Entrepreneurial orientation and farm business performance: A case of Cinnamon farmers in Galle district

Abstract

Ceylon cinnamon grown and produced in Sri Lanka has acquired a long-standing reputation in the international market. As the fourth largest foreign exchange earner cinnamon plays a significant role in the Sri Lankan economy. Sri Lanka holds a monopoly in Ceylon cinnamon in the world market. Hence, Ceylon cinnamon has opened undisputed windows of opportunity for value chain actors including farmers to display entrepreneurial spirit. However, cinnamon farmers are not equipped to exploit this opportunity due to poor entrepreneurial orientation (EO). This study aims to empirically examine the influence of EO on farm business performance, moderating role of farm and farmer characteristics, and on-farm and off-farm diversification to the EO- performance relationship. Galle district was selected for the study due to the district being the country's main cinnamon producing area. Primary and secondary data were used, and interviewer-administrated questionnaires and structured interviews were used as data collection tools. The sample comprised of 100 cinnamon farmers selected by using a stratified sampling technique. The data were analyzed using descriptive statistics and structural equation modeling technique. Results revealed that entrepreneurially oriented farmers achieved better financial performance. However, entrepreneurial orientation did not contribute to non-financial performance aspects of farm operation. Farm and farmer characteristics did not moderate the EO-performance relationship. Further, farmers who engage in on-farm and off-farm diversification activities did not contribute to enhance business performance. Entrepreneurially oriented farmers with better farm and farmer characteristics along with engagement in on-farm and off-farm diversification practices paid less attention to cinnamon cultivation due to lack of time. This has led to failure of achieving better business performance