IDEAS home Printed from https://ideas.repec.org/p/ags/aaea13/150726.html
   My bibliography  Save this paper

Nature Of The Farm: Revisited

Author

Listed:
  • Elliott, Matthew
  • James, Harvey Jr.

Abstract

This study empirically examines the effects of farm organization (separation of ownership and control) on farmer effort and farm success using a structural equation model and data from the 2005-2010 Agriculture Management Resource Survey. Contrary to expectations of existing theory, the results show that larger separated ownership and control farms have a higher probability of farm success, and their operators supply more labor effort than combined ownership and control farms. The results seem consistent even with greater exogenous uncertainty, or more asymmetric information. The implications are that current theoretical literature on farm organization and evolution was not validated using this method and data set and may need to be modified.

Suggested Citation

  • Elliott, Matthew & James, Harvey Jr., 2013. "Nature Of The Farm: Revisited," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150726, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150726
    DOI: 10.22004/ag.econ.150726
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/150726/files/Nature%20of%20the%20Farm.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.150726?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael Boehlje, 1999. "Structural Changes in the Agricultural Industries: How Do We Measure, Analyze and Understand Them?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1028-1041.
    2. Cheung, Steven N S, 1969. "Transaction Costs, Risk Aversion, and the Choice of Contractual Arrangements," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 23-42, April.
    3. Hansmann, Henry, 1988. "Ownership of the Firm," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
    4. Reid, Joseph D, Jr, 1976. "Sharecropping and Agricultural Uncertainty," Economic Development and Cultural Change, University of Chicago Press, vol. 24(3), pages 549-576, April.
    5. Joseph E. Stiglitz, 1974. "Incentives and Risk Sharing in Sharecropping," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(2), pages 219-255.
    6. Reid, Joseph D., 1973. "Sharecropping As An Understandable Market Response: The Post-Bellum South," The Journal of Economic History, Cambridge University Press, vol. 33(1), pages 106-130, March.
    7. Douglas W. Allen & Dean Lueck, 1993. "Transaction Costs and the Design of Cropshare Contracts," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 78-100, Spring.
    8. Harl, Neil E., 2000. "The Age of Contract Agriculture," Staff General Research Papers Archive 1791, Iowa State University, Department of Economics.
    9. Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
    10. Furtan, William Hartley & Karantininis, Kostas & Lund, Mogens, 2007. "Reversing the road to super farms," 102nd Seminar, May 17-18, 2007, Moscow, Russia 10025, European Association of Agricultural Economists.
    11. Harl, Neil E., 2000. "The Age Of Contract Agriculture: Consequences Of Concentration In Input Supply," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), pages 1-13, March.
    12. Harvey S. James & Michael E. Sykuta, 2005. "Property Right and Organizational Characteristics of Producer‐owned Firms and Organizational Trust," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(4), pages 545-580, December.
    13. Martinez, Stephen W., 2002. "A Comparison of Vertical Coordination in the U.S. Poultry, Egg, and Pork Industries," Agricultural Information Bulletins 33773, United States Department of Agriculture, Economic Research Service.
    14. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    15. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    16. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, June.
    17. Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-349, June.
    18. Harvey James, 1999. "Owner as Manager, Extended Horizons and the Family Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 41-55.
    19. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    20. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    21. Bardhan, P K & Srinivasan, T N, 1971. "Cropsharing Tenancy in Agriculture: A Theoretical and Empirical Analysis," American Economic Review, American Economic Association, vol. 61(1), pages 48-64, March.
    22. James J. Chrisman & Jess H. Chua & Pramodita Sharma, 2005. "Trends and Directions in the Development of a Strategic Management Theory of the Family Firm," Entrepreneurship Theory and Practice, , vol. 29(5), pages 555-575, September.
    23. Hoppe, Robert A. & MacDonald, James M. & Korb, Penelope J., 2010. "Small Farms in the United States: Persistence Under Pressure," Economic Information Bulletin 58300, United States Department of Agriculture, Economic Research Service.
    24. Gorton, Matthew & Davidova, Sophia, 2004. "Farm productivity and efficiency in the CEE applicant countries: a synthesis of results," Agricultural Economics, Blackwell, vol. 30(1), pages 1-16, January.
    25. Rao, C H Hanumantha, 1971. "Uncertainty, Entrepreneurship, and Sharecropping in India," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 578-595, May-June.
    26. Allen, Douglas W & Lueck, Dean, 1995. "Risk Preferences and the Economics of Contracts," American Economic Review, American Economic Association, vol. 85(2), pages 447-451, May.
    27. Michael L. Cook, 1995. "The Future of U.S. Agricultural Cooperatives: A Neo-Institutional Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(5), pages 1153-1159.
    28. Olson, Mancur, 1985. "Space, Agriculture, And Organization," 1985 Annual Meeting, August 4-7, Ames, Iowa 278590, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    29. Mishra, Ashok K. & Tegegne, Fisseha & Sandretto, Carmen L., 2004. "The Impact of Participation in Cooperatives on the Success of Small Farms," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 22(1), pages 1-18.
    30. William Hallagan, 1978. "Self-Selection by Contractual Choice and the Theory of Sharecropping," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 344-354, Autumn.
    31. Jess H. Chua & James J. Chrisman & Erich B. Bergiel, 2009. "An Agency Theoretic Analysis of the Professionalized Family Firm," Entrepreneurship Theory and Practice, , vol. 33(2), pages 355-372, March.
    32. Mishra, Ashok K. & El-Osta, Hisham S. & Shaik, Saleem, 2010. "Succession Decisions in U.S. Family Farm Businesses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(1), pages 1-20.
    33. Philip Garcia & Steven T. Sonka & Man Sik Yoo, 1982. "Farm Size, Tenure, and Economic Efficiency in a Sample of Illinois Grain Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 119-123.
    34. Reid, Joseph D, Jr, 1977. "The Theory of Share Tenancy Revisited-Again," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 403-407, April.
    35. Otsuka, Keijiro & Hayami, Yujiro, 1988. "Theories of Share Tenancy: A Critical Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 37(1), pages 31-68, October.
    36. Lajili, Kaouthar & Barry, Peter J. & Sonka, Steven T. & Mahoney, Joseph T., 1997. "Farmers' Preferences For Crop Contracts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-17, December.
    37. Short, Helen, 1994. "Ownership, Control, Financial Structure and the Performance of Firms," Journal of Economic Surveys, Wiley Blackwell, vol. 8(3), pages 203-249, September.
    38. Fabio R. Chaddad & Michael L. Cook, 2004. "Understanding New Cooperative Models: An Ownership–Control Rights Typology," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(3), pages 348-360.
    39. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economic Reports 34013, United States Department of Agriculture, Economic Research Service.
    40. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
    41. Mancur Olson, 1985. "Space, Agriculture, and Organization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 928-937.
    42. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    43. Donald B. Hausch & Yeon-Koo Che, 1999. "Cooperative Investments and the Value of Contracting," American Economic Review, American Economic Association, vol. 89(1), pages 125-147, March.
    44. Mugera, Amin W. & Langemeier, Michael R., 2011. "Does Farm Size and Specialization Matter for Productive Efficiency? Results from Kansas," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(4), pages 515-528, November.
    45. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    46. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
    47. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    48. James M. MacDonald & Mary C. Ahearn & David Banker, 2004. "Organizational Economics in Agriculture Policy Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 744-749.
    49. Sophia Davidova & Matthew Gorton & Belen Iraizoz & Tomas Ratinger, 2003. "Variations in Farm Performance in Transitional Economies: Evidence from the Czech Republic1," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(2), pages 227-245, July.
    50. Zahniser, Steven & Hoppe, Robert A. & Johnson, James D. & Banker, David E., 2002. "Structural Change In An Era Of Increased Openness: A Background Paper On The Structure Of U.S. Agriculture," Proceedings of the 7th Agricultural and Food Policy Systems Information Workshop, 2001: Structural Change as a Source of Trade Disputes Under NAFTA 16872, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    51. Fabio R. Chaddad & Michael L. Cook, 2004. "Understanding New Cooperative Models: An Ownership–Control Rights Typology," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(3), pages 348-360.
    52. Unknown, 2002. "Structural Change as a Source of Trade Disputes Under NAFTA," Proceedings of the 7th Agricultural and Food Policy Systems Information Workshop, 2001: Structural Change as a Source of Trade Disputes Under NAFTA 252448, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    53. Alan Barkema & Mark Drabenstott & Kelly Welch, 1991. "The quiet revolution in the U.S. food market," Economic Review, Federal Reserve Bank of Kansas City, vol. 76(May), pages 25-41.
    54. Raup, Philip M., 1973. "Corporate Farming in the United States," The Journal of Economic History, Cambridge University Press, vol. 33(1), pages 274-290, March.
    55. Hart, Oliver D, 1988. "Incomplete Contracts and the Theory of the Firm," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 119-139, Spring.
    56. McConaughy, Daniel L. & Walker, Michael C. & Henderson, Glenn Jr. & Mishra, Chandra S., 1998. "Founding family controlled firms: Efficiency and value," Review of Financial Economics, Elsevier, vol. 7(1), pages 1-19.
    57. Allen, Douglas & Lueck, Dean, 1992. "Contract Choice in Modern Agriculture: Cash Rent versus Cropshare," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 397-426, October.
    58. Fama, Eugene F. & Jensen, Michael C., 1985. "Organizational forms and investment decisions," Journal of Financial Economics, Elsevier, vol. 14(1), pages 101-119, March.
    59. Julie M. Hite & William S. Hesterly, 2001. "The evolution of firm networks: from emergence to early growth of the firm," Strategic Management Journal, Wiley Blackwell, vol. 22(3), pages 275-286, March.
    60. Allen, Douglas W & Lueck, Dean, 1992. "The "Back Forty" on a Handshake: Specific Assets, Reputation, and the Structure of Farmland Contracts," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 366-376, April.
    61. Hansmann, Henry, 1985. "The Organization of Insurance Companies: Mutual versus Stock," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 1(1), pages 125-153, Spring.
    62. Steven T. Sonka & Robert H. Hornbaker & Michael A. Hudson, 1989. "Managerial Performance and Income Variability for a Sample of Illinois Cash Grain Producers," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 11(1), pages 37-47.
    63. Habbershon, Timothy G. & Williams, Mary & MacMillan, Ian C., 2003. "A unified systems perspective of family firm performance," Journal of Business Venturing, Elsevier, vol. 18(4), pages 451-465, July.
    64. Johnson, James & Baum, Kenneth, 1986. "Whole Farm Survey Data for Economic Indicators and Performance Measures," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 38(3), pages 1-13.
    65. N. G. Kalaitzandonakes & Shunxiang Wu & Jian-chan Ma, 1992. "The Relationship between Techinical Efficiency and Firm Size Revisited," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(3), pages 427-442, November.
    66. Siddhartha Dasgupta & Thomas O. Knight & H. Alan Love, 1999. "Evolution of Agricultural Land Leasing Models: A Survey of the Literature," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(1), pages 148-176.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ackerberg, Daniel A. & Botticini, Maristella, 2000. "The Choice of Agrarian Contracts in Early Renaissance Tuscany: Risk Sharing, Moral Hazard, or Capital Market Imperfections?," Explorations in Economic History, Elsevier, vol. 37(3), pages 241-257, July.
    2. Debapriya Sen, 2005. "Sharecropping, interlinkage, and price variation," Department of Economics Working Papers 05-10, Stony Brook University, Department of Economics.
    3. Jun Yeong Lee & Grant Durbahn & Peter F. Orazem & Wendong Zhang, 2023. "The roles of risk preferences, selection, and uncertain returns on land contracts," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 220-233, March.
    4. M. A. Taslim, 1992. "A Survey of Theories of Cropshare Tenancy," The Economic Record, The Economic Society of Australia, vol. 68(3), pages 254-275, September.
    5. David G. Sirmon & Jean–Luc Arregle & Michael A. Hitt & Justin W. Webb, 2008. "The Role of Family Influence in Firms’ Strategic Responses to Threat of Imitation," Entrepreneurship Theory and Practice, , vol. 32(6), pages 979-998, November.
    6. Sen, Debapriya, 2011. "A theory of sharecropping: The role of price behavior and imperfect competition," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 181-199.
    7. James J. Chrisman & Jess H. Chua & Allison W. Pearson & Tim Barnett, 2012. "Family Involvement, Family Influence, and Family–Centered Non–Economic Goals in Small Firms," Entrepreneurship Theory and Practice, , vol. 36(2), pages 267-293, March.
    8. Hongyun Han & Hanning Li, 2018. "The Distribution of Residual Controls and Risk Sharing: A Case Study of Farmland Transfer in China," Sustainability, MDPI, vol. 10(6), pages 1-20, June.
    9. Qiang Liang & Xinchun Li & Xueru Yang & Danming Lin & Danhui Zheng, 2013. "How does family involvement affect innovation in China?," Asia Pacific Journal of Management, Springer, vol. 30(3), pages 677-695, September.
    10. Bona Sánchez, Carolina & Pérez Alemán, Jerónimo & Santana Martín, Domingo Javier, 2009. "Capacidad informativa de los resultados contables en la empresa familiar," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    11. Igor Filatotchev & Yung-Chih Lien & Jenifer Piesse, 2005. "Corporate Governance and Performance in Publicly Listed, Family-Controlled Firms: Evidence from Taiwan," Asia Pacific Journal of Management, Springer, vol. 22(3), pages 257-283, September.
    12. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2013. "Families as active monitors of firm performance," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 118-130.
    13. Roumasset, James A., 1994. "Explaining Diversity In Agricultural Organization: An Agency Perspective," Bulletins 12982, University of Minnesota, Economic Development Center.
    14. Thomsen, Steen & Rose, Caspar, 2002. "Foundation ownership and financial performance. Do companies need owners?," Working Papers 2002-3, Copenhagen Business School, Department of Finance.
    15. Torben Pedersen & Steen Thomsen, 2003. "Ownership Structure and Value of the Largest European Firms: The Importance of Owner Identity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(1), pages 27-55, March.
    16. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247, July.
    17. Theophilus Lartey & Diana Owusu Yirenkyi & Samuel Adomako & Albert Danso & Joseph Amankwah‐Amoah & Ashraful Alam, 2020. "Going green, going clean: Lean‐green sustainability strategy and firm growth," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 118-139, January.
    18. Andres, Christian, 2008. "Large shareholders and firm performance--An empirical examination of founding-family ownership," Journal of Corporate Finance, Elsevier, vol. 14(4), pages 431-445, September.
    19. San Martin-Reyna, J.M. & Duran-Encalada, Jorge A., 2012. "The relationship among family business, corporate governance and firm performance: Evidence from the Mexican stock exchange," Journal of Family Business Strategy, Elsevier, vol. 3(2), pages 106-117.
    20. Julian Schenkenhofer, 2022. "Hidden champions: a review of the literature & future research avenues," Management Review Quarterly, Springer, vol. 72(2), pages 417-482, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:150726. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.