Abstract
The objective of the study was to analyze how farmers’ managerial thinking and management process effectiveness contribute to profitability of farming. A structural equation model of these two elements of management capacity and financial performance was applied on survey data and bookkeeping results from 117 dairy farms. The model explained one-fourth of the varying profitability of sample farms. The results show that farmers’ managerial thinking is connected to farm profitability, but management process effectiveness is not. It was concluded that it is essential for good performance that the farmer has a clear vision of developing farming with business and investment plans. Successful farmers also have a firm confidence in their managerial skills, a strong emphasis on instrumental and intrinsic values, and a high appreciation of farming as occupation. They also see the farm as an entrepreneurial business unit and intend to follow the corresponding principles of management.
Highlights
Researchers and scholars in the farm management field widely agree that the farmer is one of the most important elements affecting farm performance (e.g. Westermarck 1951, Castle and Becker 1963, Muggen 1969, Barnard and Nix 1973, Bigras-Poulin et al 1985, Olsson 1988, Tarabla and Dodd 1990, Nuthall 2009)
The constructs of financial performance were added to the measurement model, and causal dependencies between the constructs were analyzed in a structural equation model
The results clearly show that the managerial thinking (MT) construct is connected to financial success
Summary
Researchers and scholars in the farm management field widely agree that the farmer is one of the most important elements affecting farm performance (e.g. Westermarck 1951, Castle and Becker 1963, Muggen 1969, Barnard and Nix 1973, Bigras-Poulin et al 1985, Olsson 1988, Tarabla and Dodd 1990, Nuthall 2009). The importance of competent management is emphasized when the farmer’s managerial capacity is seen as the fourth production factor (Rougoor et al 1998), or when the managerial input is seen as a major resource with nature, labour and capital (Nuthall 2006). Different management accounting tools that aid the manager in decision-making and in assessment of farm performance are comprehensively covered. The manager and his or her capabilities and abilities is, the key factor in determining how well these formal tools and principles and information created with them can be used in practical decision making
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
