Innovative and growth-oriented risk-takers? The

entrepreneurial identity and role-expectations of finnish

farmers

Hannu T. Vesala

Background

The farmers’ role within the EU has recently been under reconstruction: in addition to primary agricultural production farmers should fulfil multiple functions such as maintaining the rural landscape, conserving nature and providing services.

One essential feature of this new role is the demand for entrepreneurship. Farmers should be capable of competing in the worldwide, global agricultural market. They are also encouraged to diversify into business activities beyond agriculture.

To what extent do these (macro-level) policy goals are accepted by the (micro-level) actors i.e. farmers? Do they identify themselves as entrepreneurs? And if they do, do they see themselves as acting according this indentity?

Research concerning farmers identity:

-Mixed results.

-As producers, farmers’ primary function has been to produce food for the nation. By fulfilling their duty farmers have, in the first place, been serving the common good instead of their own economic interests (Alasuutari, 1996).

-traditional or production oriented identities are still dominant among farmers (Burton and Wilson, 2006).

-“Business-thinking” does not fit with agrarian values and way-of life.

-On the other hand: Finnish farmers identify themselves both as entrepreneurs and producers, and especially diversified farmers have a strong entrepreneurial identity (Vesala & Peura, 2005, Vesala & Vesala, 2009)

Producer and entrepreneur identity combined, 2001 data, number and percentage of respondents. (Vesala & Vesala, 2009)

  Conventional farmers

Diversified farmers

Rural non-agricultural small-scale businessess

Sole Producer 57: 24.3 % 60: 9.0 % 5: 2.6 %

Producer and Entrepreneur

153: 65.1 % 437: 65.9 % 31: 15.9 %

Sole Entrepreneur

12: 5.1 % 135: 20.4 % 140: 71.8 %

Neither 13: 5.5 % 31: 4.7 % 19: 9.7 %

Total 235: 100 % 663: 100 % 195: 100 %

  Conventional farmers

Diversified farmers

Rural non-agricultural small-scale businessess

Producer 53: 21.3 % 26: 6.8 % 2: 1.6 %

Producer and Entrepreneur

173: 69.5 % 262: 68.8 % 29: 23.2 %

Entrepreneur 22: 8.8 % 75: 19.7 % 77: 61.6 %

Neither 1: 0.4 % 18: 4.7 % 17: 13.6 %

Total 249: 100 % 381: 100 % 125: 100 %

Producer and entrepreneur identity combined, 2006 data, number and percentage of respondents. (Vesala & Vesala, 2009)

Identity Theory (IT)Developed by Burke and Stryker (Stest & Burke, 2000, 2003, Stryker & Burke,

2000)- Based on symbolic interaction

- Identity is a part of the self-concept and can be seen as an answer to the question: “who am I?”

- IT focuses on the roles or positions a person occupies in a group or an organization, and on intra-group relations.

- Identity is formed through the processes of identification, where one names or categorizes oneself as an occupant of a certain position or role within a group or social structure .

- This naming invokes meanings and expectations associated with each role and its performance, and these meanings and expectations form standards that guide behaviour.

- The relationship between identity and behaviour is not one-way but instead reciprocal.

- Identities influence the (behavioural) choices made, and on the other hand, acting in accordance with the role-expectations reinforces identity: - “In order to be, one must act like” (Burke & Rietzes, 1981, p. 90).

- Emotional and evaluative aspects connected to identity (self-esteem): “negative emotion results from not meeting one’s identity expectations and positive emotion results from meeting one’s identity expectations” (Stets and Burke, 2003).

Question:

- What are the (behavioral) expectations attached to the role of an entrepreneur?

- How must one act, in order to be an entrepreneur?

Defining entrpreneurship

• Entrepreneurship: no single definition• Schools in research on entrepreneurship (Cunningham & Licheron,

1991): great person school, psychological characteristics school, classic school, management school, leadership school and intrapreneur school.

• Economical research: early views:• Cantillon (1680-1734), Say (1767-1832): essential to

entrepreneurship is the bearing of the economic risk. • Schumpeter (1883-1950): Innovation: “(Entrepreneur) seeks

opportunities for profit. He introduces ’new combinations’ or innovations to reach this goal…. the entrepreneur should not feel reluctant to do something new.”

• Schumpeter also noted, that entrepreneurship is not necessarily a lasting condition, thus relating entrepreneurship to the founding of a new business.

• According to Kirzner (1973) ”entrepreneurs are the persons in the economy who are alert to discover and exploit profit opportunities”. This requires innovativeness and creativity, and also it involves the bearing of economic risk.

• Research on strategic managent: Distinction between ”entrepreneurship” and ”entrepreneurial orientation” (Lumpkin & Dess, 1996), where entrepreurship is about founding a new business, and entrepreneurial orientation describes a process: ”the methods, practices, and decision-making styles managers use to act entrepreneurially”. This view does not restric entrepreneurship in the founding period of business, but makes it possible that owner-managers can act entreprenially.

• According to Carland et al (1984) the difference between entrepreneurially oriented and non-entrepreneurially oriented owner- managers lies in growth-orientation.

Psychological research. - Early research focused on generalized traits or personality

charachteristics (i.e. what kind of persons are good entrepreneurs or who end up being an entrepreneur).

- Need for achivement (McClelland, 1961), need for control (Brockhaus, 1982)

- Later more cognitive approach; entrepereurial action can be seen as intentional, goal-directed action: “In theoretical terms, new venture creation is an intentional act that involves repeated attempts to exercise control over the processes in a specific domain, in order to achieve the desired outcome” (Shaver, 2003).

- According to social learning theories (Rotter, Bandura) goal-directed behaviour requires that a person has a sense of control and mastery over the task in hand.

- Concepts of control (Thompson & Spacapan, 1991):

- Perceived control: the belief that one can determine one’s own internal states and behavior, influence one’ environment and/or bring about desired outcomes

- Contingency beliefs: refer to judgements about the extent to wchich people in general can obtain desired outcomes through individual action. (locus of control (Rotter, 1966), outcome expectancies (Bandura, 1977)).

- Competence beliefs: perceptions of one’s own ability to enact the necessary actions to obtain the outcome (Self-efficacy, (Bandura 1977)).

Theorethical model on entrepreneurial identity

Self-identification (to a role or position): Who am I? ”An Entrepreneur”

Role-expectations:

Risk-taking, Innovativiness, Growth-orientation

Requirements / Evaluations:

Self Efficacy, Personal Control

Research questions:

Are the role-expectations related to one’s self-identification?

Is the weaker self-identification of the finnish farmers to entrepreneur’s role in relation to these role-expectations?

MethodsSubjects: three main groups:

1) conventional farmers concentrating only on agricultural primary production (`conventional farmers´) (n=271)

2) farmers who also had non-agricultural business (`diversified farmers´) (n=469)

3) rural non-agricultural small-scale businesses (`non-farm entrepreneurs´) (n=131). The sample of rural non-farm entrepreneurs was limited to small-scale enterprises with a maximum of 20 personnel and sales of more than 100 000 €.

A rural area was defined as having a population density of less than 50 inhabitants/square km within a certain zip code.

Data collection:

Data was collected by postal questionnaire in year 2006. The questionnaire used in was a modified version of the earlier questionnaire (2001) with some of the original questions excluded and three new themes added.

The questionnaire used in 2001 consisted of 71 questions or series of questions organized under the following headings: background information about the respondent; identity; economic information about the firm/farm; conceptions about being an entrepreneur; principles related to entrepreneurship and customer relations. For diversity there were 12 additional questions related to agriculture.

ResultsSelf-Identification

Identity was measured by a question: “How do you define yourself? How well do the following describe you: I’m an Entrepreneur / Professional / Producer / Wage earner / Business

manager”?

Each category was evaluated by using a five-point Likert-type scale ranging from (1) “not at all” to (5) “very well”.

Because the variables were skewed, they were reclassified into three classes: 1 = not at all / somewhat / don’t know: 2 = quite well and 3 = very well.

Each identity variable was adjusted by subtracting the combined value for all identity-variables from it.

A positive value for one identity category thus reflects that this category was evaluated as more self-descriptive when compared to other categories. And a negative value reflects that the category was seen as less self-descriptive than the other categories in general.

Identity-category

Conventional farmers (n=249)

Diversified farmers (n=381)

Non-farm entrepreneurs (n=125)

F, p<

Entrepreneur .34 (.59) .64 (.57) .75 (.63) 27.9***

Professional .09 (61) .14 (.61) .30 (.74) 4.6*

Producer .68 (.58) .35 (.59) -.31 (.45) 128.0***

Wage-earner -.70 (.49) -.72 (.46) -.51 (.42) 9.7***

Business manager

-.41 (.52) -.41 (.57) -.22 (.54) 5.9**

The means and standard deviations (sd in parenthesis) of the adjusted identity variables in the main groups

*) p<.05; **) p<.01; ***) p<.001

Measures for role expectations

(Scale: 1 = totally disagree – 5 = Totally agree)

- Risk-taking: - I am more cautious with risk-taking compared to other

entrepreneurs that I know (neg)- I do not avoid taking risks - I take risks only when compelled to do so (neg) - I do not believe in success without risk-taking.

- Growth-orientation: - Increasing the turnover of my firm is a self-evident goal for me- Compared to other entrepreneurs whom I know, I am more

reluctant in expanding my business (neg) - I prefer not to hire employees in my firm (neg)- I am trying to expand my business activities

Innovativeness: - I aim for constant renewal in my business activities- I enjoy developing new products and marketing ideas- If needed, I will make major changes in my business- I prefer to keep doing things the way I am familiar with (neg)

Self-efficacy:- My skills are quite sufficient for working as an entrepreneur- I am more competent than an average entrepreneur - My character is not of entrepreneurial type (neg)- My personal characteristics suit well for entrepreneurship- I will succeed as an entrepreneur - Not even major setbacks can make me give up my

entrepreneurship- I believe that my success in the future will outrun entrepreneurs

on average - My success as an entrepreneur is uncertain (neg)

Personal control: - I am able to affect the success of my firm through decisions

concerning products and through production- My personal changes to influence the successfulness of my

businesses are practically rather low (neg)- I am able to affect the success of my firm through marketing

and customer connections - To a great extent I can personally control the success of my

firm

Factor analysisPrincipal axis, 6 factor solution, explained 59.8 % of total variance. Oblique rotation was used, which permitted factor variables to correlate with each others.

Factor 1: Risk-taking

I do not avoid taking risks .703

I do not believe in success without risk-taking. .536

I am more cautious with risk-taking compared

to other entrepreneurs that I know (neg) -.522

If needed, I will make major changes in my business (I) .301

I take risks only when compelled to do so (neg) -.297

Factor 2: Innovativeness

I enjoy developing new products and marketing ideas .630

If needed, I will make major changes in my business .247

I aim for constant renewal in my business activities .245

Factor 3: Growth orientation

Increasing the turnover of my firm is a self-evident goal for me .780

I am trying to expand my business activities .713

Compared to other entrepreneurs whom I know, I am more

reluctant in expanding my business -.264

I aim for constant renewal in my business activities (I) .250

Factor 4: Conservativeness

Compared to other entrepreneurs whom I know, I am more reluctant in expanding my business (G) .510 I prefer to keep doing things the way I am familiar with (I) .499I take risks only when compelled to do so (R) .486 I prefer not to hire employees in my firm (G) .428I am more cautious with risk-taking compared to other entrepreneurs that I know (R) .407

Factor 5: Personal ControlTo a great extent I can personally control the success of my firm .815My personal changes to influence the successfulness of my businesses are practically rather low -.625I am able to affect the success of my firm through decisions concerning products and through production .593I am able to affect the success of my firm through marketing and customer connections .562

Factor 6: Self-efficacy

My skills are quite sufficient for working as an entrepreneur .779

My personal characteristics suit well for entrepreneurship .713

I will succeed as an entrepreneur .698

I am more competent than an average entrepreneur .682

I believe that my success in the future will outrun

entrepreneurs on average .622

My success as an entrepreneur is uncertain -.538

My character is not of entrepreneurial type -.478

Not even major setbacks can make me give up

my entrepreneurship .331

  Risk-Taking

Innovati-veness

Growth-orientation

Conservativeness

Self-Efficacy

Innovativeness .460 ***        

Growth-Orientation

.273 *** .425 ***      

Conservativeness -.557 *** -.408 *** -.429 ***    

Self-Efficacy .326 *** .331 *** .388 *** -.374 ***  

PersonalControl

.139 *** .442 *** .276 *** -.358 *** .556 ***

Correlations between entrepreneurial role-expectations

*) p<.05; **) p<.01; ***) p<.001

Correlations between entrepreneurial identity and role-expectations

Entrepreneurial identity

Risk-taking .197 ***

Innovativeness .262 ***

Growth-Orientation

.260 ***

Conservativeness -.351 ***

Self-Efficacy .428 ***

PersonalControl

.400 ***

*) p<.05; **) p<.01; ***) p<.001

Entrepreneurial role-expectations in three groups on Entrepreneur Identity (EI)

-0,8

-0,6

-0,4

-0,2

0

0,2

0,4

0,6

Risk-Taking Innovativeness Growth-orientation Conservativeness Self-Efficacy Personal Control

Weak EI Moderate EI Strong EI

The means and standard deviations (sd in parenthesis) of the role-expectation variables in

the main groups & analysis on variance   Conventional

farmers (n=233)

Diversifiedfarmers

(n=345)

Non-farmentrepreneurs

(n=118)

F (p<)

Risk-Taking -.03 (.83) .07 (.90) -.16 (.85) 3.4 (*)

Innovativeness -.33 (.81) .20 (.73) .06 (.76) 35.1 (***)

Growth-Orientation

-.12 (.92) .13 (.84) -.14 (.93) 7.3 (**)

Conservativeness

.13 (.92) -.11 (.82) .07 (.81) 6.2 (**)

Self-Efficacy -.27 (.89) .14 (.90) .13 (1.03) 14.8 (***)

PersonalControl

-.49 (.98) .19 (.76) .42 (.67) 65.1 (***)

Entrepreneurial expectations in three main groups

-0,6

-0,4

-0,2

0

0,2

0,4

0,6

Risk-Taking Innovativeness Growth-orientation

Conservativeness Self-Efficacy Personal Control

Conventional farmers Diversified farmers Non-farm entrepreneurs

Conventional vs

Diversified farmers

Conventional farmers vs

Non-farm

Diversifed vs Non-farm

Risk-taking *

Innovativeness *** ***

Growth orientation

** *

Conservativeness ***

Self-Efficacy *** ***

Personal Control *** *** *

Differencies between main groups in role expectations, pairwise comparisons

*) p<.05; **) p<.01; ***) p<.001

-0,8

-0,6

-0,4

-0,2

0

0,2

0,4

0,6

0,8

Risk-Taking Innovativeness Growth-orientation Conservativeness Self-Efficacy Personal Control

Conventional farmers Diversified farmers Non-farm entrepreneurs

Entrepreneurial expectations in three main groups with strong EI

Conventional farmers with weak and strong EI vs non-farm entrepreneurs with weak and

strong EI

-1,4

-1,2

-1

-0,8

-0,6

-0,4

-0,2

0

0,2

0,4

0,6

0,8

Risk-Taking Innovativeness Growth-orientation Conservativeness Self-Efficacy Personal Control

Conventional farmers, Weak EI Conventional farmers, Strong EI Non-farm entrepreneurs, Weak EI Non-farm entrepreneurs, Strong EI

Main group differences in individual items measuring personal control (means and F-values)

Conventional

farmers

Diversified farmers

Non-farm entrepreneurs

F (p<)

I am able to affect the success of my firm through decisions concerning products and through production

3,15 3,73 3,85 28.4 ***

My personal changes to influence the successfulness of my businesses are practically rather low

2,50 2,01 1,71 25.2 ***

I am able to affect the success of my firm through marketing and customer connections

3,20 4,09 4,22 72.8 ***

To a great extent I can personally control the success of my firm

3,52 3,97 4,25 30.5 ***

Relations of role-expectations to background variablesRisk Inno Groth Conservat SE PC

Age ** * *** *** *

Gender **

Education *** ** **

Experience * ** *** *** *

Arable land *** *** *** *

Turnover *** *** ** *** ** **

Man-years *** *** *** *** *** ***

Number of clients * **

End user clients *** *** ***

Processor clients *** ***

Outside workforce *** **

Outside work *

Line of production ** **

Line of business * ** *

• Personal control had the strongest relation to the structure of the clientele: higher personal control was connected to higher share of end-user clients.

Structure of clientele in main groups

Client Conventional

farmers

Diversified farmers

Non-farm entrepreneurs

F (p<)

End-users 34.2 % 68.7 % 84.3 % 84.6 ***

Processors 48.5 % 16.2 % 7.7 % 90.4 ***

Retailers 17.3 % 15.1 % 8.0 % 4.6 *

ConclusionIn this research, the picture of the finnish farmers

entrepreurial identy was deepened. In the theorethical model, the identification to entrepreneurs role was reflected against entrepreneurial role-expectations.

In the analysis the theorethical dimensions – risk-taking, growth orientation, innovativeness, self-efficacy and personal control – were found in the empirical data, and they were found to relate strongly and in the direction expected to the entrepreneur identy.

Main results:

What comes to risk-taking, groth-orientation and conservativeness, conventional farmers were as entrepreneurial as diversified farmers and non-farm entrepreneurs.

Conventional farmers were less innovative and had lower self-efficacy and, especially, lower personal control.

Although many finnish farmers identify themselves as entrepreneurs, the problem lies – especially among conventional farmers – their position in the market-arena and in relationships to clients.

Especially the situation, where farmers clientele includes only one big customer (for example dairy or slaughterhouse), restricts the experiences of personal control in customer relations, which is seen as typical to entrepreneurs.