Strategic orientation behind the success of Finnish family farms
2008
Maekinen, H., University of Helsinki (Finland). Dept. of Economics and Management | Ylaetalo, M., University of Helsinki (Finland). Dept. of Economics and Management
The objective of this study was to examine the long run success of farms, to recognise farms in a positive or negative twist of success, and to find factors that can explain the variation in success. The data consisted of financial statements of Finnish book-keeping farms covering the years 1998—2005. The study includes 189 dairy farms and 80 grain farms. A descriptive, backward stepping discriminant analysis was used to find the factors that could explain the class of success individual farms fall into. According to the results, the most successful milk producers have grounded their strategy on economies of size. This has enabled good level of resource utilization which can be observed as increased level of productivity and a low level of net investments. Producers who had been able to raise their level of success had followed the strategy of growth. This had however led to increased level of debt. In addition, they had not been able to achieve as high level of productivity as the initially larger farms, but presumably they have the potential to retain their level of success. Among milk producers of lowest level of success, an ambition to follow strategy of growth is clearly present. However, they are possibly facing problems with farm-specific limits of growth, management of production processes, investments, and funding. Among grain producers, the only strategic orientation with connection to the level of success seemed to relate to an increased level of productivity and a low level of investments.
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