appropriate constructs from which to develop the framework. The fundamental assertion is that innovation trajectories can be influenced by two financial dimensions: profitability and efficiency, and that four distinct environments for farmers can be identified. A k-means cluster analysis was undertaken using geographic regions and farm sizes to illustrate the use of this framework. The research results in a diverse distribution across the identified environments and various innovation trajectories between those environments were assessed. The study supports policies to encourage an agricultural innovation system (AIS) that promotes capital investment, training in entrepreneurship and innovation, and product diversification while limiting the reliance on financial support mechanisms that can inhibit innovation. The results have implications for farmers, agriculture policy makers and entrepreneurs.
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