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Strategy, key success factors and the
effectiveness of arable farms
Development of a strategic concept and a Balanced
Scorecard
Harald Ligtenberg
Master thesis
University of Groningen
Faculty of Economics and Business
MSc Business Administration
Specialization: Organizational and Management Control
January 2012
Address: Saffierstraat 224
Postal code: 9743 LP
Mobile: 0624241716
Student number: 1610228
Supervisor: drs. P.C.G. Molenaar
Co-supervisor: Dr. S. Tillema
1
PREFACE
Before you lies my master thesis conducted at the University of Groningen. This research
is performed in the last few months of my study Business Administration, Organizational
and Management Control. The subject of this research is motivated by my internship at
Acconavm. During this internship I have become more and more interested in the arable
sector. As a child I had a number of vacation jobs in this sector and I saw it as an exciting
opportunity to integrate my academic education with this sector. Especially the role of
strategy and how to use it constructively had my attention. For this reason the subject of
this thesis is the influence of strategy on the effectiveness of arable farms and the use of
key success factors.
This thesis could not have been realized without the help of others. First of all I
would like to thank the farmers who took the time and effort to answer my questions.
You provided me with a lot of information that forms the basis of the qualitative research.
I enjoyed conducting these interviews and it was a worthwhile experience. Secondly I
would like to thank Harm Jan Schipper and the other employees of Acconavm Uithuizen
to give me the opportunity of doing an internship at a an advisory and accounting
organization. They created the opportunity to visit farmers and find information I
otherwise would not have found. Furthermore drs. Molenaar helped me during the
process of writing the thesis. Thanks for asking the right questions and triggering me to
think thoroughly of what I am writing. I also would like to thank Dr. Tillema for co-
supervising my thesis. Finally I would thank the persons who took the time to read my
thesis and provided it with feedback.
I tried to make the thesis as transparent as possible. References are placed to page
numbers and chapters to make it easy to read back if it is needed. I have given
accountability of the research methods used to ensure you understand how the research is
conducted. I hope you enjoy reading my thesis and can benefit from the results.
2
ABSTRACT
This research explores the effect of strategy, with the use of key success factors, on the
effectiveness of arable farms. Through reviewing literature and conducting qualitative
research, insights in the arable sector are gained. The literature review provides a
strategy-effectiveness framework that structures the research. A strategic concept for the
arable sector is developed. It emphasizes that strategy considers where and how a farmer
wants to compete and how the farm want to stay successful. The farmer is the central
actor for the development of strategy. The strategy should adequately consider the
environment, society, power relations and learning because these aspects are important
for farmers. Furthermore key success factors, which are tasks, processes and capabilities
of a farm, are provided. These factors are measured through leading and lagging
indicators. The effectiveness of farms consists of extrinsic and intrinsic aspects. Also the
family and community play an important role in the way farmers view success. This
research develops a Balanced Scorecard (BSC) to measure performance in the arable
sector. The BSC is able to measure the diversity of a farms effectiveness. The study
contributes by increasing the knowledge about strategic management in the arable sector.
It benefits academics through the development of a framework and practitioners by
developing a BSC.
Key words: Strategy, Organizational Effectiveness, Key Success Factors, Arable Farms,
Balanced Scorecard.
3
TABLE OF CONTENTS
PREFACE .......................................................................................................................... 1
ABSTRACT ....................................................................................................................... 2
1. INTRODUCTION......................................................................................................... 5
1.1 Initial Motive ............................................................................................................. 5
1.2 Goal of the Thesis ...................................................................................................... 6
1.3 Research Questions.................................................................................................... 7
1.4 Research Design ........................................................................................................ 7
2. THEORETICAL FRAMEWORK .............................................................................. 9
2.1 The Contingency Approach ....................................................................................... 9
2.2 Concepts and Relations ........................................................................................... 10
2.2.1 Organizational effectiveness ......................................................................................... 10
2.2.2 Key success factors ....................................................................................................... 11
2.2.3 Strategy ......................................................................................................................... 12
2.2.4 Arable sector ................................................................................................................. 12
2.2.5 Conclusion..................................................................................................................... 13
3. LITERATURE REVIEW .......................................................................................... 14
3.1 Organizational Effectiveness ................................................................................... 14
3.1.1 Characteristics of organizational effectiveness ............................................................. 14
3.1.2 Organizational effectiveness in SME’s ......................................................................... 15
3.1.3 Organizational effectiveness in farms ........................................................................... 15
3.1.4 The Balanced Scorecard ................................................................................................ 16
3.2 Key Success Factors ................................................................................................ 18
3.2.1 The role of key success factors ..................................................................................... 18
3.2.2 Productivity, costs and quality ...................................................................................... 18
3.2.3 Sustainability and stakeholders ..................................................................................... 19
3.2.4 Entrepreneur, knowledge and learning .......................................................................... 19
3.2.5 Cooperation ................................................................................................................... 20
3.2.6 Finance .......................................................................................................................... 20
3.2.7 The key success factors in the BSC .............................................................................. 20
3.3 Strategy .................................................................................................................... 21
3.3.1 Influence of strategy on organizational effectiveness ................................................... 21
3.3.2 The diversity of strategy ................................................................................................ 21
3.3.3 Agricultural strategy literature ...................................................................................... 24
3.3.4 Arable sector versus strategic management literature ................................................... 26
3.4 Conclusion: the Strategy-Effectiveness Framework ............................................... 27
4
4. QUALITATIVE ANALYSIS ..................................................................................... 29
4.1 The Methodology and Cases ................................................................................... 29
4.2 Organizational Effectiveness ................................................................................... 30
4.3 Key Success Factors ................................................................................................ 31
4.4 Strategy .................................................................................................................... 34
5. DISCUSSION AND CONCLUSION ....................................................................... 37
5.1 Discussion ................................................................................................................ 37
5.2 Contribution for Academics and Practitioners ........................................................ 40
5.3 Conclusion and Limitations ..................................................................................... 42
REFERENCES ................................................................................................................ 44
APPENDIX I ................................................................................................................... 52
APPENDIX II .................................................................................................................. 53
APPENDIX III ................................................................................................................ 55
APPENDIX IV ................................................................................................................ 56
5
1. INTRODUCTION
1.1 Initial Motive
‘There is a future for the agricultural sector in the Netherlands, also for the
arable sector. […] The entrepreneurs have the key in their hands. The way they
react on changes is crucial. Therein they will have to make choices. The
occurring developments with a freer market and globalization forces them.
Waiting is the wrong reaction in this situation. Without a clear vision of the future
success will be a lucky strike.’
(Ministerie LNV, 2005: 6, translated)
In the agriculture different developments are increasing the need for more insight in the
way enterprises should be managed. As the statement at the beginning of this chapter
shows, arable farmers have to think about their vision and strategy because of the
developments that are taking place. Agricultural firms are more and more forced to
respond to changes in their environment and adapt their strategies and plans accordingly.
The demands for product safety and quality are increasing and sustainable production
becomes more important. These developments have led to an increasing attention for new
management accounting approaches for farms. But there is not enough known about
strategic management and its implementation at farms (Noell & Lund, 2002: 1-2).
The subject of this thesis is the relation between the strategy pursued by an arable
entrepreneur and the key success factors leading to success. In the Netherlands the
agriculture still has an important role in the economy. It provides about ten percent
employment and contributes about nine percent to the Dutch economy in 2006 (Silvis, de
Bont, Helming, van Leeuwen, Bunte, & van Meijl, 2009: VIII). In this thesis the terms
arable farm and arable enterprise are used to refer to the type of farm that grow crops. In
particular it aims at organizations which are growing seed potatoes as main product.
Organizations differ from each other, even in the same sector. Arable farms can
aim for high quality or rather lowest possible costs (i.e. differentiation or cost leader) or
even a combination. It would be very helpful to understand organizations and the strategy
they pursue to assure that taken actions are appropriate for a particular organization.
Ondersteijn, Giesen & Huirne (2003: 32) state that farms in the Netherlands are mainly
family businesses and the strategy pursued is chosen by the farmer and his family.
Farming decisions are not made by strategy experts and the family business has no large
staff to support their decision making process. Knowledge about the style of a farm helps
the management of a farm to create congruence and actualization of the goals (van der
Ploeg, 1999: 122). So, some additional insight in strategic management fulfils an actual
need for farming families in the Netherlands.
Research in the management accounting field does not have enough impact on
practice while research should be important for practice (Malmi & Granlund, 2009: 598).
This thesis is executed in cooperation with Acconavm (advisory and accountancy
agency) and practical considerations are included to be appealing to academics and
practitioners. Knowledge about strategy and success factors is important because this
knowledge can improve the advice given by consultants of Acconavm to farmers.
Consultants can use this knowledge to give appropriate advice and monitor and control
6
the development of a farm in a better way (Ondersteijn et al., 2003: 53). It is important to
understand the strategy and the key success factors for high performance for arable
entrepreneurs and for consultants advising entrepreneurs. Next the goal of the thesis is
introduced.
1.2 Goal of the Thesis
The objective of this study is to explore the role of strategy in arable farms and what
important (key success) factors for organizational effectiveness are. This research tries to
enhance the knowledge about strategies and the success factors of arable enterprises. The
research is exploratory and by exploring literature, executing interviews and visiting
farms, ideas about strategy in the arable sector are generated which helps future studies.
The research represents a preliminary investigation in this sector which can become the
basis for empirical testing (Scapens, 2004: 260).
Knowledge about why an organization is, or is not, successful is important for
organizations. Without this understanding managers do not know how to stay or become
successful. That is why it is necessary to study arable farms, because it enhances the
understanding of their effectiveness. A way to analyze organizations is the use of the
contingency approach. Contingency theory is an approach to understand the structure of
organizations which can be dependent on a number of factors like size, technology,
strategy or environment (Robbins & Barnwell, 2002: 27, 46). Organizations are studied
to see what the impact is of a variable on that particular organization. This thesis focuses
on strategy, because it is seen as one of the imperatives with the largest impact on the
way organizations are managed (Robbins & Barnwell, 2002: 138) and because it is not
well understood how strategy should be managed at arable farms (Noell & Lund, 2002:
1-2).
Besides business goals arable farms also have to deal with family aspects and
combining these goals can be difficult. Arable family farms aim to be sustainable and
viable in the present and for the next generation (Lourenzani, Queiroz & de Souza Filho,
2005: 290). The way entrepreneurs manage their farms, the building of networks and how
they respond to changing consumer demands are issues which become increasingly
important for farms (Silvis et al., 2009: 99). But how should entrepreneurs in the
agriculture incorporate these goals and issues? Which strategy should they follow and
which elements are important for successful deployment of the strategy? The usefulness
of management control tools, like the balanced scorecard (BSC), for agricultural
enterprises is more and more recognized these days. Shadbolt (2007: 867) states that ‘the
BSC used by farm managers would provide an ongoing learning opportunity for the farm
as it facilitates in-depth discussion about the business’ vision, strategy and critical
success factors and translating them into specific measures and objectives.’ This
statement shows the importance of knowing what drives success and how to manage and
control this at an arable farm.
This thesis tries to bridge the gap between the current knowledge about the
strategy of arable farms and the key success factors and the desired state of knowledge. It
will enhance the understanding of agricultural businesses and strengthening the
professionalism in the agriculture which is needed to sustain the changing circumstances
like environmental regulation, food quality demands and sustainability (Noell & Lund,
7
2002: 1). But above all, it will increase the insights in how strategy influence arable
farms performance. In the next section the problem analyzed above is structured through
the use of research questions.
1.3 Research Questions
The problem statement on which this thesis is focused is: what is the role of strategy in
arable enterprises and how can organizational effectiveness be achieved with the use of
key success factors?
This question considers the way strategy influences arable enterprises and what
the key success factors for organizational effectiveness are. Strategy is an imperative, a
variable that dictates the structure of an organization (Robbins & Barnwell, 2002: 139).
The key success factors of an organization are contingent on the strategy of the
organization. Because organizations have different strategies consequently there are
differences in key success factors. The chosen strategy should lead to success for an
enterprise. But success is not only dependent on the generation of profits and that is why
this research considers organizational effectiveness as being more than just financial
success. To answer the problem statement the following research questions are asked:
1. What is organizational effectiveness?
2. What are key success factors?
3. What is strategy?
4. What is the relation between strategy and organizational effectiveness?
5. What is the relation between organizational effectiveness and key success
factors?
6. What is the relation between strategy and key success factors?
7. What are distinguishable characteristics of the arable sector and enterprises?
8. How should organizational effectiveness be measured in the arable sector?
9. Which key success factors need to be used in the arable sector?
10. What is the role of strategy in the arable sector and arable enterprises?
These questions are answered in the forthcoming chapters. Through the answers on these
research questions the problem statement can be answered and new insights in the arable
sector are developed. The methodology of the thesis is considered in the following
section.
1.4 Research Design
To give an answer to the problem statement the research should consist of an organized
search for information, the analysis of data and the interpretation of this information
(Cooper & Schindler, 2006: 77). This is done through a literature review, a qualitative
analysis and a discussion of the results. To ensure well executed research, Cooper &
Schindler (2006: 22-23) list a number of characteristics that serve as conditions for good
research. First of all the research process should be described to enhance the transparency
of the methods used (Cooper & Schindler, 2006: 23). It is important to give
accountability of the methods that are used. This way it can be understood how the
8
researcher has executed his research and the reliability and validity can be assessed
(Boeije, 2005: 150; Saunders, Lewis & Thornhill, 2003: 421).
In the previous section the purpose of this research is presented. It wants to
contribute to the arable sector by exploring strategic management in this sector. The
nature of this study is exploratory, which means that it aims to increase the understanding
of the problem statement (Cooper & Schindler, 2006: 164). Through exploration of the
subject under study, insights are gained about strategy, effectiveness and success factors
in the arable sector. In the following chapter the theoretical framework is established in
which the approach and concepts of this thesis are discussed.
After the theoretical framework a literature review is executed. The review
provides insight in the use of strategy, the success factors and organizational
effectiveness in the arable sector. Cooper & Schindler (2006: 164-165) state that a
literature search is the first step in an exploratory research. The literature review is used
to explore the subject under study and understand and define the problem. It is important
to understand the theory underlying qualitative research and it is an essential part when
conducting research (Ahrens & Chapman, 2006: 823; Yin, 2003: 28). Through the
literature review the qualitative research can be better interpreted. And according to
Scapens (2004: 274) it is important to establish linkages between literature and the cases
to enhance the plausibility of the research.
After the literature review a qualitative analysis is executed. Because not all
existing knowledge is written down, it is important to find out what participants in the
arable sector know and experience (Cooper & Schindler, 2006: 145). Through interviews
and case studies a deeper understanding of the subject is achieved (Jansen, Merchant &
van der Stede, 2009: 75). By using multiple sources of data, triangulation is used to
improve the construct validity (Yin, 2003: 34, 98). The use of theories in case study
research also improves the external validity of the research. It helps to generalize the
results to theory, which Yin (2003: 37) calls analytical generalization. The methodology
of the qualitative analysis is further elaborated in chapter four. Furthermore, in chapter
four the results of the qualitative research are presented. Interviewing farmers helps to
understand the problem more clearly. Also a reflection on the participants of the research
takes place in chapter four. Yin (2003: 24) argues that is important to describe the unit of
analysis because it enhances the transparency of the research.
After the literature review and qualitative analysis, a discussion of the findings
takes place. In this section the limitations of the research are revealed to understand the
reliability of the results (Cooper & Schindler, 2006: 23). In this chapter a conclusion is
given which answers the problem statement. This conclusion is based on the findings and
the interpretation of these findings in the discussion section. By executing the study
according to the above process, transparency is given about the research. This should
enhance the reliability of the research. The coming chapters contain additional
methodological considerations, specific for those chapters.
In exploratory research, just as in other types of research, it is important to state
what is explored in the study (Yin, 2003: 30). For this reason is in the next chapter a
theoretical framework created to establish a common ground for communication and to
help the reader in his understanding of the research.
9
2. THEORETICAL FRAMEWORK
The basis for executing empirical research is the use of concepts. By building concepts a
shared perception of the terms under consideration is created. This enhances the
understanding and communication of these terms (Cooper & Schindler, 2006: 36). In this
section the used approach and concepts are explained. By establishing and
communicating the framework of the research to the reader, the intelligibility of the
research is increased. First the approach that is used (contingency theory) is considered.
2.1 The Contingency Approach
Contingency theory is often used as research method but it is not possible to give one
exact definition of contingency theory (Chenhall, 2003: 157). It refers to a set of
organizational theories (Schreyögg, 1980: 306). According to Chenhall (2003: 157)
contingency is used as a term to state that something is true under specific conditions.
There is not one theory to explain how a specific dependent variable acts under different
circumstances. The behavior of the variable is dependent on a number of specific factors.
The contingency approach in general has been defined in the literature as the
identification and developing of functional relations between variables as environment,
organizational design or performance (Luthans & Stewart, 1977: 183). Donaldson (1987:
19-21) argues that structures need to fit with the contingencies for the organization and
the goodness of this fit will enhance economic performance. In this thesis the
contingency factor on which the focus is placed is the strategy. The conceptual
development of strategy is done in section 2.2.1.
The contingency approach has gained influence from the 1960s. Approaches in
the organization theory field were lacking the consideration of organizational structure.
The question that rose was: is there a best structure of an organization for every situation?
Or do different circumstances mean adaption of the organizations structure to that
specific situation (Robbins & Barnwell, 2002: 46)? Determinants which are influential on
an organizations structure are strategy, size, technology and environment (Robbins &
Barnwell, 2002: 27). Chenhall (2003: 128) adds culture of a nation and he argues that the
structure of an organization can influence the design of management control systems
(MCS). The contingency approach is frequently used in research. For example much of
the empirical MCS research follows a contingency approach to study the effect of
contingent variables on MCS design (Langfield-Smith, 1997: 207). But why is the
contingency approach so widely accepted and used?
According to Ginsberg & Venkatraman (1985: 421) the contingency approach is
so popular because it clearly states that there is no optimal way to conduct business for
every organization. Tosi & Slocum (1984: 9) argue that this logic is very appealing and
makes sense. In the agriculture there seems to be diversity in the way arable
entrepreneurs manage their farms. There are differences in the way they seed, harvest and
protect their crops. Some arable enterprises have fulltime employees other have more
machinery. It seems that the contingency approach can help to understand this diversity
by explaining and understanding what kind of circumstances influence the structure of an
organization. The strategy has a fundamental influence on how organizations are
structured and managed (Robbins & Barnwell, 2002: 138) and needs to be considered
10
when explaining the behavior of arable organizations. This makes the contingency
approach the appropriate methodology to study the way farming strategies influence the
structure of a farm and in the end the organizational effectiveness (figure 1).
FIGURE 1
Strategy-effectiveness, version 1
Strategy StructureOrganizational
Effectiveness
The contingency approach helps to understand and establish functional relations
in the arable sector. Due to the relevance for practitioners and academics of the relation
between strategy and effectiveness, the research subject is the influence of strategy on
organizational effectiveness. In chapter 3.3.1 it is shown that strategy has a significant
influence on the effectiveness of organizations. The intermediate variable structure falls
beyond the scope of this research and is for this reason not discussed. Next the different
concepts are considered that are relevant for this research.
2.2 Concepts and Relations
In this section the concepts needed to answer the problem statement are explained. The
organizational effectiveness, key success factors, strategy and the arable sector are
discussed and defined.
2.2.1 Organizational effectiveness. According to Chenhall (2003: 135) the
dependent variable of contingency research should be organizational performance. But
defining organizational performance is not as easy as it seems. Performance is about the
effectiveness of an organization and it is conceptualized in different ways. Research often
uses economic measures to indicate the performance of organizations in studies (e.g.
Merchant, 1985: 71; Simons, 1987: 363). Tosi & Slocum (1984: 12) discuss the concept
of effectiveness in contingency theory and they conclude that ‘profitability fits nicely
with the free market, capitalistic view of the economy shared by most organizational
theorists.’ But they also state that profitability is only one concept of effectiveness. Also
Langfield-Smith (1997: 226) shows that the use of economic performance measures is
not optimal for indicating success.
Robbins & Barnwell (2002: 87) argue that an assessment of organizational
effectiveness requires a construct with multiple criteria and it should focus on the process
and the goals. They come to a general definition of organizational effectiveness: it is ‘the
degree to which an organization attains its short- (ends) and long-term (means) goals, the
selection of which reflects strategic constituencies, the self-interest of the evaluator and
the life stage of the organization’(Robbins & Barnwell, 2002: 87). A general definition of
organizational effectiveness is available but Cameron (1986: 541) concludes that it is
impossible to come to one comprehensive construct of organizational effectiveness. She
argues that the way organizational effectiveness is conceptualized is dependent on the
preferences of individuals and the organization and will differ between organizations.
11
Several approaches are available to assess the organizational effectiveness which
could be used to study effectiveness in the arable sector. To understand an organization
and its behavior an analysis of the goals is crucial (Perrow, 1961: 854). In this view the
goals are the measures of effectiveness and this is the goal-attainment approach (Robbins
& Barnwell, 2002: 69). This approach is dependable on the clarity of the goals, which is
not always the case.
The systems approach sees organizational effectiveness as the ability of
organizations to exploit their environment for valued recourses. The focus is on the
ability of organization to get the necessary resources (Yuchtman & Seashore, 1967: 898).
The problem is that important processes are often difficult to measure and the focus on
process distracts attention from the actual goals (Robbins & Barnwell, 2002: 75).
The strategic-constituencies approach focuses on the constituencies which are
important for the survival of the organization. To be effective the demands of those
constituencies need to be fulfilled, this approach has a stakeholder view (Pfeffer &
Salancik, 1978). However it is difficult to balance the most important (strategic)
constituencies with the less important ones. Another difficulty is the changing
environment that changes the demands placed on an organization (Robbins & Barnwell,
2002: 80).
Finally the balanced scorecard approach balances the different demands placed on
the organization with its capabilities (Kaplan & Norton, 1996: 56). This approach aligns
the organization with its environment and produces measures in four perspectives
(financial, customer, internal business and learning and growth). However it is difficult to
determine which demands are most important and which stakeholders are important. A
changing environment makes it even harder (Robbins & Barnwell, 2002: 85). When
studying organizational performance in the arable sector, the most appropriate approach
needs to be used. In chapter three the most appropriate method to measure performance at
arable farms is presented.
2.2.2 Key success factors. When managing or advising an enterprise it is
important to know what is critical for high performance. Through this knowledge the
execution of the strategy can be monitored and the possibilities for good results increase.
Rangone (1997: 208) states that the assessment of the effectiveness of an organizations
strategy can be performed with the help of key success measures. By measuring the key
success factors the achievement of the strategy and objectives can be evaluated (Ferreira
& Otley, 2009: 271). In the literature these factors which are important for the survival of
an organization are often called the key (or critical) success factors.
A number of definitions are available and Rockfart (1979: 85) defines it as
follows: ‘Critical success factors [...] are, for any business, the limited number of areas in
which results, if they are satisfactory, will ensure successful competitive performance for
the organization’. Boynton & Zmud (1984: 17) define the key success factors in
somewhat the same way. They state that the key success factors are the few things that
must go well to make sure success is achieved by the manager or the organization. The
key success factors are tasks or processes which are important, mandated, for an
organization to achieve high performance and they are context dependant (Sousa de
Vasconcellos e Sa & Hambrick, 1983: 367-368). Ferreira & Otley (2009: 267) state that
an organization needs to know which key factors are important for achieving
organizational effectiveness. These key factors should be brought to the attention of the
12
managers and employees and be measured to know if the strategy is executed in such a
way that the goals are achieved. The key success factors are a more concrete explanation
of the mission and vision of an organization and a part of the control structure of an
organization. The key success factors are used to make sure that the most important
elements are measured and can be attained (Ferreira & Otley, 2009: 271).
To understand performance thoroughly it is important to measure the key success
factors. Therefore, the focus in this thesis is on the measuring aspect of these factors.
Walsh (1996: 509) states that organizations measure the progress towards the
organizational goals through key performance indicators. But Walsh (1996: 511-512,
519) shows that indicators need to be distinguished in two different aspects: outcome
measures and in-process measures. This is in line with the distinction made by Kaplan &
Norton (1996: 64) that a BSC is more than a collection of key success factors and should
consist of lagging and leading indicators. Lag indicators tell if something is working well
(outcome) while lead indicators tell how something is working.
In this study key success factors are defined as a limited number of context
dependant factors that could be tasks, processes or capabilities that are measured through
leading (process) and lagging (outcomes) indicators in the BSC. They are based on the
vision and strategy of an organization and are required to attain high performance. If key
success factors fail, the overall performance is, in general, low.
2.2.3 Strategy. Strategy is a somewhat different than the other contingency
factors. Strategy is a way for managers to influence the contingency variables. The choice
of a particular strategy influences the environment of an organization. Managers have
room to position their firms in a particular environment through their strategic choice
(Chenhall, 2003: 150). But what kind of choices are there? According to Porter (1980:
126-129) it is necessary to characterize the competitors through the strategic dimensions,
such as product quality, cost position or specialization. This way it is possible to
structurally analyze the specific sector. When analyzing competing firms in one industry
‘patterns of behavior begin to emerge which suggest that these various organizational
forms can be reduced to several archetypes’ (Miles & Snow, 1978: 29).
According to Robbins & Barnwell (2002: 139) strategy is ‘the adoption of courses
of action and the allocation of resources necessary to achieve the organizations goals.’
But this is a very general definition. One exact definition of strategy does not provide the
variety which entails strategy. For this reason Mintzberg (1987) recognizes multiple
definitions of strategy and Mintzberg, Ahlstrand & Lampel (1998) distinguished different
schools of strategy. The review of these authors is done in chapter three. In the next
section the arable sector is discussed.
2.2.4 Arable sector. It is important to understand what exactly is meant with an
arable enterprise and that sector. For this reason this concept is also considered in the
framework. In the Netherlands the agricultural sector provides about ten percent
employment and contributes about nine percent to the Dutch economy in 2006 (Silvis et
al., 2009: VIII). But the arable sector is only a part of the agricultural sector. The arable
sector consists of around 9,600 enterprises with an average size of 40.6 hectare. An
arable farm grows crops like potatoes, sugar beets, cereals or onions (ABN AMRO, 2011:
10). In this thesis the terms arable farm or arable enterprise are used to refer to the type of
farm that grow crops and the farmer or entrepreneur is the person leading the farm. In
13
particular it aims at organizations which are growing seed potatoes as main product. Most
of the farms in the Netherlands are small family farms (Ondersteijn et al., 2003: 32).
2.2.5 Conclusion. Figure 2 is a visual representation of the research questions in
chapter one. It consists of the three concepts that are the subject of this research. These
concepts are studied in the context of the arable sector and are for this reason also
influenced by this sector. Based on the conceptual development, the model shows that
strategy influences organizational effectiveness and the key success factors. However the
key success factors influence organizational effectiveness also, as is argued in the
conceptual development.
FIGURE 2
Strategy-effectiveness, version 2
StrategyOrganizational
Effectiveness
Key Success
Factors
Arable sector
In the next chapter literature is reviewed which helps to understand the concepts and their
relations. The conceptual model above is the starting point of the literature review and is
updated at the end of the review.
14
3. LITERATURE REVIEW
In this chapter literature is reviewed to gain insight in the strategy of arable farms, its
effect on organizational effectiveness and the use of key success factors. The objective is
to understand these concepts and their relations. The search for literature is performed
through search engines like: Business Source Premier, Academic Search Premier,
GreenFILE and Google scholar. Literature discussed during courses attended at the
University of Groningen is used. Also the database of the University of Wageningen,
because of its specialization in agriculture, and additional business literature (Rabobank,
ABN AMRO, Ministerie LNV and LEI) is used.
This chapter starts with discussing organizational effectiveness, followed by a
discussion of the key success factors. Thirdly, the strategy literature is reviewed and at
the end a final version of the strategy-effectiveness model is presented. The literature
review is extended to all types of farms because literature about arable farms only is not
very extensive. Moreover are farms relatively comparable, they are almost all small
organizations with a natural input (crops or animals) to deliver output.
3.1 Organizational Effectiveness
The dependent variable is organizational effectiveness of farms. The purpose of this
section is to show what organizational effectiveness is and how it is used and measured in
arable farms. First of all it is important to know the characteristics of organizational
effectiveness. Next the organizational effectiveness of small and medium enterprises
(SME’s) and of farms is discussed. Effectiveness in SME’s is included because the
existing literature of organizational effectiveness in farms is not very extensive. This
section is ended by a discussion about the BSC and its appropriateness for arable farms.
3.1.1 Characteristics of organizational effectiveness. It is difficult to find a
comprehensive definition for organizational effectiveness, as is shown in chapter two.
The definition of organizational effectiveness differs between organizations and sectors.
Nonetheless there is agreement about some aspects crucial for defining organizational
effectiveness. Cameron (1986: 540) describes these areas of agreement and first of all she
points out that organizational effectiveness is the central construct for organizational
sciences. Consensus is also reached about the diversity of the construct. Organizational
effectiveness is different for organizations and even changes over time in one
organization. Quinn & Cameron (1983: 49) state that a change in an organizations life
cycle stage changes the criteria of effectiveness of that organization. This leads to the fact
that no best set of indicators can be achieved for organizational effectiveness in general.
Cameron (1986: 541) states that the indicators for organizations effectiveness are based
on the preferences of individuals. And these preferences differ between individuals and
actors linked to an organization. Thus organizational effectiveness is characterized by a
huge diversity but it is a very important concept.
Cameron & Whetten (1983: 270-273) provide guidelines to assess organizational
effectiveness. According to them there are seven important issues for an organization to
define their effectiveness: from whose perspective, which activities, what level of
analysis, the purpose, the timeframe, what type of data is used and what the reference is
to compare the effectiveness. By incorporating these characteristics a comprehensive
15
definition of organizational effectiveness can be given for a particular situation. This is
consistent with the concept defined by Robbins and Barnwell (2002) stated in the
theoretical framework. There the organizational effectiveness is seen as the achievement
of the short and long term goals of an organization and these goals reflect different
strategic constituencies and the perspective of the evaluator.
When studying organizational effectiveness these characteristics need to be
incorporated. The BSC is a way to incorporate these characteristics. It is a tool to balance
short and long term goals, the outcomes and drivers of performance, objective and
subjective measures (Kaplan & Norton, 1996: 56). It achieves it through four
perspectives (financial, customer, internal process, learning and growth). The BSC seems
to provide the diversity and attention for multiple aspects needed to assess organizations
effectiveness in a constructive manner. Before exploring the usefulness of this tool it is
important to know how organizational effectiveness is studied and measured in SME’s
and farms.
3.1.2 Organizational effectiveness in SME’s. Paige & Littrell (2002: 315) state
that success in SME’s often is defined in tangible extrinsic outcomes such as financial
objectives. Kuratko, Hornsby & Naffziger (1997: 31) find in their study that
entrepreneurs not only try to achieve extrinsic goals (increasing personal wealth and
income) but also intrinsic goals such as excitement, recognition, challenge,
accomplishment or growth. Also employment autonomy and security for the family are
often cited goals for the entrepreneur. This last reasoning is confirmed by Langen-Fox
(1995: 215-216) in her study of female entrepreneurs. She found that more than halve of
the female entrepreneurs in their sample placed high values on family and economic
reasons to be an entrepreneur. Langen-Fox called these the pragmatic types, other types
found were managerial (high on internal control) and need achiever entrepreneurs. From
this research it becomes clear that there is diversity in goals for SME’s, with a distinction
between extrinsic and intrinsic goals for entrepreneurs.
3.1.3 Organizational effectiveness in farms. Arable farms are not the same as
every other SME. Specific literature about farms is needed to find out if organizational
effectiveness is seen differently in farms. Walter (1997: 64) shows in his study of
American farmers the diversity in success perspectives of farmers and proposes four
different perspectives: steward, manager, conservative farmer and agrarian farmer
(Walter, 1997: 55-65). The steward links success to taking care for his land and the
environment. This derives from a moral responsibility of being part of the natural system
but also derives from economic interest for taking care of the families interest. The
manager sees successfulness through the analysis of the business. Success is having an
efficient business through detailed records and production figures. Good management of
the farm is the goal of this type of farmer. The conservative farmer wants to maintain a
viable enterprise for the family and has an explicit long-term orientation. Community
involvement is important while a business and efficiency perspective is less present. The
agrarian farmer finds success in the intrinsic reward of living and being a farmer.
Farming and family are important and time needs to be invested in both. The success
typologies show that land, environment, economic, efficiency, long-term continuation,
family and intrinsic rewards all can be incorporated in the effectiveness of an arable farm.
The diversity of goals farmers pursue in their business is also found by other
researchers. Maybery, Crase & Gullifer (2005: 67) find in Australia three different
16
perspectives (economic, conservative, lifestyle). While Robinson, Freebairn, Bell & Huda
(2003) found that the pride of ownership is the most important goal of Australian
farmers. Other goals are making a satisfactory income, self-respect by their work, having
a challenge and a future income. Mäkinen, Rantamäki-Lahtinen, Ylätalo & Vehkamäki
(2009: 187) state that the goals of farmers can have different grounds. It could be
survival, financial or more subjective. According to Mäkinen et al. (2009: 187) the
financial measures of success are seen as good fit of the goal of profit maximization. But
they argue that there are a number of findings indicating that the rural entrepreneurs are
not (only) seeking profit maximization. Intrinsic aspects of the job (enjoying the work,
independence or a good reputation) are often seen as more important than profit
maximization (Gasson & Errington, 1993: 97-99; Komppula, 2004: 21). Gasson (1973:
527) provides four perspectives of the objectives of family farms. These reward
perspectives are instrumental (satisfactory income, expanding business working
conditions), intrinsic (working in the field, variety of tasks, independence), social values
(farmer prestige, belonging to a farming family) and expressive (personal fulfillment,
pride of ownership, doing a worthwhile job).
The common factor in the arguments of all these researchers is the diversity of
goals of farmers. Another relevant aspect for farms and their effectiveness is that arable
farms in the Netherlands are mostly family farms. Goals of the farms need to balance the
organizations and family interests (Lourenzani et al., 2005: 289). The goals need to
provide an acceptable economic income and take the lifestyle of the family in account
(Mäkinen et al., 2009: 187). This also increases the diversity of goals arable farms
pursue.
3.1.4 The Balanced Scorecard. It is clear that there is a great variety in how
organizational effectiveness is defined by entrepreneurs in the agriculture as well as
SME’s in general. This could be the reason for the growing attention for the BSC in
SME’s and farms. The BSC can be used to balance the different and competing
objectives in an organization (Sundin, Granlund & Brown, 2010: 234). Developing a
BSC aligns the organization with its environment, by developing and implementing
strategy. The BSC is a tool to see if the goals and objectives are achieved (Robbins &
Barnwell, 2002: 81).
Kaplan & Norton (1996: 57-64) developed the BSC and they proposed four
perspectives. Because the financial and customer perspective are generic they state for
these perspectives actual concepts. For the internal business process and learning and
growth perspectives guidelines are stated because they are dependent on organizations
specific characteristics. In table 1 the recommendations of Kaplan & Norton (1996) are
presented.
TABLE 1
The BSC perspectives (Kaplan & Norton, 1996)
Financial Revenue growth and mix, cost reduction, productivity
improvement, asset utilization, investment strategy
Customer Product service attributes, customer relationship, image and
reputation
Internal business
process
The most important internal processes in which the organization
must excel. Measures focus on the internal processes with the
greatest impact on the objectives in the customer and financial
17
perspectives. This perspective incorporates both the long-wave
innovation cycle as well as the short-wave operations cycle.
Learning and growth Learning and growth occurs through people, systems, and
organizational procedures
Gumbus & Lussier (2006: 410) state that the BSC is appropriate for SME’s.
Entrepreneurs should make objectives and targets for each of the perspective of the BSC.
They should measure those targets to see if the stated objectives are achieved. SME’s can
benefit from the use of the BSC but there is not much research done towards the use of
the BSC in SME’s (Gumbus & Lussier, 2006: 422). Is it possible to use the BSC in arable
farms to measure performance, and if so, how?
According to Noell & Lund (2002: 1) the changing environment in the agriculture
calls for more professional management of the farm. It increases the need to understand
the role of strategy in arable farms and its effect on the performance. Lourenzani et al.
(2005: 295) state that the BSC is an efficient tool to control the financial and non-
financial performance of the farm. Noell & Lund (2002: 14) argue that the BSC is an
effective tool to assist the management of a farm and that it is implementable in farms.
According to Shadbolt (2007: 867) the BSC provide ‘an ongoing learning opportunity for
the farm as it facilitates in-depth discussion about the business’ vision, strategy and
critical success factors and translating them into specific measures and objectives.’
Lourenzani et al. (2005: 292-294) developed the different perspectives of the BSC
applied to small- and medium sized farms. For arable farms the financial perspective
would include generating income through crops and other activities and getting a high
price for the products with low costs. The customer perspective would consist of a
competitive price and an attracting product which is delivered by the farms through
efficient production. The production should be efficient and technological up-to-date and
able to deliver the wanted quality. The learning and innovation perspective is aimed at
the farmers management qualities and fulfilling the families goals.
The BSC seems an appropriate tool for assessing the effectiveness of arable
farms. It is obvious that effectiveness of an arable farm is a multiple construct consisting
of different perspectives. When studying organizational effectiveness of arable farms
different perspectives are needed. Only focusing on profits is not enough and other
(intrinsic) goals should be included. Noell & Lund (2002: 15) argue that farmers need to
extend the customer perspective with a stakeholders perspective. But when using the
BSC as an measurement tool for organizational effectiveness it is important to be aware
of its limitations. Nørreklit (2000: 82) argues that the relationships in a BSC are not
causal but rather logical which can lead to faulty assumptions of performance drivers.
When developing a BSC the linkages between the perspectives should be considered
carefully to make sure the right causal factors, leading to high organizational
effectiveness, are chosen. The second criticism of Nørreklit (2000: 82) is about the
rooting of the strategy in the organization and environment. The lack of rooting of the
strategy could lead to a gap between the intended strategy and the one executed. Nørreklit
(2002: 83) argues that to improve the BSC regarding these two flaws, coherence between
the perspectives is needed and a dialogue about the strategy is needed to increase the
awareness of the employees.
To sum up, the effectiveness of farms consists of multiple perspectives, extrinsic
and intrinsic aspects, short- and long-term goals and it compasses social and family
18
aspects. The BSC is a tool that can measure the diversity of the effectiveness of farms
because it has multiple perspectives. But what should be measured, which aspects are key
to the survival of an arable farm? In the next section key success factors are discussed.
3.2 Key Success Factors
In the following section the role key success factors play in organizations and the relation
with organizational effectiveness and strategy is discussed. When the role of key success
factors is explained, agricultural literature is reviewed to find out which key factors are
important for arable farms. This section ends with a discussion of the key success factors
that are found and their relation with a BSC.
3.2.1 The role of key success factors. In the conceptual development of key
success factors (p. 12) is explained that these factors are based on the vision and strategy
of an organization. They are measured as indicators distinguished in leading and lagging.
The view of a company on its own key success factors determine the measures a
company has in place in its BSC (Kaplan & Norton, 2005: 179). The BSC is more than a
collection of key success factors and should consist of lagging and leading indicators
(Kaplan & Norton, 1996: 64). Lead indicators are mostly found in the internal business
and learning and growth perspective of the BSC (Kaplan & Norton, 1996: 69-76). Noell
& Lund (2002: 10-11) argue that the lagging indicators are generic and similar for most
farms while the leading indicators differ more between farms.
Measuring key success factors also benefits organizations in another way.
Martinez, Pavlov & Bourne (2010: 78) state that reviewing performance gives
organizations the opportunity to learn. This learning occurs on two levels: single- and
double loop learning. The first is the process of carrying on the current way of working
and only adjusting it by taking corrective actions. The second one is the process of
questioning the underlying policies and objectives of an organization leading to a new
process (Argyris, 1977: 116). These adjustments influence the strategy and create a
feedback loop between the key success factor and performance with strategy. Noell &
Lund (2002: 13) state that single and double loop learning is important for farms. Double
loop learning is important because farmers need to respond to developments and make
strategic changes.
Key success factors need to be incorporated, through leading and lagging
indicators, in a BSC to measure an arable farms performance. These leading indicators
create understanding of possibilities of improvement. But which key success factors are
there for farms? At the end of this section the distinguished key success factors are placed
in the context of the BSC.
3.2.2 Productivity, costs and quality. An important factor for success for arable
farms is their productivity. Because demand for food increases and available arable land
decreases, it is important to enhance the productivity per hectare (Bos et al. 2007: 1-2).
Especially in the Netherlands the productivity per hectare is very important because of
the very high price of land (CBS, 2000: 10). Research at dairy farms shows that
economies of scale are very important for attaining high performance (Mosheim &
Lovell, 2009: 792). Economies of scale are achieved by increasing land or stock.
Rasmussen (2011: 11) emphasizes the need of scale enlargement for improving the
productivity. Research done by Venema, Prins, de Bont, Ruijs, Durksz, & Posthumus
19
(2009: 97) showed clear differences in growing costs for seed potatoes. And these costs
were lower for the entrepreneurs with more hectares. However this research also showed
that low costs are achieved by entrepreneurs with less hectares of arable land. Scale
enlargement seems to enhance productivity and lower the costs but is not mandated to
achieve low costs. The quality of Dutch crops is high and this high quality makes the
products of Dutch arable entrepreneurs appealing (Venema et al., 2009: 99). In the
Netherlands productivity is important and reducing costs is something every entrepreneur
should pursue. But the high quality of crops in the Netherlands creates a competitive
advantage for arable farmers.
3.2.3 Sustainability and stakeholders. To be successful, resources like soil and
water should be healthy. This is achieved by exerting sustainability through the use of
fertilizer and other farming actions. In the agricultural literature sustainability is an
important issue. Goulding, Jarvis & Whitmore (2008: 677) conclude that farmers should
focus on being sustainable and meeting environmental targets. These will become ever
more important because consumers increasingly want products which are produced with
minimal environmental costs. In the Netherlands sustainability has been viewed through
the ‘people, planet, profit concept’ (Bos et al., 2007: 2). This way the interests of
different stakeholders are considered which is common feature in the Netherlands
(Bakker, Evers, Hovens, Snelder, & Wegeman, 2005: 75). Bos et al (2007: 2) state that
this stakeholder view can be achieved by taking in account the rural community and
economy, the use of water, soil fertilizer and crop protection. According to Rabobank
(2010: 38) agricultural entrepreneurs should exert good stewardship over their natural
resources and assets to attain sustainability. Parra-Lopez, Groot, Carmona-Torres &
Rossing (2008: 546) show that in the Netherlands (and in Europe) organizations need to
understand their stakeholders and the public demands. They show for example that Dutch
citizens value environmental health, landscape quality and nature value (in descending
order). But research showed that arable and dairy farmers do not change their strategy
when sustainability policies change (Wageningen UR, 2011: 62).
3.2.4 Entrepreneur, knowledge and learning. Guan & Oude Lansink (2006: 654)
show the importance of personal characteristics of entrepreneurs. The human resources of
a farm are as important to the success of a farm as land and capital (Jose & Crumly,
1993: 121). Rougoor, Trip, Huirne & Renkema (1998: 270) argue that the management
capabilities of an agricultural entrepreneur influence the performance of their business.
ABN AMRO (2010: 9) give characteristics of successful entrepreneurs: initiative,
cooperative, creativity, information seeking, persistence, boldness, organizational
capacities and self-criticism. According to Harris (2011) forward thinking family farms
are performing better than the rest in Britain. The personal characteristics and capabilities
of an entrepreneur are important drivers of success (Rougoor et al., 1998: 263).
It is clear that the entrepreneur is an important driver of organizational
effectiveness. Although there are differences in the skills an arable farmer posses, it is
possible to learn new things. Ondersteijn et al. (2003: 49) conclude that education is an
important driver of improvement of farms and for performance. Others found that
financial training alone has a weak impact on performance (Jackson-Smith, Trechter &
Splett, 2004: 144). It seems that there are possibilities to improve the capabilities of a
farmer in such a way that performance will improve. Knowledge can also be derived
from other sources. The top farmers in England use advisory organizations to get good
20
business advice (Harris, 2011). Thus besides increasing knowledge through training,
using advisory organizations also seems to have a positive influence.
Aside from personal characteristics and education, innovation is a possible
success factor (de Lauwere, 2005: 229). In the Netherlands arable farming is
technological advanced and research to enhance the sustainability of agriculture has led
to the increasing use of decision support systems by Dutch farmers (Bouma, 2003: 461).
The long-term continuity of the organization becomes more important and technology
can assist in securing a sustainable future. According to Venema et al. (2009: 98)
technological innovations can be more interesting when a certain size is reached because
new technology is expensive. In this case cooperation can be a way to benefit from
technological innovations.
3.2.5 Cooperation. Sometimes it could be the case that it is not possible for a farm
to increase the land, enhance the productivity or buy the newest technology. When that is
the case an arable farmer could cooperate with other farmers. Working together can be an
excellent way to achieve scale enlargement. The optimal amount of hectares for seed
potatoes is around 40 or 50 hectares (Venema et al., 2009: 97), but this is difficult to
attain because the soil in the Netherlands is very expensive. Through cooperation with
other farmers this size can be reached and economies of scale can be achieved.
Cooperation with science institutions can enhance the knowledge which makes it easier
to enhance productivity or sustainability (ABN AMRO, 2010: 6). Cooperation can be
helpful in other ways too. It increases the effectiveness of agricultural enterprises, their
flexibility and it lowers the costs (Fortescue, 2005). Cooperation can help to coordinate
markets and exert control over other parties in the market. Cooperation challenges
managers of agricultural enterprises in how they organize, direct and finance such
systems (King, 1992: 1217). According to Harris (2011) the best performing farmers
cooperate with each other. It shows, from surveys, that this group is performing better at
the bottom line. Cooperation can be a way to increase productivity, efficiency,
knowledge or power.
3.2.6 Finance. Debt is used by organizations to invest in property they otherwise
could not buy, however it also puts pressure on a firm to pay its obligations regarding the
debt (Hillier, Ross, Westerfield, Jaffe & Jordan, 2010: 3, 435). When managing a farm,
entrepreneurs should consider their finances. Davies (1996: 187) shows in a study of
British farms that there is a relation between the failure of farms and the insolvency of
those farms. His advice is that farm managers should be careful in relying at the
appreciation of land value to stay in business and farmers should not accumulate a high
indebtedness (Davies, 1996: 192). But according to Guan & Oude Lansink (2006: 654),
long-term debt seems to have a positive effect on productivity growth through the risk
perceptions and the personal characteristics of a person. The influence of financial
structure on the performance seems to be quite complex.
3.2.7 The key success factors in the BSC. The review above shows a number of
key success factors for arable farms. To know and understand the performance of a farm
thoroughly, these factors should be measured. This enhances the understanding why an
arable farm is performing at its current level and where possibilities lie for improvement.
It is important to distinguish these factors in lead and lag indicators and place them in the
right perspective of a BSC for farms. In table 2 the factors discussed in this section and
the ones earlier about the BSC (3.1.4), are placed in the perspectives of the BSC. The
21
distinction in leading and lagging indicators is made in chapter five when the research
discussion takes place.
TABLE 2
Key Success Factors for arable farms
Perspective Concepts
Finance Income, costs, finance (debt), productivity
Customer/stakeholder Customer & stakeholder management, quality, competitive price,
sustainability
Internal Business Technology, cooperation, fertile soil,
Learning & Growth Personnel, learning, innovation, management qualities
3.3 Strategy
In this section the strategy and its effect on an organization is discussed. An appropriate
understanding of strategy is needed when the BSC is used to measure performance. First
of all the relation of strategy with organizational effectiveness is discussed. Next the
strategic management literature (3.3.2) and the agricultural literature (3.3.3) are reviewed.
These discussions increase the knowledge about strategy and the specificities of strategy
in the arable sector. The discussion helps with the generation of the strategic concept in
the arable sector in section 3.3.4. The definitions of the categorization made by different
authors are not discussed because it is beyond the scope of this research.
3.3.1 Influence of strategy on organizational effectiveness. Porter (1980: 5)
states that strategies are used to create a position for an organization which it can defend.
He argues that strategies are needed to survive and influence the competitive forces of an
organization in a positive way. Organizations use strategies to survive in the market. The
strategy an organization follows significantly influences the performance of an
organization. It appears that differences in strategies lead to differences in performance
(Hambrick, 1983: 17). Cameron (1986: 107) states that strategy, together with the
environment, has the largest impact on organizational effectiveness. Strategy also has an
effect on organizational effectiveness when it is combined with other variables (resource
sharing, controls) (Govindarajan & Fisher, 1990: 279). Research showed that general and
strategic management approaches can be used for farm businesses. It even shows that
successful agricultural entrepreneurs use strategic management concepts (Harling &
Quaile, 1990; Harling, 1992; as stated by Ondersteijn et al., 2003: 33). Strategy
influences the performance but this effect should be reviewed by organizations. Martinez,
Pavlov & Bourne (2010: 71) show that it is important to review the strategy to find out if
it is leading towards the goals of the organization. Reviewing the strategy demonstrates
the viability of the chosen strategy. The review is done by measuring the key success
factors which is discussed above. Strategy influences organizational effectiveness but it is
very diverse. To understand the effect on organizational effectiveness it is important to
zoom in on this diversity.
3.3.2 The diversity of strategy. Although strategies cannot be captured in one
single concept there is agreement on a number of aspects. Chaffee (1985: 89) states that
strategies are used to cope with the environment and that strategic decisions are complex.
Strategy is about taking action and also about the process of deciding and implementing
22
those actions. Strategy can be intended or emerging, realized or not, it can exist at
different levels and it involves conceptual as well as analytical thoughts. Strategy and the
decisions influence the performance of an organization. These agreement points do not
enhance our understanding of strategy as much as needed. For that reason a review of the
literature is carried out to understand this concept better. Two important contributions to
the strategy debate are discussed: Miles & Snow (1978) and Porter (1980) (Robbins &
Barnwell, 2002: 147) and secondly the diversity in this field is shown. These discussions
create insights in how strategies are formed and which concepts are important. But first
of all the different forms in which strategy appears are discussed.
Mintzberg (1987: 11-17) argues that strategy can be a ‘plan, ploy, pattern,
position or a perspective’. The definitions are listed in the table below.
TABLE 3
Strategy definitions Mintzberg (1987)
1. Plan: strategy is made in advance of the actions and the strategy is developed
consciously and purposefully.
2. Ploy: strategy involves specific tactical maneuvers executed to be ahead of
competitors.
3. Pattern: strategy is the consistency of behavior of an organization which can be
intended or not. Strategies can be deliberate where intentions are realized, but also
emergent meaning that patterns develop without planned intentions.
4. Position: strategy is the way to position an organization in their internal and external
context, the environment.
5. Perspective: strategy is shared by the organizations members through their intentions
and actions.
According to Mintzberg (1987: 20-21) these definitions are complementary and add to
the understanding of strategy. They help to understand and manage the process of
forming strategy.
Miles & Snow (1978: 21-23) state that the process of how an organization copes
with the conditions in the environment is complex. This process, the adaptive cycle, is
distinguished in three problems that management continually need to solve. First of all
there is the entrepreneurial problem. This consists of determining the organizations
domain by choosing a specific product or service and a target market or segment.
Management must commit resources to a particular product-market domain to achieve
the goals related to this domain. The second problem is the engineering problem that
consists of developing and implementing an actual system for the solution of the
entrepreneurial problem. It involves the selection of the appropriate technology (input-
transformation-output process) to produce the product for the market and to ensure a
system of information, communication and control to make the process efficient. The
administrative problem provides stabilization and reduces the uncertainty in the process
that is developed in solving the entrepreneurial and engineering problem. Besides this
rationalizing of the process, the administrative problem also involves innovation.
Management should create a process that is able to direct and monitor the current process
and ensures future innovative actions. The administrative process is a lagging as well as a
leading variable in the process of adaption.
23
Porter (1980: 34-35) develops three generic strategies to help an organization
create a position which enables the organization to outperform competitors in the long
run. The chosen position helps an organization to use its capabilities in the best way to
defend itself against the competitive forces. Through strategic moves and by anticipating
changes in these forces, the balance of these forces is influenced in favor of the
organization (Porter, 1980: 29-30). The best strategy for an organization is a unique one
adapted to the particular situation of that organization. Three generic strategies are
defined that should be translated to a more specific level for particular kinds of industries
(Porter, 1980: 34). The generic strategies are: overall cost leadership, differentiation and
focus. These strategies differ in their strategic target which can be industry wide or one
particular segment, and in their strategic advantage that can be the uniqueness of a
product or its low costs (Porter, 1980: 35-39).
Mintzberg et al. (1998: 8) carried out a review of the strategy field to show the
‘different angles, orientations and tendencies.’ Their division in schools helps to
understand what the role of strategy is and can be for arable farms. But rather than
discussing all these schools in complete detail, the goal here is to show and understand
the variety that underlies the strategy formulation process. According to them the strategy
field consists of a design, planning, positioning, entrepreneurial, cognitive, learning,
power, cultural, environmental and configuration school. These are presented in table 4.
TABLE 4
Schools of thought in the strategy field (Mintzberg et al. 1998)
1. Design school: strategy making aims to
establish a fit between the organizations
internal capabilities and the external
possibilities. A formulated strategy should be
explicit and act as a perspective for all
organizations members (p. 24, 29-32).
2. Planning school: strategy is carefully
planned and guided by formal structures.
Strategy is an explicit path with attention for
objectives, programs, budgets and
accompanying operating plans (p. 58).
3. Positioning school: strategy is a generic,
identifiable position in the economic
marketplace which is very competitive and is
chosen through analytic calculation (p. 85).
4. Entrepreneurial school: strategy is a
perspective, the sense of direction and vision
of a single leader. This vision is ‘a mental
representation of strategy, created or at least
expressed in the head of the leader.’ This
vision acts as a guide for the long-term while
the details evolve during the process of
implementing the strategy and responding to
the environment (p.124-125, 143).
5. Cognitive school: this school recognizes
that strategy formation is a process of
cognition. Strategy formation is happening in
the mind of the strategist and emerges as a
perspective in their mind through concepts,
schemas and frames (p. 170).
6. Learning school: strategy is a learning
process. The formulation and implementation
of strategy are intertwined. Learning emerges
through the process of reviewing past
behavior and is managed by the leaders.
Strategies at first are patterns of the past, later
becoming plans and finally a perspective
guiding organizations (p. 208-209).
7. Power school: the strategy process is
shaped by power and politics inside the
organization and in its environment. These
8. Cultural school: this school considers
strategy formation as a process which is
based on the beliefs and understandings of
24
strategies are emergent and take the form of
ploys and it is a process of negotiation. It
involves political games between individuals
or groups with different interests (micro
power) and between networks or alliances of
an organization in its environment (macro
power) (p. 260).
the organizations members which they share
through social interaction. Strategy is
considered to be a perspective and deliberate
although not always being aware of it (p.
267-268).
9. Environmental school: the environment
is the central actor for the formation of a
strategy. The strategy should adequately cope
and react to the environmental forces. If an
organization fails to respond effectively it
will die (p. 288).
10. Configuration school: this school argues
‘each school at its own time, in its own
place.’ It describes the organization and its
context (configuration) and the strategy
making process (transformation). Strategic
management should be capable to create
stability but, when needed, manage
transformation. Strategy making is a diverse
process consisting of concepts of the above
nine schools (p. 302, 305-306).
The first three schools are prescriptive of nature, how strategies should be formulated.
The next six schools are more concerned with describing how strategies are made. The
configuration school combines all these schools (Mintzberg et al., 1998: 5-7). These ten
schools describe different parts and definitions of the strategy making process and should
be incorporated when creating a strategy. All these schools contribute to strategy but
every strategy process is different. Sometimes it is a more individual process than a group
process, for example in the case of a small firm. This means that in a strategy process not
every school has the same importance (Mintzberg et al, 1998: 367).
3.3.3 Agricultural strategy literature. To understand the role of strategy in arable
farms, agricultural literature is considered. In this literature archetypes are developed,
called styles of farming. Van der Ploeg (1994: 18) defines a farming style as responses
from an entrepreneur to the environment, the markets and the technology. It is a
systematic and continual effort to create congruence in the farm (van der Ploeg, 1999:
110). The term is used to identify groups of arable entrepreneurs who have the same way
of doing and thinking in their business (Schmitzberger, Wrbka, Steurer, Aschenbrenner,
Peterseil & Zechmeister, 2005: 278). These styles are various ways to achieve the goals
of a farm. According to Vanclay, Howden, Mesiti & Glyde (2006: 62-63) the styles are
strategies of farming which guide entrepreneurs in doing their business. In the following
section a number of contributions to the strategy debate in the agriculture are discussed.
This increases our understanding of the way arable entrepreneurs can influence (through
strategy) the effectiveness of their farms.
Van der Ploeg (1999: 127) investigated dairy farms in the Netherlands and
distinguishes six different styles of farming (appendix I). His work is used as a basis to
study agriculture throughout the world (Vanclay et al., 2006: 61). These styles are based
on two dimensions (van der Ploeg, 1994: 8; van der Ploeg, 1999: 112-113). First a choice
should be made regarding the use of technology and the way resources are conversed into
value. Is there a focus on the use of technology or rather on human skills? The second
dimension is the mobilization of resources. Is the farm dependent on the market for labor,
capital, land and cows or are these internal available (autonomous of the market).
25
Wiskerke (1997) conducted an interesting dissertation on arable farming in
Zeeland, a southern province of the Netherlands. Wiskerke (1997: 73-76) distinguish six
different farming styles in the arable sector: kilo farmer (high kg revenues), machinery
farmer (mechanization of the process), thrifty farmer (reducing costs), grower
(optimization of the process), labor intensive farmer (labor creates added value) and the
biological farmer. The categorization of Wiskerke (1997: 66-69) is based on three phases
of the production process of arable farms. These phases consist of two extremes and
farmers can choose a point somewhere in between.
First of all arable farms need to mobilize their resources of which the soil is the
most important one. To grow crops the soil needs to be fertile and this is done by the
farm self or through the market. Farms ensure a fertile soil themselves through crop
rotation and growing crops that place a low burden on the soil (e.g. wheat, cereals or
grass). This is called the extensive path. The intensive option to ensure a fertile soil is
with the use of the market. Fertilizer is bought and additional land is rented or exchanged.
The second step is to convert the resources into products. The differing aspect here is
how technology is used at an arable farm. A farm can use machines to reduce labor costs
or instead use labor because they consider labor as key to adding value. Finally the
products need to be commercialized. A farmer can decide to produce for broad markets
by mass production or a farmer can produce a more unique product for specific (niche)
markets. In mass production the farmer does not really add value while the production for
specific niches implies a high degree of added value to the products.
Commandeur (2006: 116) studied pig farms in the Netherlands and also finds
differences in farming styles there. The differences are based on the perspective a farmer
has on the labor productivity and if the farmer wants to increase productivity (through
intensification or growth). Furthermore the scale of the farm and the expectation for
revenue (staying in business or making real profits) is a distinguishing factor
(Commandeur, 2006: 117).
In Austria farming styles are studied by Schmitzberger et al. (2005: 277). They
investigated arable farmers, winegrowers, dairy farmers and some mixed forms. They
distinguish eight styles of farming (appendix II). The farming styles they found were
based on economic, social and attitudinal aspects. ‘Economic criteria included input of
labour time and production means, machinery, past and future farm development,
economic situation and dependency from subsidies. Criteria related to the personality of
the farmer comprised age, education, future perspectives (succession), attitude towards
agriculture, attitude towards landscape and nature and their conservation, and landscape
perception’ (Schmitzberger et al., 2005: 278).
Marsden, Whatmore, Munton & Little (1986: 273) made a categorization of farm
businesses based on the economic centrality in a farm. That is the importance of financial
income of a farm for farm families in England. They show that the economic centrality
can be very diverse. Farmers can receive only a small part of the income from farming
because they are part-time, retired or hobby farmers. It could be the case that not enough
is earned and that farmers are taking all possible actions to survive. Farms can be used as
investments in which they are only a part of a larger asset portfolio (Marsden et al., 1986:
276-278). The dependency on income from the farm influences the decisions of the
entrepreneur.
26
3.3.4 Arable sector versus strategic management literature. The discussion of
the strategic and the agricultural literature provides the basis for developing a strategic
concept for arable farms. The dimensions discussed in section 3.3.3 add value to the
strategic concept because arable farms are different than other organizations due to the
natural input (crops, soil) and the fact that most farms are small family businesses. The
strategy concept in section 3.3.2 must be supplemented with these specific aspects to
make the concept suitable for the arable sector. The purpose is to find the dimensions
specific for strategy formation in arable farms.
The starting point for strategy development is the choice for a target market and
product according to Miles & Snow (1978) and Porter (1980). Seed potatoes are the main
product for arable farmers because they generate the most money. Other crops are also
included to differentiate the ways of income and to rotate the crops on the soil to ensure a
healthy soil. The strategic decision here is not as much about the choice of specific crops
but more about if and how to add value to a product. Should the market be targeted
through mass production or through unique products with a high degree of added value
for specific markets? This is comparable to the strategic target in the model of Porter
(1980: 39) that differentiates strategies in industry wide or niche. This solves the question
where an arable farmer competes but does not solve the question of how the farmer
competes.
How the farmer competes is dependent on mobilization and conversion of
resources. Because of the specific characteristic of the arable sector, dependent on natural
inputs and the high degree of family farms, the determinants presented by van der Ploeg
(1999) and Wiskerke (1997) regarding the process are followed. The strategy is
determined by mobilizing the resources (intensive or extensive path) and converting the
resources into real products. The conversion into products is done through a process
which involves a combination of technology (machines) and skill (human labor). These
two decisions determine what the production process of a farmer is. This is similar to the
engineering problem stated by Miles & Snow (1978: 22) about the process of producing.
Decisions relating controlling the current way of doing business and innovations
for future success (Miles & Snow, 1978: 22-23) seem to be missing as a strategic
decision in the arable literature. Authors acknowledge the fact that innovation and
learning is important (section 3.2.4, p. 19) but do not incorporate it in the strategy debate.
Only goals of staying in business or making profits are stated. There is a lack of
awareness in the arable sector to control achievement of the goals and to innovate the
farm. However this needs to be incorporated in the strategy development of farms.
Some of the aspects that are discussed by Mintzberg et al. (1998) in section 3.3.2
need to be included in the strategy of arable farms. Strategy making for arable farms is a
more individual process of the entrepreneur in his own mind. The strategy needs to fit
within the preferences and attitude of the farmer. Furthermore the organizational
environment is important for farmers because it determines the context of the arable farm.
Also the learning aspect is important in the strategy and farmers need to consider it when
developing the strategy. Furthermore farmers can cooperate with other farmers and
parties to seize certain benefits (macro power). The discussion above shows the
dimensions of strategy for arable farms and are summarized in table 5.
27
TABLE 5
Strategic decisions
Subject Factor
Where to compete Strategic target
How to compete Mobilization of resources; Conversion into
products
How to stay successful Controlling and innovating (learning)
Responsibility for the strategy process The entrepreneur (preferences and attitudes)
The context of the farm Environment
The relations of the farm Macro power
By following the dimensions proposed above, the strategic management determinants are
specified for an arable farm. In the next section the literature review is summarized and a
framework is presented.
3.4 Conclusion: the Strategy-Effectiveness Framework
In this chapter three concepts are discussed: organizational effectiveness, key success
factors and strategy. These concepts are investigated in the context of arable farms and
the literature review resulted in a number of findings that answer the research questions
stated in chapter one.
The concept of organizational effectiveness for arable farms consists of multiple
objectives and multiple perspectives (p. 17). This way the demands of different
stakeholders can be considered. It should have short and long-term goals and the goals
should be extrinsic (financial income) and intrinsic (lifestyle of a farmer, independence,
challenge). When setting their goals, arable entrepreneurs need to include family and
social aspects. Organizational effectiveness at arable farms is a diverse concept that
consists of different factors. The BSC is adequate to capture this diversity for farms and
can be used to measure performance. In chapter five a BSC for arable farms is presented.
Secondly the key success factors (p. 12) are discussed. For these factors indicators
are set up which are distinguished in leading and lagging indicators. Having indicators for
the processes (leading) and outcomes (lagging) increases the understanding of the
performance. Measuring helps to understand which key success factors are doing well
and which needs to be improved. This helps to give feedback on the current way of
working and the followed strategy. By measuring the key success factors an organization
can learn what it should improve. The key success factors for arable farms are related to
the perspectives of the BSC and presented in table 2 (p. 21).
Strategy is discussed by reviewing general strategic management literature and
agricultural literature. Strategy has an impact on the effectiveness of farms and is very
diverse. The relevant dimensions for arable farmers when developing their strategy are:
strategic target, mobilization and conversion of resources, controlling and innovating the
process, the entrepreneur, the environment and macro-power. These dimensions are
developed by adjusting the strategic concept in the strategic management literature in
such a manner that it fits in the arable sector and is presented in table 5 (p. 27).
28
These three key concepts and their relations are presented in the framework
below. The framework answers what the concepts mean for the arable sector and how
they relate with each other and are based on the discussion above.
FIGURE 3
Strategy-effectiveness framework, final version
Controlling and
Innovating
Entrepreneur
Environment
Mobilization and
Conversion
Key Success Factors
Strategy of
Arable Farm
Effectiveness of
Arable Farm
Strategic
Target
BSC
1
23
4
Leading LaggingMacro power
Extrinsic/Intrinsic
Society/Family
Multiple perspectives
Short- and long-term
There are four causal relations in the framework. First of all strategy has an influence on
effectiveness of the farm (1) as is shown in chapter 3.3.1. Strategy also influences the key
success factors of a farm because those factors are derived from the vision and strategy of
the farm (2). The use of key success factors, in the form of indicators, has a causal
relation with the effectiveness of a farm. When the key success factors are measured and
the performance is low on these factors, overall effectiveness is also low (3). Lastly, the
indicators and the effectiveness of the farm tell something about improvement
possibilities and act as a feedback loop which can help to adapt the strategy accordingly
(4). Furthermore the framework shows the determinants of strategy for arable farms and
how organizational effectiveness should be measured. It distinguishes the key success
factors in leading and lagging indicators and mentions the four perspectives. The factors
are not specified because they are dependent on the characteristics of a specific farm.
This chapter presents a framework that helps to understand the concepts and their
relations. In the next chapter case studies are performed to see if the framework reflects
the practice of arable farmers in the Netherlands.
29
4. QUALITATIVE ANALYSIS
In the previous chapter literature is reviewed to increase our understanding of the
relations between organizational effectiveness, key success factors and strategy. This
review provides a framework for the qualitative research presented in this chapter. The
purpose of this chapter is to investigate how these three concepts are used in practice.
First of all the methodology of this research is explained and the participants and the
cases are introduced. Next the results of this research regarding organizational
effectiveness, key success factors and strategy are presented.
4.1 The Methodology and Cases
It is important to describe the research process and the studied cases to enhance the
transparency of the methods used (Cooper & Schindler, 2006: 23; Yin, 2003: 24). The
purpose of this section is to show how the qualitative research is executed and what is
done to assure the reliability of the research.
Because I followed an internship at Acconavm there were possibilities to use
multiple sources (interviews, study groups, observations, presentations) to study arable
farms. Multiple sources of evidence are needed necessary to understand the case studies
thoroughly (Scapens, 2004: 266). Four arable enterprises were visited and the
entrepreneurs were interviewed. The selection of arable businessmen is done by an
experienced senior advisor who ensured that the participants reflected the actual diversity
in the arable sector. Appendix III presents the farmers, who remain anonymous and
shows the differences in for example age, size and education. The interviewed farmers
were contacted with the help of the senior advisor. The participants were beforehand
phoned to ask for permission and to inform them about the topic and goal of the research.
The visited farms and entrepreneurs all come from the northern part of the Netherlands.
Furthermore a senior advisor with long experience in advising arable farms is
interviewed. Besides the interviews I also participated in two study groups, which are
meetings of approximately twelve farmers. These meetings exist of visiting two farms
and discuss the performance of these farms and developments in the sector. Furthermore I
visited a ‘masterclass’ of Acconavm. A masterclass consists of presentations of experts in
advising arable farms. Table 6 present the chronological order of the activities.
TABLE 6
Date of activities
Date Activity
21-06 Study group 1
22-06 Study group 2
13-07 Masterclass Acconavm
09-08 Interview farmer A
10-08 Interview farmer B
10-08 Interview farmer C
11-08 Interview senior advisor
18-08 Interview farmer D
30
During the meetings, farm visits, presentations and interviews I made notes to
preserve the data. Hayes & Mattimoe (2004: 362) state that resistance to tape record an
interview can be an issue for participants. Such resistance may even be anticipated
beforehand. Because an arable entrepreneur talks about his own business and this
involves his personal life and his family, resistance for taping was anticipated. Saunders
et al. (2003: 264) argue that taping of the interview can have a negative effect on the
quality of the interview. It can distract the interviewee and reduce the reliability of the
responses. Taking notes is the better option in that case and the conducted interviews are,
for these reasons, not tape recorded. This should have enhanced the openness of the
participants and they looked comfortable and open during the interviews.
Following recommendations of Hayes & Mattimoe (2004: 368) an interview
document was set up (appendix IV). This included the topics which needed to be
discussed and acted as guidance during the interview. The literature review made it
possible to determine the most relevant topics and helped to set up the document (Yin,
2003: 28). The layout of this document was organized in such a way that there was
enough space for notes. The interviews were semi-structured which created freedom to
ask open questions and allowed for, if necessary, additional questions. It also gave the
participants freedom to explain their answer (Baarda, de Goede & van der Meer-
Middelburg, 2007: 16; Horton, Macve, Struyven, 2004: 340). The use of open questions
and my background (I am a student, relatively new to the field) should have helped to
reduce the coloring of the answers of the participants (Marginson, 2004: 328).
After the interviews I translated my notes into an interview report. I did this the
same day, so the memories and thoughts of the interview were still clear. This enhances
the accuracy and comprehension of the obtained data (Hayes & Mattimoe, 2004: 369).
When the interview reports were finished the final version was sent to the participants to
check whether the reports reflected their actual opinion. This increases the reliability and
validity of the research although data is lost through manual recording (Boeije, 2005:
150). The interview report makes it possible to seize some of the advantages of tape-
recording such as ‘re-listening’ the interview and having access to a permanent and
accurate record of the interview (Saunders et al., 2003: 264). All these actions improve
the reliability of the data collection (Yin, 2003: 34). The results of the case studies are
presented next.
4.2 Organizational Effectiveness
The effectiveness of the farm is commonly referred as ‘success’ by all the farmers. The
interviews resulted in different aspects regarding the effectiveness of arable farms.
Success is very personal and different for every farmer as farmer B explains. Success has
different perspectives and is influenced by different persons. The senior advisor finds it
important that farmers want to perform at their best and are not satisfied with an average
performance. Although success is diverse, the farmers agree about certain aspects of
success.
All the farmers explain the importance of generating income for the family.
Through their farming activities a descent income needs to be generated of which they
can live. And farmer D adds that it is even nicer if more families (i.e. those of employees)
can make a living out of the farm. Almost all the farmers place emphasis on the fact that
31
the work is enjoyable. Farmer D explains that it is also a kind of success if everybody is
healthy, including the employees. As the above already shows, the farmers agree on the
fact that success is not only financial. The financial aspect of success is only one side of it
because success is much broader. Two farmers want to generate high kilogram revenues
of potatoes. Also high quality potatoes are regarded as success by some farmers. And
Farmer A states that to own a farm and having the freedom of being self-employed is
already a kind of success. Success in farming involves the whole life style as the
following statement of farmer A shows: ‘Farming is a form of life.’
In the long run the farmers see success often as growth. Growth occurs through
buildings, soil and sometimes personnel. For example farmer A tries to improve the
performance every year a bit while farmer D sees generating stable revenues as long-term
success. The senior advisor emphasizes the importance of stable incomes. It is not
sustainable in the long run to compensate bad years with good ones. Farmer B states that
success is also the achievement of goals and that when goals are met, new goals should
be set. This way growth occurs and the farm is stimulated to keep improving. Three
farmers have children and farmer A and B stress that the farm should be inheritable for
their children if they want to continue the farm in the future. Investments are based on the
succession of the farm in the future. In study group 1 the two visited farms had just built
a new barn, which was set down in such a manner that in the future it could be enlarged.
This way, if the farm is taken over by children, growth is still possible. To have
possibilities of future growth the farm needs to be managed in a sustainable manner and
the soil should stay fertile. Sustainability and soil usage is discussed further below.
The farmers experience tension between time spent at work and time for family
and other social interactions. It is important to have time for family but this means less
time for farming activities. A happy family life creates stability for the farmers. Often the
wife of the farmer plays an important role in the business and advices the farmer. In one
case the farmer was talking about possibilities to grow a new crop but the wife responded
that for the moment it would be too stressful for him.
Three farmers state the importance of measuring performance and benchmark it
with other farmers. Farmer A has the criticism that benchmarking can be a bit fictive. In
study group 1 farmers also argued that the comparison did not always reflect the
actuality. But farmer B states that when the measuring focuses on why performance
differs between farmers, it is of great value. Measuring performance also helps to see
where you stand in the arable sector. The senior advisor advises that comparing should
focus on what to do instead of what not to do.
To summarize, the farmers see organizational effectiveness as a broad concept. It
is personal and differs between farmers. It has extrinsic and intrinsic aspects. Furthermore
family, social and health aspects are important and short- and long-term aspects are
included in their success definition. It is important to measure and know the performance
on these aspects because it can provide information. Next the key success factors that
emerged during the qualitative research are discussed.
4.3 Key Success Factors
In the section above farmer B argued that measuring performance need to be in-depth and
beyond measuring only outcomes. The interviews with the farmers yielded a number of
32
factors that are important to achieve success. These factors tell something about how
success is achieved and can indicate how well a farm is performing. If the performance of
these factors is low, overall effectiveness of the farm will also be low. Furthermore it is
important to understand that the Dutch arable and agricultural sector is in strong relation
with the world market, as all the farmers mention and is confirmed by the experts in the
masterclass. This is why farmers need to focus on the strong elements of the Dutch seed
potatoes: their high quality according to most of the farmers. They also argue that having
somewhat higher costs is part of the game of being an arable farmer in the Netherlands.
The farmers agree on the fact that soil is very important for the performance.
Farmer D stated that ‘soil is number one’ for achieving success in this sector. In the
strategy section the fertility of the soil is discussed in detail. Besides having a healthy and
fertile soil it is also important to have good buildings and possibilities to store the
products without quality loss. But, as Farmer B states, the importance of buildings in the
business differs per farm. Having storing space makes it possible for farmers to store
potatoes (and other products) and sell the products at a time the farmer wants. Investing
in buildings costs a lot and brings risks with it. In study group 2 a farmer was visited that
invested a lot in buildings and storing possibilities. This farmer did not own all the land
he uses, but hires additional land. When hiring extra land is not possible anymore, the
new buildings are less useful. But farmer D argues that it is a strong element of the Dutch
arable farmers that they can deliver products of high quality throughout the year. For that
reason storing space is needed.
All the farmers emphasize the immense importance of the team that surrounds a
farmer. The senior advisor argues that this team needs to complement the farmer and
should not exist of mere followers. The team should add value to the farm and strengthen
the farmer on his weak points. Personnel can help the farm in different ways. First of all
the quantitative aspect of personnel is important during peak moments. In the harvest
period it is important to have access to additional employees because most farmers
cannot harvest all crops by themselves. This is especially the case during bad weather
when moments to harvest are scarce. The extra hiring costs are amply compensated by
the extra revenue. Also a labor intensive production process could increase the need of
additional personnel. However some farmers choose to use machines instead of
employees. Farmer A invests a lot in machines and provides services, with his machines,
to other farmers to make the investments in machines profitable. He chooses to use
machines because full-time employees limit his freedom.
Besides the quantitative aspect, farmer B considers it important to have a team
around yourself (this could be just the farming family) that supports you. Farmer D
argues that having good employees is very important. When tasks can be delegated to
employees, the farmer self can focus on the most important or urgent tasks. Employees
need to be capable to work independently and the farmer should be capable to delegate
tasks to them. The fact that arable farms are family businesses is an important success
factor argues farmer A. It provides cheap labor and creates stability for the farmer self.
But, according to the senior advisor, farms should not be dependent on family labor. If a
farm is dependent on (cheap) family labor, it is not competitive enough.
Another important success factor according to the farmers is knowledge. Farmers
should know the developments that are taking place and they need to know the
marketplace. It is crucial to invest time to increase the knowledge as is illustrated by
33
farmer A: ‘I earn more in the office than on the land.’ Knowledge should aim at future
development and chances but also on the current market situation. When to buy resources
and when to sell the products? Above is already mentioned that by being able to store
products farmers can sell their products at a moment of their choice. By investing time in
decisions when to sell their products, higher prices can be generated. Every farmer should
make time available for such decisions argues the senior advisor. Two farmers emphasize
the usefulness of budgets to plan investments. Farmer D, being one of them, argues that
the use of management tools makes the business process transparent and the
consequences of decisions better comprehensible.
Knowledge can be generated through internet, business literature, agricultural
congresses, networks and advisors. Advisors coach farmers and help them perform better.
The role of an advisor can be executed by a number of professionals, besides the
consultant. First of all there is the accountant who helps with the financial administration
and, more important, with tax planning and subsidies that can be earned. Suppliers can be
advisors related to the growth of crops and also the notary, lawyer or bank can be the
advisor on specific aspects of the farm.
Farmers participate in different ways on the market. There are a number of
options open for farmers through which they can sell their products. According to an
expert on the masterclass, farmers can use the options stated in table 7.
TABLE 7
Options for selling (expert masterclass)
Option Long-term average price Long-term variation
Free trade High price High variation
Pool Above average price Average variation
Periodical contract (future) Average price Low variation
Permanent contract Low average price Low variation
The prices are becoming more volatile as some farmers and experts state and this
influences the selling of the products. Contracts stabilize the price for a period however
this option needs a good understanding of the market. Farmers using pools do not need
such information, the price they get is the price set by the trading house of the pool. Free
trade gives the opportunity to seize high prices. The farmer decides when to sell but
sometimes it happens that farmers wait too long and the price becomes so low that losses
are made. The volatility of the prices and the different options create diversity in the way
farmers sell their products. Three farmers use a combination of those options but all the
farmers sell, at least some of their products, through pools. This ensures an average price
for the products and is less risky than other options because you get the average price of
that moment. Farmer C chooses to only sell through pools because his business is
growing crops and not trading. ‘Activities that are not your core business, you should
outsource to capable people’ he argues. Farmer A trades his onion free because he enjoys
taking a little gamble. But if it goes wrong, severe consequences are unlikely because
onions are only a small part of the business. Farmer B and D use multiple options to
differentiate and spread the risks. Both farmers state that it is important to look what
works well and choose for that option. By not only using pools you may be able to seize
above average returns. It seems that the use of these options varies a lot between farmers.
34
All the farmers state the importance of having good relations with the trading houses.
Farmer D argues that if there is trust between the trader and yourself, the trader will put
effort to get a good price for the products.
Farmers have multiple relationships with different parties in their business and are
closely observed by the government and society. All the farmers acknowledge that they
take the nature in consideration in their business. Besides the nature, farmers also need to
take in account the consequences of their actions on the community in which they live.
For example a farm visited in study group 2 had complaints from neighbors about the
noise of the cooling systems of the barns. Farmer D stresses the importance of lobbying
and having good relations with the neighbors, suppliers and buyers and other trade
associations. Having good relations with them, helps doing business with them. By
creating goodwill at the bank through repayment of a part of the loan, farmer D managed
to keep the interest on his loans at a appropriate level while his total loan increased. But
farmer A does not have a good relationship with the bank and he creates his own
financial freedom by only investing when it has low risks. This farmer however
emphasizes the need to treat relationships with respect. Farmer B on the other hand has a
very pragmatic view on relations and aims to increase his own benefits through the
business relations. There is diversity in how relations are managed but that it is necessary
to manage the relations is obvious. Farmer D sees opportunities to improve the managing
of the relations. He finds it a weakness of most Dutch arable farmers that they do not
engage enough in lobbying.
Sustainable farming is another success factor and it is a topic that increasingly is
considered. The soil is important for farmers and sustainable farming helps to keep the
soil fertile. Sustainable farming does not stop at the soil and growing of crops. Farmer D
argues that sustainability needs to be achieved in soil, machines, buildings and people.
Taking good care of machines and buildings helps to keep them working proper and by
taking measures for hygiene and working conditions the people working on the farm stay
healthy. Farmer B states that sustainable farming simply means that you are farming in an
efficient manner, not spoiling resources and taking good care of your soil. This way
sustainable farming is achieved in the whole farm.
In conclusion the qualitative research showed that key success factors can be the
natural resources (soil), processes (buildings, labor), products, knowledge and learning,
selling of products, management of relations and sustainability. These factors are
important for farmers and need to be used in a BSC. In the next section the results of
strategy in the qualitative research are presented.
4.4 Strategy
The farmers have dissimilar perspectives about the way strategy is present in their farm.
Farmer A even questions the appearance of strategy in his business because he acts upon
his vision about the farm and does not have a real strategy in place. But all the farmers
explicitly mention, when discussing strategy, that growth is not only a form of success
but also a part of the strategy. This growth needs to occur in all aspects of the business
but almost all the farmers want this especially in the soil that is owned.
Besides this general growth aspect other strategies are mentioned. Farmer C
explicitly follows a specialization strategy focused on high quality seed potatoes while
35
farmer B and D follow a high revenue strategy. This means that they want to generate
high kilogram revenues for seed potatoes. Farmer D wants to get the most out of his
business and pursues being at the top of, not only revenues, but also quality and income.
All the arable farmers have a high degree of potatoes but farmer D has a very high degree
of potatoes compared with other farmers which he sees as a specialization in potatoes.
When discussing the concept of strategy some farmers have a certain perspective or plan
about the right path to follow and pursue their view. But farmer A, not having a real
strategy, argues he just ‘go with flow’ and takes actions on the way of what he sees as the
right thing to do at that moment.
All the farmers acknowledge the importance of soil. During the interviews and
case studies it became clear that farmers are dependent on the fertility of the soil for the
possibilities of revenue and quality. This fertility is different per location but this does not
mean that farmers have no influence at all on the fertility. Seed potatoes place a heavy
burden on the soil and with the use of fertilizers and the rotation of crops on the soil,
fertility can be sustained or improved. A normal rotation is that once every three years
potatoes are grown on a land. But Farmer C, with a specialization strategy on high
quality, only grows potatoes once every four year on a land and has a high amount of
wheat in their business. By having a high degree of wheat (this crop places a low burden
on the soil) and growing potatoes once every four year on a particular land, the fertility of
the soil increases. Farmer D also wants a high quality potato but uses his soil more
intensive. By hiring additional land of other farmers he can use his own land more
extensive. The soil usage is a very important consideration in the decisions of a farmer.
The use of soil is only one aspect of the strategy, labor is another one. Because it
is discussed in the key success factors section, a short description is given here. Farmer C
argues that his farm has a high degree of labor because this improves the quality of the
potatoes. Pursuing high quality simply means a more labor intensive process. But Farmer
D uses personnel because it creates for him the time to focus on the most important tasks
in the business. Another consideration of almost all the farmers to use (additional)
personnel is to seize harvesting time to the fullest. This way revenue can be at the highest
possible level. Farmer A, not very keen on having employees, invested in machines and
uses these very intensive. The strategy of a farmer influences the use of labor which can
be manually oriented or very mechanical.
The entrepreneurs preferences play a very important role in how the business is
run. For example the risk preferences of an entrepreneur play an enormous role in which
decisions are taken and how much return is required. According to the senior advisor ‘an
entrepreneur can undertake actions in a dynamic and intensive way, but it is also
possible to undertake more slowly. This means extensive and less risky.’ The entrepreneur
is the central actor in the farm and is in control of the farm. During the masterclass it was
argued that the risk an entrepreneur wants to take should emerge throughout his entire
business. The preferences of the farmer determine how the business is run and the farmer
should make the decisions. Farmer B states that the basis for his decisions is the return an
investment generates. Decisions should be made carefully, supported with calculations
and knowledge of the consequences of a decision. During study group 1 there was
consensus about the returns as a basis for investments. Better invest money because it has
a higher return than place it on the bank or in soil. But, according to farmer D, the buying
of soil has clear advantages, although the investment in a new building yields a higher
36
return. This is because land is scarce and hard to get your hand on. The farmers and
experts agree on the fact that a farmer needs to possess more skills these days than simply
growing crops. ‘Farmers need to become managers’ as an expert states. They should
seek knowledge, delegate tasks to employees and manage employees and relations with
other market parties. If a farmer is unable to act as a manager the farm will not survive
according to the senior advisor.
The society and the government places, with rules and demands, a burden on the
freedom of an entrepreneur. According to experts at the masterclass, the limiting factors
for farmers in the future are the society and nature. The possibility to differentiate your
activities is quite difficult because of the demands placed by the government according to
farmer B. New activities are surrounded with administrative difficulties and licenses that
are needed. The demands of society for low prices and at the same time sustainable
farming are incompatible. Besides the society, farmers need to consider their fellow
farmers. Cooperation with other farmers and networks are important because it can create
opportunities for economies of scale, better soil usage, knowledge development or
increase the value of life. Farmer D states that his good relation with his neighbor creates
the opportunity for going on vacation, while the neighbor executes the necessary tasks
that cannot be done by the employees.
Farmer C states that is important to continually search for improvement and all
the farmers agree about the importance of learning. Farmer A argues that it is important
to keep optimizing the farm and perform better every year. This can be done by the
options discussed in the key success factors section about learning and by looking at
other farmers and see what they do. This learning helps farmers to change and improve
their actions and strategy.
A common feature is the diversification strategy. Almost all the farmers consider
doing something besides farming. Farmer C works part-time on the farm and three days
somewhere else. Farmer A and D consider to do something else besides the farm
business, for example child daycare or caravan stalling. This way their wives can have a
more active role in the enterprise. All the farmers are interested in options that provide
additional income like windmills or solar energy. Farmers diversify because they seek
new challenges, want variety in their work or involve their wife more actively according
the experts in the masterclass.
Summarizing the results it seems that the strategy concept differ between farmers.
But the strategy they follow takes in consideration the soil, labor, growth and
improvement (learning), environment, society and legislation and their own preferences.
The qualitative results above need to be understood correctly. In the next chapter
the results are discussed with the help of the framework presented in chapter three and
the contribution, limitations and conclusions of this research are presented.
37
5. DISCUSSION AND CONCLUSION
This research aims to increase the understanding of the influence of strategy on
organizational effectiveness and the use of key success factors in the context of arable
farms. In chapter three the strategy-effectiveness framework is developed and in chapter
four the qualitative results are presented. To understand the contribution of this research a
discussion of the qualitative results, compared with the framework, is presented.
Secondly the contribution for academics and practitioners is discussed. This section ends
with the conclusion and the limitations of the research.
5.1 Discussion
In the two chapters above a lot of information is found in both the academic literature and
the arable sector. This information should enable us to answer the problem statement,
presented in chapter one: what is the role of strategy in arable enterprises and how can
organizational effectiveness be achieved with the use of key success factors?
The research shows that organizational effectiveness at arable farms is a broad
and diverse concept. In the literature review it is seen that effectiveness of arable farms
consists of multiple perspectives. This is validated in the qualitative analysis. The farmers
are of course interested in generating an income but that they also want to generate high
revenues or high quality products. However the finances and production of the farm does
not capture effectiveness in his totality. In the literature it is found that farmers perceive
success also intrinsically and this is confirmed in the qualitative research. Farmers are
happy with the fact that they are farmers and are their own boss. Another important fact
is the family of the farmer. They play an important role in the farm and also in the
definition of success. A healthy family and employees are already a form of success. In
the literature review it is argued to focus not only on short-term goals but also on the
long-term continuity of the farm. The interviewed farmers take the long-term future into
account in their success definitions when they discuss succession issues and the state of
the farm in the future. When developing plans, future growth options are often
considered. For example the building of a new barn which is placed in such a way that in
the future the barn can be enlarged and future growth is possible.
The BSC is proposed as the ideal tool to measure performance in arable farms.
The literature review shows that the BSC is capable to incorporate the diversity in
success for arable farms. Although farmers do not use this tool yet, farmers see the
benefits of using management tools because they make the business more transparent.
Although not all the farmers use management tools, it is argued that farmers need to
develop management skills and the BSC can help with that. In section 5.2 a BSC for
arable farms is presented. To be able to present a BSC it is important to understand the
key success factors and the strategy of arable farms because of their role in the BSC.
The multiplicity of effectiveness in arable farms means a diversity of goals for
these farmers. Without measuring the key success factors, performance is not well
understood. This research argued that the key success factors are tasks, processes or
capabilities for which indicators are developed (p. 12). These indicators need to be
distinguished in leading and lagging indicators. The distinction in leading and lagging
indicators is widely used in the BSC and the academic world. For arable farmers and
38
related stakeholders this distinction can be very useful. Farmers state that comparing
results does not help them unless the causes are known. The indicators tell something
about the process (leading) and the outcome (lagging) of the key success factors. The key
success factors are based on the strategy, vision and goals of the farm. Measuring these
factors provides feedback for the farmer about the strategy and if adjustments are
necessary to improve performance.
In the literature a number of important factors are found. The productivity of the
farm per hectare and the quality of the products are important aspects. The costs and
finances (debt) of the farm should be in order while the sustainability and the relations
with stakeholders need to be appropriately managed. Cooperation with other parties in
the market can help to seize economies of scale but also learning is very important
because it gives feedback to the current way of working and helps to innovate.
The results of the qualitative analysis provided some more in-depth information
about the key success factors. The productivity of the farm and the quality of the products
are important but the fertility of the soil is also a key success factor. The fertility of the
soil can be improved through crop rotation (internal), fertilizers or hiring additional land
(external). The fertility of the soil is in close relation with the sustainability of an arable
farm. An unhealthy soil is not only bad for nature, it is also bad for the growth of crops.
Farmers see sustainability as part of being a farmer because in most cases it makes
economically sense to be sustainable, it is seen as a form of efficiency. However most
participants in the arable sector argue that government and society place too much burden
on the farmers and that it is difficult to handle with these high demands.
Not only come farmers more and more in contact with other society members, the
management of these relations is becoming more important. One farmer sees it has a
great weakness that farmers do not lobby. Better relations with other farmers can help
with hiring additional land, storage space or other services. Also good relations with
other market parties increase the possibilities of making the right decisions in the
marketplace. Farmers state that it is important that the buildings and machines are
efficient and up-to-date. The market for crops (in this case especially seed potatoes) is a
world market. The strong aspects of Dutch farmers are their high quality and ability to
deliver throughout the year. But it is important to have possibilities to store crops without
quality loss and for that reason it is worthwhile to have buildings and barns that are
capable to do this. The prices of crops are becoming more volatile and the right manner
and moment to sell the product is not easy to determine.
A factor not very present in the literature review is the team surrounding a farmer.
The qualitative results show that practitioners place an enormous value on the team that
helps the farmer. This can be family members or employees. These people complement
the farmer, add knowledge, manpower and create a stable team for the farmer. Also
knowledge and learning is considered as very important by the farmers and this is
supported by the literature review. Practitioners learn by looking at other farmers, going
to meetings, congresses, use networks and reading literature. The use of advisors is
ubiquitous in the arable sector. Advisors can be consultants, accountants, suppliers, banks
or someone else. Advisors help with different aspects of the farm and farmers use
different advisors. Because key success factors are dependent on the strategy and differ
between farms, a definitive list cannot be provided. The discussion above shows a large
number of factors that can be important. These are summarized in table 8 and are used in
39
the BSC below. Table 8 holds the factors in table 2 (p. 21) added with the key success
factors of the qualitative analysis.
TABLE 8
Key Success Factors for arable farms
Perspective Concepts
Finance Income, costs, debt, productivity
Customer Quality, customer & stakeholder management, selling options,
sustainability
Internal Business Soil fertility, buildings and machines, cooperation with farmers and
other market parties, crop rotation
Learning & Growth Team, learning, innovation, management qualities, networks, advisors
To achieve the goals that are set the right strategy needs to be chosen. In the
literature review it is shown that strategy influences effectiveness and that it is also the
case for farms. The literature review made it clear that strategy can have many different
forms and aspects (Mintzberg, 1987). Thus although a farmer may not be actually aware
of strategy, their perspective or pattern of actions is a form of strategy.
Because the strategic concept for arable farmers is not specifically discussed in
the literature, this research compared the strategic management literature with the
agricultural literature and developed a strategic concept for arable farms (table 5, p. 27).
A strategy for arable farmers should say something about where a farmer wants to
compete (strategic target), how the farmer wants to compete (mobilization of resources
and the conversion into products) and how the farmer wants to maintain and control high
performance now and in the future. The strategy is developed by the entrepreneur and it
should fit the preferences of the farmer. Important factors such as the environment,
macro-power (cooperation) and learning should be incorporated in the strategy.
The results in the qualitative analysis show that the strategic concept, presented in
chapter three, reflects the actuality in the arable sector. Although farmers are not aware of
choosing to aim for a specific niche or the broad market they choose by aiming for
unique high quality (niche) or just a normal product but as much as possible (industry
wide). All the farmers consider the mobilization of their resources. This means how they
ensure a fertile soil. Some farmers choose to have an above average crop rotation to make
sure the soil is not to intensively used. Others use the soil intensive and use a lot of
fertilizers or hiring additional land to keep the soil healthy. The producing process is also
different between farmers. To achieve high quality farmer C uses a lot of labor to add
value while farmer A uses a lot of machines to generate revenue as high as possible. The
farmer is the central actor in the strategy formation. The strategy should fit with his
preferences and vision. The farmer is responsible and the owner of the farm and the
farmer should make the decisions and lead the farm. The strategy cannot be developed
without considering a number of important factors. It needs to provide answers for
developments in the environment, marketplace and future to make sure the farm can
survive and is profitable.
The discussion above shows what the effectiveness, key success factors and
strategy mean for an arable farm and how they should be used. But what does this
research mean for academics and practitioners?
40
5.2 Contribution for Academics and Practitioners
The presented research has several contributions for academics as well as practitioners.
First of all a framework is developed which shows the influence of strategy on the
effectiveness of arable farms and key success factors. This framework is a useful tool for
studying and understanding the relations of these three concepts. The framework is
developed by incorporating academic management literature with the characteristics of
the arable sector. This increases the strength of the literature in the arable sector.
Secondly a strategic concept is presented in the framework with its underlying
determinants. The development of the strategic concept in the arable sector creates an
understanding of strategy that goes beyond the categorizations found in the agricultural
literature, such as van der Ploeg (1997) and Wiskerke (1997). It is more appropriate for
the arable sector than the generic strategic management literature. It is a comprehensive
concept suitable for academics and more in-depth for practitioners than for example the
concept of a growth strategy.
Thirdly academics need to be aware in future research that effectiveness of arable
farms is diverse and cannot be measured with financial measures only. These measures
are not comprehensive enough to measure the diversity in arable farms effectiveness.
Effectiveness of farms goes beyond financial and production aspects and should also
consists of intrinsic rewards such as the happiness of a farmer. Although this notion is
made before, the novelty of this research is that it proposes the use of the BSC in arable
farms in the Netherlands. This strategic measurement tool is able to capture the diversity
of the effectiveness of farms. The BSC ensures congruence in the arable farm by linking
different important aspects towards the organizations goals. A BSC for arable farms is
presented in table 9. It is based on the findings in this research regarding strategy, key
success factors (table 8, p. 39) and the diversity in effectiveness of arable farms. A BSC
is dependent on the strategy of a farm and the characteristics of the specific farm. Table 9
is a starting point for farmers and advisors who want to use and develop a BSC.
TABLE 9
Balanced Scorecard for Arable Farms
FINANCE
Objective Lagging indicator Leading indicator
Increase income Income (growth)
Increase productivity Margin on products
Increase investment return ROI
Appropriate revenue mix Different products Growing new crops
CUSTOMER AND STAKEHOLDERS
Objective Lagging indicator Leading indicator
Quality product Diseases, rejected products Meeting quality requirements
Reputation # of complaints
# of fines
Management of stakeholders,
complying to rules
High average price Set of selling options Time invested in sales
41
INTERNAL BUSINESS PROCESS
Objective Lagging indicator Leading indicator
Fertile soil Soil fertility, diseases Crop rotation, hiring extra
land, fertilizer use
Better utilization of buildings Enough storage possibilities,
idle space
Renting space out or renting
space from other farmers
Better utilization of
machines
Needed repairs, idle time
machines
Investments machines,
renting machinery to other
farmers
Efficient use of labor Labor costs, idle time and
productivity employees
Planning of work, flexibility
in hiring additional
employees
Efficient use of resources Spillage of resources, Deciding which and how
much resources are needed
LEARNING AND GROWTH
Objective Lagging indicator Leading indicator
Increase knowledge (market,
future opportunities)
Use of advisors, visiting
congresses, reading
literature
Time for knowledge seeking,
sharing of knowledge
through networks
Better management skills # of training days, use of
advisors
Time for developing
management skills
Good control system Bookkeeping system in
order, income statement in
order
Use of management tools
Good (family) life Working hours at farm,
working hours other family
members
Time available for family,
new challenges, involvement
wife, children (succession)
Farmers need a tool that links strategy, with key success factors distinguished in leading
and lagging, to the performance of their farm. Because these aspects are all in the BSC, it
is a tool from which farmers can benefit and it creates transparency in their farm. The
perspectives have a causal relation with each other. In the end they influence the financial
results causing the financial perspective to consist of mainly lagging indicators. This BSC
is only a starting point and should be specified for a farm with actual targets. The critique
of Nørreklit (2000: 82) is that the linkages in the BSC are not causal and the rooting of
the strategy is not optimal. These points of criticism need to be considered when
developing a BSC.
Another contribution of this research is the recognition farmers place on the team.
In the literature the value of the team was not mentioned with such emphasis as the
farmers in this research did. This notion is worthwhile for academics that want to study
arable farms. Furthermore this research showed that measuring key success factors
(through indicators) and performance creates feedback on the current way of working.
Measuring helps to adjust the strategy or even to change the strategy if necessary. This
enhances the importance for farmers to understand their performance and is another
reason to use a BSC or other tool to understand performance thoroughly.
Finally this research aimed to increase the understanding how to strategically
manage arable farms. By developing the strategy-effectiveness framework, a BSC and
42
the three concepts, insights in strategic management for arable farms are increased.
Farmers can use these insights to manage their farms and academics can use it to study
arable farms.
Because qualitative research uses analytical generalization, instead of statistical
generalization, the results are generalized to a theory that needs to be tested in other
situations. By repeating the results above in other situations the results gain support (Yin,
2003: 37). Future research needs to extent the findings of this research. The strategy-
effectiveness framework (p. 28) and its underlying concepts are the theories proposed in
this research. These should be used in different arable sections to test their applicability
in other settings. Furthermore the BSC in the arable sector is very useful but it also needs
to be tested outside the sample of this research. In the next section the conclusions and
limitations are presented.
5.3 Conclusion and Limitations
This research showed that strategy and strategic decisions influence the effectiveness of
farms. Farms effectiveness is very broad and includes multiple perspectives and short-
and long-term aspects. Besides financial aspects, goals of the family and other intrinsic
rewards need to be included in the effectiveness definition of farms. It is argued that this
diversity can be measured with the help of the BSC (presented in table 9, p. 40). In the
BSC the key success factors play an important role and are measured through leading and
lagging indicators. These indicators create a causal relation that shows farmers if they are
executing the strategy in the right manner and if it leads to success. The strategy of
farmers consists of a number of aspects that are derived from the strategic management
literature and agricultural literature. A comprehensive strategy should consider where and
how a farmer wants to compete and how the farmer controls and innovates the farm. The
strategy should be aligned with the preferences of the farmer and adequately consider
important aspects such as environment, power relations and learning. The strategy-
effectiveness framework in figure 3 (p. 28) presents the different relations and can be a
guidance for future research regarding this concept.
Yin (2003: 34) argues that in exploratory research attention needs to be given to
the construct and external validity and the reliability of the research. As the research
design (section 1.4) and methodology section of the interviews (section 4.1) show,
careful attention for these aspects is given. Nevertheless this study has some limitations.
First of all strategy is the only variable studied that influences the dependent variable
organizational effectiveness. Future studies should incorporate other variables to
understand the effect even better. Secondly the participants in the study do not reflect the
entire population of arable farmers in the Netherlands. Only four farmers and one advisor
are interviewed in-depth and although the number of participants increases by the
inclusion of the study group members, it remains a small portion of the total population
of arable farmers. Effort is made to ensure diversity in the interviewed farmers but it
remains a small portion. All the farmers are from the northern part of the Netherlands
which can create a geographical bias. This leads to a disadvantage of qualitative research
that it is difficult to generalize the results (Myers 2009: 9). However through analytical
generalization the results are generalized to theory as is shown in section 5.2. Also the
interviews are conducted in a year that is preceded by an exceptional good year. The year
43
2010 was for the arable farmers a very good year with high prices. This may have created
an overly positive view of the farmers on the future of the sector. Furthermore the
research is conducted in cooperation with an advisory and accounting organization which
may have influenced the participants. This influence is however limited because of my
background, being a student and new to the field of the arable sector.
This research is a first step in a thorough understanding of the strategic concept
and its influence on effectiveness in the arable sector and future studies can build on this
research.
44
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APPENDIX I
Market and technology, determinants of moving space
Van der Ploeg, 1999: 127
This figure is an illustration of van der Ploeg (1999: 126-127) that shows the maneuver
space of farmers and the accompanying farming styles. On the vertical axe the conversion
process is stated, which is somewhere between highly technological or highly skill
oriented. On the horizontal axe the mobilization of resources is placed. The two outer
ends of this variable are highly autonomous of the market or highly dependent on the
market. In the figure six farming styles with a sketch of their moving space are placed.
The farming styles are unique combinations of the two variables this is illustrated by the
way the figure is drawn (lines are not strict).
53
APPENDIX II
Farming style classification
Schmitzberger et al., 2005: 279
54
Schmitzberger et al. (2005) define eight farming styles in Austria based on economic,
social and attitudinal information. The yield optimizer, traditionalist, innovative and
support optimizer are the ones with major importance while the other four are of minor
importance. The specific characteristics of each style are placed in the figure.
55
APPENDIX III
Overview of interviewed farmers
Farmer A B C D
Age # # # #
Size (ha) # # # #
Crops Seed potatoes,
sugar beets,
wheat, grass and
onions
Seed potatoes,
sugar beets and
wheat
Seed potatoes,
sugar beets and
wheat
Seed potatoes,
table/ consumer
potatoes, sugar
beets, wheat
Business
form
Partnership with
wife
Partnership with
son
Partnership with
parents, brother
Sole
proprietorship
Education HLS Agriculture
school
University -
Background Arable farming
family
Arable farming
family
Arable farming
family
Dairy farming
family
Experience 22 years - 4,5 years 20 years
Started Taken over from
father
Taken over from
father
Joined family
farm
Started arable
farm in addition
to family’s dairy
farm
Children Yes Yes No Yes
# confidential
This table shows the different characteristics of the interviewed farmers. If a
characteristic is unknown it is shown by the symbol - in the table.
56
APPENDIX IV
Questionnaire entrepreneurs in the arable sector Date:
Enterprise
Crops
Size
How is the farm performing
Entrepreneur
Age
Education
Goals of the enterprise
- How do you see success in your business?
- Are you satisfied with the current situation?
Strategy
- What is your strategy?
- How becomes the strategy clear in the business?
- Do you think about other options (such as diversification, specification, low costs)?
- Which strategic options do you see with other arable farms?
- How are important decisions made?
Key success factors
- What is important to achieve success?
- What are the success factors? / What are the strong points of the enterprise?
- Sale opportunities
- Other activities besides growing (storage, packing, etc.)?
- Investments
- Which parties are important for a successful business?
- Sustainability
- Personnel
- Measuring performance
- Knowledge
Future of the arable sector
- What becomes important for the arable sector?
- Which qualities of farmers are becoming important?
- Where do you want to be in ten years?
Role of the advisor?
