Influence of institutional factors on smallholder farmers’ marketing channel choices - Institutional Constraints to Small Farmer Development in Southern Africa - page 95

Traditions and beliefs are part of informal institutions that can influence marketing choices.
In the model, the dummy variable, guided by traditions and beliefs (TRAD) is used to
determine effects of traditions and beliefs on marketing. Households were asked on the
extent to which tradition plays a role in their agricultural activities. They were also asked
if they were open to new farming and marketing methods offered by non-family members.
The variable was allocated dummy values where households with strong traditional guidance
took the value of one and zero if otherwise. The variable is expected to take a negative value
because household depending on traditions and beliefs are normally not liable to change
(Dorward et al. , 2005). Such households would rather stick to what they know especially
if the marketing environment is changing rapidly. Thus, such households are less likely to
participate in the formal markets.
5.7 Empirical results
This section presents the results of the multinomial logistic regression model and discusses
the results of the significant variables that determine market participation choices in the
Kat River Valley. The variables that were discussed in the previous section were considered
for the model and tested for their significance. The multinomial logistic results of informal
and formal market choices as compared to non-market participation are presented in Table
5.2. The table shows the estimated coefficients (β values), standard error, significance values
and odd ratio of independent variables in the model.
According to Gujarati (1992), the coefficient values measure the expected change in the
logit for a unit change in each independent variable, all other independent variables being
equal. The sign of the coefficient shows the direction of influence of the variable on the logit.
It follows that a positive value indicates an increase in the likelihood that a household will
change to the alternative option from the baseline group. On the other hand, a negative
value shows that it is less likely that a household will consider the alternative (Gujarati, 1992;
Pundo and Fraser, 2006). Therefore, in this study, a positive value implies an increase in the
likelihood of changing from not participating in marketing to either informal or formal
market participation choice. In this study, the variables were tested at the 5% significance level.
5.7.1 Significant variables in the model
As indicated in Table 5.2, some predictor variables influence market participation choices
significantly. Of the 14 independent variables used in the model, five and six variables
in informal and formal market choices respectively, are statistically significant at the 5%
significance level. In all but one of the cases, the signs of the estimated coefficients are
consistent with the a priori expectations.