Journal of Entrepreneurship Education (Print ISSN: 1098-8394; Online ISSN: 1528-2651)

Research Article: 2021 Vol: 24 Issue: 1

How is it Possible to Foster the Growth of Small Layer Poultry Farm in South Sulawesi Province, Indonesia?

Muhammad Yunus Amar, Department of Management, Faculty of Economics and Business, University of Hasanuddin, Makassar, Indonesia

Palmarudi Mappigau, Department of Social Economics, Faculty of Animal Sciences, University of Hasanuddin, Makassar, Indonesia

Citation Information: Amar, M.Y., & Mappigau, P. (2021). How is it possible to foster the growth of small layer poultry farm in South Sulawesi province, Indonesia? Journal of Entrepreneurship Education, 24(1).

Abstract

The small layer poultry farms in Indonesia have growth opportunities. The owners of these farms are entrepreneurs who need to foster grow their business. However, how it is possible to foster the growth of small layer poultry farm by considering entrepreneurial intention, social network and business strategy Therefore, this study aims to examine the direct impact of entrepreneurial intention on small layer poultry farm’s growth and its indirect impact by mediating social networks and business strategy. This study used a quantitative research study focused on structured and semi-structured interviews for collecting the data. Data were obtained from 96 small layer poultry farms in South Sulawesi Province in, Indonesia in April 2017 by using the questionnaire survey. The results showed that the direct impact of entrepreneurial intention on small layer poultry farm’s growth was not substantial. Further, research on the social network and business strategy can strengthen and positively impact the entrepreneurial intention on small layer poultry farm’s growth Thus, this study leading to novel and unique insights and contributions for both poultry agribusiness, and policy-makers.

Keywords

Entrepreneurial Intention, Small Poultry Layer Farm, Farm Growth, Social Network, Business Strategy.

JEL Classifications

L21, L26, M21, Q12

Introduction

Layer poultry farming is an important subsector of the livestock industry, which promotes economic growth in many developing countries, such as Indonesia (Wynne and Lyne, 2003; Odine et al., 2015). The layer poultry production also contributes to food security and supply of high-quality protein (Hamid et al., 2017; Anang et al., 2013) Indonesia is ranked seventh on the world's list of significant egg producers, and its production volume reached 1,224 metric tons in 2013, which contributed approximately 1.70% globally or relatively 20.7% in the less developed countries (LDC) (Windhorst, 2016). In 2018, the number of commercial poultry businesses in Indonesia was an estimated 29.939, and approximately 161.35 million hens were reared. However, over 95% were small farm businesses with a maximum production capacity of 5 000 hens. They are concentrated on the eastern, central, and western java, as well as South Sulawesi provinces (Directorate General of Animal Husbandry and Animal Health, 2015).

The small poultry farms in Indonesia have opportunities for growth due to the rapid increase in market demand for eggs, easy availability of production inputs, and government policy. The owners of these farms are entrepreneurs who need to foster grow their business. The fact still remains that they prefer the status quo and unwillingness to grow, and only a few have been able to realize medium scale production. However, how it is possible to foster the growth of small layer poultry farm by considering entrepreneurial intention, social network and business strategy. Moreover, numerous studies reported that it is due to the entrepreneur’s intentions (Price et al., 2013). However, several scholars stated that the effect of entrepreneurial growth intention on small farm growth is complex, thereby suggesting the need to review the moderating variables (Levie & Autio, 2013). According to certain literature, social networks and business strategies are moderating variables that have the potentials to stimulate the growth of these businesses (Machado, 2016). However, studies concerning the effect of entrepreneurial intention on small farm’s growth are limited (Pushpakumari & Watanabe, 2009; Oyedijo & Akewusola, 2012; Mustikowati, 2014). In these regards, this study is aimed to fill the research gap by examining the direct and indirect impact of entrepreneurial intention on small layer poultry farm’s growth, through mediating variables such as social network and business strategies.

Literature Review

Entrepreneurial Intention

Entrepreneurial intention is synonymously used in the literature relating to concepts of growth ambition, expectation, motivation, propensity, willingness, preferences, aspiration, and attitude. Therefore, the definition is generally aimed to understand the numerous reasons and ways managers seek (or do not seek) growth (Wallin et al., 2016) and also relates it to the development of their businesses (Levie & Autio, 2013). Cooney (2012) stated that entrepreneurs' primary role and intention determine the chances of futuristic growth. Zhao et al., (2005) found that the effects of perceived learning from entrepreneurship-related courses, previous entrepreneurial experience, and risk propensity on entrepreneurial intentions were fully mediated by entrepreneurial self-efficacy. Pruett et al., (2009) found a direct relationship between perceived importance of barriers and behavioral intentions. They argue that individuals who perceive lack of knowledge, business risks, and financing (barriers) are significantly less likely to have strong entrepreneurial intentions. Bird (1988) found that entrepreneurial intentions are shaped by personal factors such as perceived abilities and social factors such as social network. Zhao et al., (2005) found that entrepreneurial intention have a positive effect on entrepreneurial behavior. Kolvereid & Bullvag (1996) reported that the managers' intention has a positive effect on the achievement of growth. In addition, Gherhes et al., (2016) stated that entrepreneur’s intention is as important as the manager’s ability to foster and manage growth. Stroe (2012), as well as Levie & Autio (2013), stated that in order to achieve growth, entrepreneurial growth intention needs to align with the important factors enabling development, namely social network and business strategies. These studies lead us to propose the following hypotheses:

H1: Entrepreneurial intention has a positive impact on small layer poultry farm’s growth

H2: Enterprenerial intention has a positive impact on social network

H3: Entrepreneurial intention has a positive impact on types of business strategies

Social Network

Social networks are defined as a set of actors, individuals, or organizations, and the series of linkages between them (Martins, 2016). They aid small businesses that are dependent on limited resources or other enterprises (Mäläskä et al., 2011). Social networking has a positive impact on the growth of small businesses because they provide access to resources, knowledge, and skills needed for their development and exploitation (Dowla, 2011). Furthermore, it also acts as a buffer against shocks or uncertainties needed to protect and enhance the competitive advantage of small businesses (Waihenya, 2014). Aldrich et al., (1987) stated that social networks play an impact on the process of founding and growth of businesses. In developing countries, small enterprise networking is based on social and business connections (Barr, 2000). According to Ritter et al., (2004), Ismail & Karlsson (2013), social network strengthens the intention to develop business strategy. We, therefore, put forward the following hypotheses:

H4: Social network has a positive impact on small layer poultry farm’s growth

H5: Social network has a positive impact on types of business strategies

Business Strategy

The performance of any enterprise is determined by the type of business strategy adopted (Nur et al., 2014). Ferreira & Azevedo (2008) reported that enterprises' resources and capabilities are the main competences for formulating and adopting these strategies. One of the most dominant frameworks for business strategy is Miles & Snow's typology, namely defenders, prospectors, analyzers, and reactors. This classification is based on the assessment of the firm's responds to entrepreneurial problems, such as the strategy to adopt and administrative problems in accordance with the selection of structures that are consistent with the strategy (Miles & Snow, 1986). Firms that are able to achieve a fit between strategy and structure tend to create a significant competitive advantage (Ogollah et al., 2011; Bustamam & Pech, 2016). Yuliansyah et al., (2017) found that business strategy has a full mediating effect on the relationship between integrative strategic performance measurement (RISPM) and organizational performance. Oltra & Flor (2010) suggested the need to consider the fit between operations and business strategy, since the effect of operations strategy on business performance is different according to the type of strategy. We, therefore, put forward the following hypotheses:

H6: Types of business strategies has a positive impact on small layer poultry farm’s growth

H7: Social networks and types of business strategies largely contribute to the impact of entrepreneurial intention on layer poultry farm’s growth

Our conceptual model representing in Figure 1.

Figure 1 A Conceptual Model

Research Methodology

This study was carried out from April to September 2017 in Sidrap Regency, a region well-known for the development of layer poultry farming located in South Sulawesi Province, Indonesia. The inductive approach and quantitative methods were used to collect data in order to validate the conceptual model and the proposed hypotheses. The population consisted of small layer poultry farms with less than 5000 hens and has been in existence for the past five years. Based on this circumstance, the target population was assumed to probably have stable growth intentions over time, as well as the capability to manage the poultry business effectively. The number of samples was 96 farms determined by the Yamane's formula. Subsequently, they were randomly selected from a population of 1.366 farms registered with Animal Husbandry and Health Agency of South Sulawesi Province in April 2017. Data collection was based on structured questionnaires consisting of both close and open-ended questions, in accordance with a cross-sectional survey research method, which involves a combination of direct observation and face-to-face interviews with owners of small layer poultry farms. The open-ended questions were used to provide additional information that was not captured by the close-ended question. The variables of entrepreneurship intention (X1) were measured using for 1 item, variable of social network (X2) were measured using for 2 items, and variable of type business strategy (X3) were measured using for 2 items. Regarding variables and associated with items used are shown in Table 1.

Table 1 Variable and Associated Items
Entrepreneurship Intention (X1)      
Indicate your level of agreement with the following sentences
Are you willing or not willing to pursue growth in the number of laying hens reared in the next three years from the time of the survey
Social Network (X2)      
Indicate your level of agreement with the following sentences
Do you get input access particularly feed, day-old chicks, and drugs from social interactions with poultry shop or middlemen
Do you get access to market and market information from social interactions with poultry shops or middlemen
Business Strategy (X3)      
Indicate your level of agreement with the following sentences
Do you adopt type business strategies (defenders, prospectors, analyzers, and reactors) in operating your layer poultry farming due to the fluctuation of production input and eggs' prices
If yes, what specific strategies do you adopt
Scale 1 to 5 (1: Strongly disagree to 5: Strongly agree)

Before its application, the questionnaire was issued in order to verify the validity and reliability. Therefore, it was initially distributed to 25 respondents. However, immediately the items on the questionnaire were confirmed valid and reliable, it was distributed to all the respondents. Irrespective of the fact that most of the information acquired was ordinal, a Successive Interval Method (SIM) was used to transfer them into interval data, and it was further examined using path analysis, which is a multivariate technique used to describe both direct and indirect effects of independent variables on the dependent ones. Therefore, the model in this study involves independent, intervening, and dependent variables determined and verified using path analysis.

Results and Discussion

The results from path analysis using LISREL 8.51 are shown in Tables 2 & 3.

Table 2 The Result from Path Analysis: Impact of Independent Variable on Dependent Variable
Independent Variables Dependent Variables Path Coefficient
Entrepreneurial Intention (X1) Farm growth (X4) 0.023ns(0.764)
Entrepreneurial Intention (X1) Business Strategies (X3) 0 .142*(0,014)
Entrepreneurial Intention (X1) Social Network (X2) 0 242*(0.003)
Social Network (X2) Business Strategies (X3) 0. 051*(0.047)
Social Network (X2) Farm growth (X4) 0.414**(0.000)
Business Strategies (X3) Farm growth (X4) 0.202* (0.007)
Number of observations 96 farms, Standard errors in parenthesis
Ns p>0.05; *p<0.05; ** p<0 .01
Table 3 Contributory Effects of Moderating Variable: Social Network and Types of Business Strategies
  Contributory Effects
Enterprenerial Intention Variable Direct (X4) Via X2 Via X3 Total
X1 0.023 0.1 0.029 0.152
X1 0.023 0.1  - 0.123
X1 0.023 - 0.029 0.052

In accordance with Table 1, the impact of entrepreneurial intention (X1) on small layer poultry farm’s growth (X4) was statistically insignificant at a 5% level. This shows that positive entrepreneurial intention does not guarantee the realization of small layer poultry farm’s growth, or its impact tends to be weak and limited. A probable reason for this discovery is that the owners of these farms focus on their day-to-day activities and do not have any specific goals or plans to develop their businesses in the future. However, this is due to changes in the nature of managerial problems that occur in the transformation from small to medium-sized enterprises. In addition, the owners' do not have adequate abilities to resolve growth issues. Consequently, they perceive the present small-scale production as a comfort zone that needs to be managed. This finding is consistent with previous studies. Additionally, Wallin et al., (2016) stated that entrepreneurial intention was influenced by their perceptions of the field's barriers and constraints. Stroe (2012) stated the insignificant relationship between entrepreneurial intention and small layer poultry farm growth. This is due to the fact that the owners do not have the appropriate facilities to realize their intentions. Similarly, entrepreneurial intention is not enough for development. A relationship tend to exist, supposing the entrepreneurial intentions are compiled with the appropriate enablers such as social network practices and business strategies (Storey, 2004; Lin, 2002)

Table 1 shows that entrepreneurial intention (X1) has a positive impact on social network (X2) at a statistically significant level of 5%, therefore, it depends on entrepreneurial intention. Furthermore, it implies that positive entrepreneurial intention realizes gainful production input (feed, day-old chicks and drugs), egg market, and its information from social interactions with poultry shops and middlemen. This research is supported by the studies carried out by Mappigau & Amar (2019) and Pistrui (2002) which stated that lack of market information as well as limited financial resources has a negative impact on entrepreneur’s growth intention and expansion plan, which includes the social relationship and personal contacts with external actors. Nishantha & Kawamura (2011) reported that enterprises with positive entrepreneurial intentions offer active resources, knowledge, and information through existing social networks. Estrin et al., (2014) and Lajqi & Krasniqi (2017) stated that easy access to resources moderates the positive effects of informal institutional relations on growth prospects.

The path analysis results in Table 1 show that entrepreneurial intention (X1) has a positive impact on business strategies (X3) at a statistically significant level of 5%. This shows that strategic business practices depend on entrepreneurial intentions. It simply means that farmers with positive entrepreneurial intention tend to adopt various strategies business practices, which serves as a barrier from fluctuations of market prices, production input, egg products, and highly competitive layer poultry farms. A similar situation was reported by Rizzo & Fulford (2012) and Ismail & Karlsson (2013) argued that entrepreneurial intention has an impact on the business strategy adopted to achieve futuristic growth. Additionally, Mappigau & Amar (2019) and Nur et al., (2014) stated that it also plays an important role in the improvement of small farm growth.

Table 1 shows that social network (X2) has a positive impact on small layer poultry farm’s growth (X4) at a statistically significant level of 5%. This shows that growth depends on social interaction with external actors. These findings, simply mean that farmers that actively interact with poultry shops and middlemen realize more get access to production input (feed, day-old chicks and drugs), egg market, and its information, which serves as an important tool for growth, it is further supported by previous studies. Nishantha & Kawamura (2011) stated that networking has a significant and positive effect on small farm growth. Mappigau & Amar (2019) reported that networking is identified as one of the tools utilized by these businesses to reduce limited internal resources, as well as enhances capabilities and the exploitation of growth opportunities.

Path analysis results in Table 1 show that social network (X2) has a positive impact on business strategies (X3) at a statistically significant level of 5%. This shows that business strategy practices depend on social networks or interactions with external actors. In accordance with this finding, farmers with active social networks through interactions with poultry shops and middlemen realize gainful access to production input (feed, day-old chicks and drugs), egg market, and its information needed to adopt various strategic business practices. This finding is supported by research carried out by Ismail & Karlsson (2013), which stated that the availability of resources and information from social networks permit these businesses to pursue certain strategic practices to be able to respond to changes in the environment. According to Ritter et al., (2002) social network strengthens the capabilities of small layer poultry farming to develop various types of business strategies

Table 1 show that the various business strategies (X3) positively impact small layer poultry farm’s growth (X4) at a statistically significant level of 5% level. This shows that growth depends on the strategic business practices. It simply means that farmers that adopted appropriate strategic practices were able to respond to environmental changes, which are essential for their growth. Similarly, Ismail & Karlsson (2013) stated that an entrepreneur needs to respond to environmental changes in which the firm operates. It is important to quickly implement business strategies for small farm growth. This finding is consistent with previous studies. Oyedijo & Akewusola (2012) stated that the business strategy is a key determinant of both small and medium scale farm growth performances. Asa & Prasad (2015) reported that business strategy is positively related to small firms' growth. Furthermore, any firm that implements business strategy is probably 2.3 times more likely to achieve growth than those that did not implement such practices.

According to Table 2, the direct impact of entrepreneurial intention on small layer poultry farm’s growth was smaller (0.023). However, after the inclusion of the moderating variables, namely social networks and business strategies into the model, its impact increased to 0.152. Therefore, social networks and business strategies largely contribute to the impact of entrepreneurial intention on layer poultry farm’s growth. This is consistent with the research carried out by Madsen (2007) which stated that although resources from social networks are essential, they do not ensure the improved performance of small layer poultry farm’s growth. Therefore, there is a need to combine it with the various business strategies. However, the contribution of the social network to entrepreneurial intention tends to be larger than the impact of the business strategies (0,153 vs. 0,052). This shows that it is a more effective factor in mediating entrepreneurial intention on small layer poultry farm’s growth. The research supports this carried out by Gulati et al., (2000) which stated that social network is considered as an important variable for the growth of small enterprises. Muthuvelayutham & Jeyakodeeswari (2014) reported that strategic business orientations were unable to improve small businesses' performance because resources and availability of information from social networks play an important role.

Conclusion

This research developed a conceptual model that illustrates the role of social networks and business strategy in mediating the impact of entrepreneurial intention on small layer poultry farm’s growth. The results show that entrepreneurial intention has a positive and significant impact on social networks and the business strategy, with an insignificant effect on the small layer poultry farm’s growth. It also shows that the moderating variables enhance the impact of entrepreneurial intention on the small layer poultry farm’s growth. Subsequently, the social network has a greater impact.

This study made certain recommendations for the existing literature. Firstly, it discusses the growth of small layer poultry farming business, an area of research that has received little or no attention in the past. Secondly, it identified that moderators such as social networking and the business strategy, determine to have a significant influence. However, it is emphasized that this study has several limitations, namely, the data were obtained from only one source such as the owners of small layer poultry farms, and was collected at only a certain point in time, it was further evaluated by multivariate analysis. Furthermore, recent studies need to involve samples from more than two sources (i.e. owners of farm and external actors) from social networks to help minimize the sample base's possibilities. In addition, there is a need to apply longitudinal research to capture the dynamic effects of growth intentions and a combination of statistical and case study analyses to acquire a broad range of other variables that tend to affect growth. Conversely, this finding is recommended for policy settings by acting as a means of focusing on reducing growth barriers in the small layer poultry industry and rendering consultation services to owners on ways to manage complexities associated with growth. This research is recommended for the owners of small layer poultry farms that intend to apply strategic business decisions and create a social network for growth achievement.

Acknowledgement

The authors are grateful to the Rector of the Hasanuddin University for providing financial assistance based on Grant No.34932.UN.4.1/IU/2016. The authors also acknowledge all the stakeholders that participated in secondary data collection. The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. The authors designed the research, analyzed, collected, and wrote the research reports. All authors read and approved the final manuscript.

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