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What Drives Strategic Behavior? A Framework to Explain and Predict SMEs' Transition to Sustainable Production Systems

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  • Kalogeras, Nikos
  • Pennings, Joost M.E.
  • Garcia, Philip

Abstract

The strategic choices of Small and Medium Enterprises in the agribusiness sector are fraught with large cost and revenue uncertainties. The transition to a new production system implies that SMEs must re-allocate resources and develop new strategies to achieve market goals. We highlight the agricultural, marketing and management literature on decision-making under risk for strategic decisions. Subsequently we discuss the various elicitation techniques to measure decision-makers' utility functions. That review indicates that one is able to measure the global utility function in a reliable and valid way. Particularly the measures based on experiments and rooted in expected utility framework seem to perform well. Furthermore, we develop various research propositions that deal with the factors that influence SMEs strategic decision whether or not to switch to sustainable production systems. We propose to investigate the global shape of the utility function of SMEs as it drives strategic decisions, and the factors that influence these decisions.

Suggested Citation

  • Kalogeras, Nikos & Pennings, Joost M.E. & Garcia, Philip, 2006. "What Drives Strategic Behavior? A Framework to Explain and Predict SMEs' Transition to Sustainable Production Systems," 2006 Annual meeting, July 23-26, Long Beach, CA 21354, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21354
    DOI: 10.22004/ag.econ.21354
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