Assessing social capital and its impact on economic performance: A comparative study of members and non-members of farmer producer companies in India
-
Author(s)Sushant MalikLink to ORCID Index: https://orcid.org/0000-0002-9763-8363
,
Dilip KajaleLink to ORCID Index: https://orcid.org/0009-0007-8518-4943
-
DOIhttp://dx.doi.org/10.21511/ppm.22(3).2024.17
-
Article InfoVolume 22 2024, Issue #3, pp. 214-224
- 182 Views
-
39 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Farmer producer companies (FPCs), modern farmer collectives registered under India’s Companies Act, play a crucial role in providing core services like input supply, marketing, technical, and financial support, as well as auxiliary services such as social capital and consultancy, which are linked to higher economic performance and innovation. The study analyzes the levels of social capital among members and non-members of FPCs and their relationship to the economic performance of their members. The data on social capital were collected from 20 FPCs (292 members and 77 non-members) from Maharashtra state of India. Unpaired student T-tests and Mann-Whitney tests were performed to compare the levels of social capital among the members and non-members. OLS regression was performed to understand the difference in social capital and its effect on economic performance. The results reveal that all the indicators of social capital were significantly higher for the members (Mean = 4.27) than for non-members (Mean = 3.14). The social capital indicators related to membership and participation in groups (p-value < 0.10) and the sharing of production and other information (p-value < 0.01) positively affected economic performance. Higher levels of education (p-value < 0.05) and frequent contact with members (p-value < 0.01) positively affected, whereas higher landholding (p-value < 0.10) and years of membership (p-value < 0.01) negatively affected the economic performance of members. As the Indian government plans to add 10,000 FPCs in the next three years, the strategy to increase the social capital of FPCs may enhance the overall resilience and sustainability of rural economies.
- Keywords
-
JEL Classification (Paper profile tab)Q13, O35, O13, M21
-
References60
-
Tables6
-
Figures1
-
- Figure 1. Composition of social capital amongst members and non-members
-
- Table 1. Variable definition and measurement
- Table 2. Normality tests
- Table 3. Results of unpaired students’ t-test
- Table 4. Mann-Whitney U Test
- Table 5. Descriptive statistics of variables
- Table 6. OLS regression
-
- Adler, P. S., & Kwon, S. (2002). Social сapital: Prospects for a new concept. The Academy of Management Review, 27(1), 17-40.
- Arnott, D., Chadwick, D. R., Wynne-Jones, S., Dandy, N., & Jones, D. L. (2021). Importance of building bridging and linking social capital in adapting to changes in UK agricultural policy. Journal of Rural Studies, 83, 1-10.
- Bae, M., Kim, Y., & Hong, I. (2023). Factors of capital on depression in older adulthood: A comparison of urban and rural regions in Korea. Healthcare, 11(21), Article 2850.
- Bantilan, M. C. S., & Padmaja, R. (2008). Empowerment through social capital build-up: Gender dimensions in technology uptake. Experimental Agriculture, 44(1), 61-80.
- Baron, R. A., & Markman, G. D. (2000). Beyond social capital: How social skills can enhance entrepreneurs’ success. Academy of Management Perspectives, 14(1), 106-116.
- Baviskar, B. S. (2007). Cooperatives in Maharashtra: Challenges ahead. Economic and Political Weekly, 42(42), 4217-4221.
- Bernardes, E. S. (2010). The effect of supply management on aspects of social capital and the impact on performance: A social network perspective. Journal of Supply Chain Management, 46(1), 45-55.
- Bourdieu, P. (1986). The forms of capital. In Handbook of Theory and Research for the Sociology of Education (pp. 241-258).
- Carrico, A. R., Truelove, H. B., & Williams, N. E. (2019). Social capital and resilience to drought among smallholding farmers in Sri Lanka. Climatic Change, 155, 195-213.
- Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95-S120.
- Cooke, P., & Wills, D. (1999). Small firms, social capital and the enhancement of business performance through innovation programmes. Small Business Economics, 13, 219-234.
- Cortina, J. M. (1993). What is coefficient alpha? An examination of theory and applications. Journal of Applied Psychology, 78(1), 98-104.
- de Winter, J. F.C., & Dodou, D. (2010). Five-point Likert items: t test versus Mann-Whitney-Wilcoxon (Addendum added October 2012). Practical Assessment, Research, and Evaluation, 15.
- Dost, M., Badir, Y. F., Ali, Z., & Tariq, A. (2016). The impact of intellectual capital on innovation generation and adoption. Journal of Intellectual Capital, 17(4), 675-695.
- Febrianti, T. (2020). Social capital in encouraging the food security enhancement for fishermen families. IOP Conference Series: Earth and Environmental Science, 443, Article 012107.
- Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth ventures. Academy of Management Journal, 46(3), 374-384.
- Grootaert, C., Narayan, D., Nyhan Jones, V., & Woolcock, M. (2013). Measuring social capital: An integrated questionnaire (World Bank Working Paper no. 18).
- Israel, G. D., Beaulieu, L. J., & Hartless, G. (2001). The influence of family and community social capital on educational achievement. Rural Sociology, 66(1), 43-68.
- Jayaraman, A., Ramu, P., Rajan, S. C., & Thole, S. P. (2023). Data driven analysis of social capital in farmer producer companies. Heliyon, 9(7), Article e17489.
- Jeong, S. W., & Chung, J.-E. (2023). Enhancing competitive advantage and financial performance of consumer-goods SMEs in export markets: How do social capital and marketing innovation matter? Asia Pacific Journal of Marketing and Logistics, 35(1), 74-89.
- Kaganzi, E., Ferris, S., Barham, J., Abenakyo, A., Sanginga, P., & Njuki, J. (2009). Sustaining linkages to high value markets through collective action in Uganda. Food Policy, 34(1), 23-30.
- Kawachi, I., Kennedy, B. P., & Glass, R. (1999). Social capital and self-rated health: A contextual analysis. American Journal of Public Health, 89(8), 1187-1193.
- Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff ? A cross-country investigation. The Quarterly Journal of Economics, 112(4), 1251-1288.
- Kumar, S. (2016). Effect of gender on collaborative associations of researchers in Malaysia. The Electronic Library, 34(1), 74-82.
- Lakens, D. (2013). Calculating and reporting effect sizes to facilitate cumulative science: A practical primer for t-tests and ANOVAs. Frontiers in Psychology, 4.
- Lalitha, N., Viswanathan, P. K., & Vinayan, S. (2024). Institutional strengthening of farmer producer organizations and empowerment of small farmers in India: Evidence from a case study in Maharashtra. Millennial Asia, 15(2), 278-299.
- Li, J., & Barbieri, C. (2020). Demystifying members’ social capital and networks within an agritourism association: A social network analysis. Tourism and Hospitality, 1(1), 41-58.
- Liang, Q., Huang, Z., Lu, H., & Wang, X. (2015). Social capital, member participation, and cooperative performance: Evidence from China’s Zhejiang. International Food and Agribusiness Management Review, 18(1), 49-77.
- Lopes, M., Nesbitt, H., Spyckerelle, L., Pauli, N., Clifton, J., & Erskine, W. (2015). Harnessing social capital for maize seed diffusion in Timor-Leste. Agronomy for Sustainable Development, 35, 847-855.
- Lumley, T., Diehr, P., Emerson, S., & Chen, L. (2002). The importance of the normality assumption in large public health data sets. Annual Review of Public Health, 23, 151-169.
- Markelova, H., Meinzen-Dick, R., Hellin, J., & Dohrn, S. (2009). Collective action for smallholder market access. Food Policy, 34(1), 1-7.
- Mawejje, J., & Terje Holden, S. (2014). Does social network capital buy higher agricultural prices? A case of coffee in Masaka district, Uganda. International Journal of Social Economics, 41(7), 573-585.
- McKnight, P. E., & Najab, J. (2010). Mann-Whitney u test. In I. B. Weiner & W. E. Craighead (Eds.), The Corsini Encyclopedia of Psychology. Wiley.
- Mukherjee, A., Singh, P., Maity, A., Shubha, K., & Burman, R. R. (2020). Enhancing livelihood security of dairy farmers through farmers’ producer company: A diagnostic study of Bundelkhand region. Range Management and Agroforestry, 41(1), 156-167.
- Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242-266.
- Nahm, F. S. (2016). Nonparametric statistical tests for the continuous data: The basic concept and the practical use. Korean Journal of Anesthesiology, 69(1), 8-14.
- Neti, A., Govil, R., & Rao, M. R. (2019). Farmer producer companies in India: Demystifying the numbers. Review of Agrarian Studies, 9(2), 92-113.
- Ngo, Q.-T., Thai, T.-K. H., Cao, V.-T., Nguyen, A.-T., Hoang, N.-H., & Nguyen, N.-D. (2020). Individual-level employment transitions in rural Viet Nam. AGRIS On-Line Papers in Economics and Informatics, 12(1), 73-91.
- O’Brien, D. J., Banwart, L., & Cook, M. L. (2013). Measuring the benefits of smallholder farmer membership in producer-controlled vertical value chains: Survey findings from a development project in East Africa. Poverty & Public Policy, 5(4), 399-416.
- Ollila, P., Nilsson, J., & Hess, S. (2014). Farmers’ reactions to the internationalisation of cooperatives. Agricultural and Food Science, 23(4), 291-306.
- Öztopcu, A. (2023). Social capital in sustainable cooperative entrepreneurship: An insight at cooperatives in Turkey. International Journal of Sustainable Development, 26(3-4), 356-382.
- Paavola, J., & Adger, W. N. (2005). Institutional ecological economics. Ecological Economics, 53(3), 353-368.
- Pretty, J. (2003). Social capital and the collective management of resources. Science, 302(5652), 1912-1914.
- Putnam, R. (1993, April 1). The prosperous community: Social capital and public life. The American Prospect.
- Putnam, R. (2000). Bowling alone: The collapse and revival of American community. New York: Simon & Schuster.
- Qin, M., Wachenheim, C. J., Wang, Z., & Zheng, S. (2019). Factors affecting Chinese farmers’ microcredit participation. Agricultural Finance Review, 79(1), 48-59.
- Qiu, L., Zeng, W., Kant, S., & Wang, S. (2021). The role of social capital in rural households’ perceptions toward the benefits of forest carbon sequestration projects: Evidence from a rural household survey in Sichuan and Yunnan Provinces, China. Land, 10(2), Article 91.
- Qurniati, R., Febryano, I. G., & Zulfiani, D. (2017). How trust influence social capital to support collective action in agroforestry development? Biodiversitas Journal of Biological Diversity, 18(3), 1201-1206.
- Tsai, M., & Luh, Y. (2023). Group heterogeneity and the economic effect of farmer organisation participation: Empirical evidence from Taiwan. Journal of Agricultural Economics, 74(2), 473-491.
- Tsai, W., & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41(4), 464-476.
- Uphoff, N., & Wijayaratna, C. M. (2000). Demonstrated benefits from social capital: The productivity of farmer organizations in Gal Oya, Sri Lanka. World Development, 28(11), 1875-1890.
- Villalonga-Olives, E., & Kawachi, I. (2017). The dark side of social capital: A systematic review of the negative health effects of social capital. Social Science & Medicine, 194, 105-127.
- Wang, A., He, K., & Zhang, J. (2022). The influence of clan social capital on collective biogas investment. China Agricultural Economic Review, 14(2), 349-366.
- Wedajo, D. Y., Jilito, M. F., & Yildiz, F. (rev. ed.). (2020). Innovating social connectedness for agricultural innovations in eastern Ethiopia. Cogent Food & Agriculture, 6(1).
- Woolcock, M. (1998). Social capital and economic development: Toward a theoretical synthesis and policy framework. Theory and Society, 27, 151-208.
- Woolcock, M. (1999). Managing risk, shocks, and opportunity in developing economies: The role of social capital. Washington, DC: World Bank.
- Wulandari, C., Budiono, P., & Iswandaru, D. (2021). Importance of social characteristic of community to support estoration program in protection forest. Indonesian Journal of Forestry Research, 8(2), 173-186.
- Xu, Y., Liang, Q., & Huang, Z. (2018). Benefits and pitfalls of social capital for farmer cooperatives: Evidence from China. International Food and Agribusiness Management Review, 21(8), 1137-1152.
- Yli-Renko, H., Autio, E., & Sapienza, H. J. (2001). Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22(6-7), 587-613.
- Zhou, J., Liu, Q., & Liang, Q. (2018). Cooperative membership, social capital, and chemical input use: Evidence from China. Land Use Policy, 70, 394-401.
-
Integrated financing model in Islamic microfinance institutions for agriculture and fisheries sector
Aan Zainul Anwar , Edi Susilo ,
Fatchur Rohman ,
Purbayu Budi Santosa ,
Edy Yusuf Agung Gunanto
doi: http://dx.doi.org/10.21511/imfi.16(4).2019.26
Investment Management and Financial Innovations Volume 16, 2019 Issue #4 pp. 303-314 Views: 1292 Downloads: 130 TO CITE АНОТАЦІЯThe uniqueness of micro, small and medium enterprises (MSMEs) in the agriculture and fisheries sector has led to thoughts of innovation in the microfinance institutions (MFIs) that serve it. Service innovations in the agriculture and fisheries sector have been carried out in various countries to facilitate the development of this sector. This study aims to analyze the financing model of Islamic microfinance institutions (Islamic MFIs) based on the characteristics of the agriculture and fisheries sectors and the reconstruction of Salam contracts of Islamic financial institutions for farmers and fishermen. The research method used is qualitative descriptive analysis. The data were obtained through in-depth interviews with the agriculture and fisheries businesses in Central Java, Indonesia. The result showed that Salam contract constructed according to the characteristics of the fishing community to alleviate it from the shackles of moneylenders and wholesalers, including Islamic MFIs, farmers, and fishers as members of Islamic MFIs, buyers, Islamic banks and Islamic insurance. The output of this research is that farmers and fishermen can form a community to help one another with financial needs and are managed by Islamic MFIs that work in synergy with fisheries and agriculture companies, as well as an integrated Salam contract application system for Islamic MFIs.
-
The impact of fiscal decentralization on economic development
Mykola Pasichnyi ,
Tetiana Kaneva ,
Maksym Ruban ,
Anton Nepytaliuk
doi: http://dx.doi.org/10.21511/imfi.16(3).2019.04
Investment Management and Financial Innovations Volume 16, 2019 Issue #3 pp. 29-39 Views: 1278 Downloads: 365 TO CITE АНОТАЦІЯIn this article, updated approach to assess the impact of fiscal decentralization on economic development is offered. The relationship between the proper level of fiscal decentralization and economic growth for 27 advanced and emerging economies in Europe from 1992 to 2017 was evaluated using panel data. In the EU members, Belarus, Georgia and Ukraine expenditures decentralization was more essential than revenue decentralization. The vast majority of the counties from Central and Eastern Europe have increased the level of fiscal decentralization since 1992. It was found that revenue decentralization was associated with lower growth rates, while expenditures decentralization could slightly encourage economic development. The overall decentralization indicator adversely affected the growth, but that interconnection was not robust. The empirical investigation showed significant role of demographic structure and sustainability to ensure economic development. The authors propose the statements for the local authorities to develop the methodical bases of the fiscal policy’s design. In the survey, a balanced approach to the tax and public spending policy’s preparation and planning is presented.
-
Moderating role of social capital on the effect of financial behavior on financial inclusion
Chike Onodugo , Ifeoma Onodugo ,
Anastasia Ogbo ,
Henry Okwo ,
Charles Ogbaekirigwe
doi: http://dx.doi.org/10.21511/ppm.19(3).2021.41
Problems and Perspectives in Management Volume 19, 2021 Issue #3 pp. 502-512 Views: 870 Downloads: 352 TO CITE АНОТАЦІЯThe need for improved institutional interventions aimed at increasing access to financial services by small and medium enterprises (SMEs) has been emphasized. Complimenting these efforts, this study proposes that building social networks capable of informing requisite financial behaviors would facilitate the financial inclusion of SMEs co-existing in business clusters. This study aimed to empirically test the moderating influence of collective action, bonding, trust, and bridging on the effect of financial behavior on financial inclusion. Using a sample of 311 owners/managers of small and medium scale businesses in sub-urban clusters in South-Eastern Nigeria, the hierarchical moderated regression analysis was used to test the hypotheses of the study. Results show a positive main effect of financial behavior on financial inclusion
(βf = 0.162; t (304) = 1.503; p < 0.05). Also, collective action (βfca = 0.201; t (304) = 6.906; p < 0.05) and bridging (βfbr = 0.201; t (304) = 6.906; p < 0.05) had positive moderating effects, bonding (βfb = 0.032; t (304) = 1.423; p > 0.05) and trust (βft = 0.014; t (304) = 0.9609; p > 0.05) were statistically insignificant. For policy implications, social virtues such as bridging and collective action are more veritable tools for financial inclusion than the personal virtues of trust and bonding and should be factored into economic and social intervention being deployed by institutions interested in meeting the banking/financial needs of businesses.
