Entrepreneurial characteristics and financial performance
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The main objective of the study is to explore the relationship between entrepreneurial competencies of a farmer and the financial performance of said farm to determine whether initiatives focussed on improving entrepreneurial competencies of farmers will contribute towards improving their financial performance. The study was conducted in South Africa, and the data used within the study was gathered through a formal agreement with a commercial financial organisation. The financial performance of the farmers was calculated by means of farm financial ratios and then used to determine a single measurement namely the operating efficiency. The operating efficiency was calculated using a mathematical linear programming technique, this technique is a financial based Data Envelopment Analysis (DEA). It was hypothesised that entrepreneurial competencies of farmers will have an effect on the financial performance of the farm. The entrepreneurial competencies instrument used by Man (2001), was identified and used to measure the entrepreneurial competencies of the farmers. Entrepreneurial competencies were identified in terms of the statements that displayed high-factor loadings for each of the competencies. Farmers displayed an average of 70% or above for all the individual entrepreneurial competencies, indicating entrepreneurial behaviour among the farmers. . To determine the relationship between entrepreneurial competencies and financial performance the operating efficiency scores were regressed against the competencies scores. An Ordinary Least Squares (OLS) model was used within the Principal Component Regression (PCR) to regress the dependent and independent variables due to the nature of the dependent variables. The results from the financial based DEA showed that there were inefficient farms within the sample, however more than half of the farms had an efficiency score above 0.855, indicating high levels of operating efficiency. Therefore, the majority of farms were operating close to efficiency compared to one another, however not all were efficient. The entrepreneurial competencies scores indicated that all the farmers displayed entrepreneurial competencies. In determining the relationship between the operating efficiency and all of the entrepreneurial competencies as a combined index there was a positive significant relationship, for a single entrepreneurial competencies index. On further investigation a t-test was used to determine if there was a statistical difference between each individual competencies and the financial performance. It was found that individual competencies have a larger positive relationship on the operating efficiency of the farm. The results show that each of the individual entrepreneurial competencies have a positive relationship with the operating efficiency of the farm. Operating inefficiencies can be improved by increasing the individual entrepreneurial competencies where a farmer is lacking.