Interaction between credit and entrepreneurial orientation to strengthen farmers’ intentions to diversify their income

Purpose. This study aims to assess how entrepreneurial orientation (EO) and credit access – particularly informal credit – jointly influence farmers’ decisions and intentions regarding income diversification. It identifies the determinants of credit choice and evaluates the interaction between EO and credit utilisation in shaping diversification strategies among rural households. Methodology / approach. Survey data from 367 borrowing farmers in Vietnam’s Mekong Delta were analysed using Probit and Multinomial Logit (Mlogit) models. Probit models identify factors influencing credit choices, while Mlogit models assess EO and credit source effects on past and future diversification. The study introduces an EO scale incorporating passivity, conservatism, and imitation. Results. The results reveal that entrepreneurial orientation significantly increases farmers’ likelihood of income diversification, especially when combined with commercial bank credit. This interaction suggests that entrepreneurial households better leverage formal credit for new income activities. In contrast, subsidised credit supports production but not diversification, while informal credit – despite its higher costs – remains vital for small-scale investment. Overall, the findings highlight that diversification depends not only on credit access but also on how EO enables households to use credit for entrepreneurial transformation. Originality / scientific novelty. This study contributes new behavioural evidence on how EO interacts with different credit types to shape farmers’ diversification behaviour. It advances existing literature by integrating EO into credit – diversification models and by developing an expanded EO scale that includes passivity, conservatism, and imitation – traits that are often overlooked in rural entrepreneurship research. By combining behavioural finance and rural credit analysis, the study provides a more comprehensive understanding of how entrepreneurial capacity and credit structures jointly influence livelihood diversification in emerging economies. Practical value / implications. Policymakers should integrate financial literacy training, simplify loan applications, and expand digital financial services. Strengthening bank-microfinance partnerships and local credit cooperatives can improve credit access and encourage diversification. Enhancing EO and credit access can support sustainable livelihoods, poverty reduction, and rural resilience. Further qualitative research should explore borrowing decisions and long-term EO effects.