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What Factors Are Influencing Members Willingness To Contribute Equity Capital In Agricultural Cooperatives?

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  • BEZABIH, Tibebu
  • BEYENE, Fekadu
  • HAJI, Jema
  • LEMMA, Tesfaye

Abstract

Research background: In the current competitive agricultural market, where substantial capital investment is required to pursue growth related competitive strategies, agricultural cooperatives’ performance mainly relies on members’ willingness to contribute equity capital. Members are the single and most important source of investment capital. Purpose of the article: This study investigated factors influencing members’ willingness to contribute equity capital to their agricultural cooperatives in Ethiopia with the intention of providing empirical evidences to decision makers with regard to specific measures to be taken to enhance members’ willingness to contribute equity capital, and thereby improve agricultural cooperatives’ performance. Methods: Multi-stage random sampling technique was employed to select the study districts, farmer associations, agricultural cooperatives and respondent households. Semi-structured questionnaire was employed to collect cross-sectional data from randomly selected 214 households. The data were analysed using binary logistic regression model. Findings & value added: We found that education level; past role as a committee member; trust on other members’ commitment and directors’ leadership – influence positively and significantly members’ willingness to contribute equity capital. While age and perception on the cooperatives’ weaknesses affect negatively and significantly members’ willingness. The important policy recommendations are developing and fostering trust among members and between members and directors; re-orienting service provisions in line with the needs and interests of their members; assessing agricultural cooperatives’ performance depending on the values that their members expect to obtain from membership. This study investigated the influence of trust on members’ willingness to contribute equity capital, and hence will add value to better understanding of the role of trust in enhancing members’ commitment in cooperative organizations. Lastly, this cross-sectional survey study subjected to limitations associated with this type of study. Hence the generalizability of its results to other areas of agricultural cooperatives needs further investigation.

Suggested Citation

  • BEZABIH, Tibebu & BEYENE, Fekadu & HAJI, Jema & LEMMA, Tesfaye, 2021. "What Factors Are Influencing Members Willingness To Contribute Equity Capital In Agricultural Cooperatives?," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 24(2), October.
    • Handle: RePEc:ags:roaaec:316625
    DOI: 10.22004/ag.econ.316625
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    References listed on IDEAS

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    1. Nilsson, Jerker, 2001. "Organisational principles for co-operative firms," Scandinavian Journal of Management, Elsevier, vol. 17(3), pages 329-356, September.
    2. Fabio Chaddad & Constantine Iliopoulos, 2013. "Control Rights, Governance, and the Costs of Ownership in Agricultural Cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 29(1), pages 3-22, January.
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