Farm business development: the motives and effects of diversification strategies

Abstract: This thesis investigates the factors underlying farm business development in Sweden, and the economic and social implications related to different development strategies. The thesis consists of four papers. Paper I uncovers the values that underlie farmers’ strategic choices for business development. The results indicated that a mixed set of use- and non-use values guide choices for farm strategic orientation. Paper II examines the relationship between entrepreneurial orientation and farmers’ satisfaction with business performance while considering the moderating effects of the farm diversification strategy and the environmental conditions in which a farm business operates. The findings suggested that the combination of farm diversification strategy with the environmental conditions has a significant relationship with farmers’ satisfaction with business performance. These two papers differ in their methodological approaches, however, they focus on the farmer as the unit of analysis, whereas Papers III and IV that follow, focus on the farm business as the unit of analysis. In particular, Paper III investigates the role of diversification strategies in enhancing farm financial performance. The results show a heterogeneous relationship between agricultural and farm diversification with farm financial performance across farm types. Finally, Paper IV examines the impact of diversification strategies on farm-level employment and farm income variability. It suggests that farm diversification is a labour-saving strategy and that it increases farm income variability. In contrast, agricultural diversification is positively related to farm-level employment but negatively related to farm income variability.