Epsilon Archive for Student Projects

Abstract

Today´s debate in farming is being focused on tourism, outdoor life and hobbies in the rural areas. This is of interest also for the general public as a way of counteracting the depopulation of the rural areas. Within the last years, the farming has become more technically advanced and hence efficient. This has led to increased production volumes and wider selection of products with lower margins for the farmer as a consequence. When the profitability is reduced, the farmer is faced with the choice of either increasing efficiency or diversification of the business.

Previous research has pointed out farmers’ aversion to the risk in new venture creation with the result of a cautious approach, which may contribute to a prolonged process. A prolonged process is a problem in fast-growing business that causes reduced market potential and lack of resources. A waste of time is in this setting considered as costly. The aim of this study is to investigate if the development process and the problems seen in fast-growing business apply to new venture creation in farm-based business.

This study is based on a literature search where an existing model of development is stated as a hypothesis. This model is then tested in the farming setting by analysis of studies conducted on this subject.

The results suggest two conclusions. First, trustworthiness is an important aspect in fast-growing business as a way of attracting resources. This does not apply to new venture creation in farm based business because the existing business yield profit for the new business and thereby reduce the need of an extern financier. Second, the inherent ability of the farmer to develop a business is limited. An environment that facilitates the learning and development of the farmer’s entrepreneurship is therefore important in successfully developing the business.