DETERMINANT FACTORS OF THE DECISIONS ASSOCIATED TO RISK OF THE COLOMBIAN COFFEE GROWERS

Abstract

The main idea of this paper is to identify the determinant factors of the decisions associated with the risk of Colombian small-scale coffee growers. Through a survey from a selected sample from Colombian coffee growers, classified by region and size,we identify the risk propensity and confidence in risk management instruments. With the data, we build two taxonomies: the first one, the risk taxonomy; and the second one, the risk management instruments taxonomy. With these results, we build six unobservable constructs through Confirmatory Factor Analysis CFA methodology. The constructs represented: i) the history of successes and failures resulting from decisions made in the past; ii) the influence of the idiosyncratic characteristics of the problem on coffee growers' perceptions of risk; iii) the tendency of coffee growers to take or avoid risks; iv) the alternatives that a decision maker confronts; v) the individual evaluation of the risks before a situation and the confidence in that evaluation; and iv) the effects of the risk management instruments offered to the coffee growers. The results of the six latent constructs were significant, which allows us to conclude that the latent constructs are measurement models defined as indicators that describe the decisions associated with the risk of small-scale coffee grower’strough the identified factors.