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The Impact of Management on Farm Expansion and Survival

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  • Musser, Wesley N.
  • White, Fred C.

Abstract

Commercial agriculture is undergoing a major structural change in the form of decreasing numbers and increasing sizes of farm units. This structural change results in farm firms constantly experiencing expansion and survival problems. In some cases, expansion and survival are related: growth in size is necessary to incorporate cost-reducing technological improvements to maintain income levels. In others, these problems are separated: expansion is desired to increase income-earning capacity, or survival may be a primary objective for the firm when expansion is unlikely. This paper develops an analytical framework, incorporating the dynamics of expansion and survival, and explores their interrelationships. Stochastic relationships are incorporated for use in conceptualizing simulation studies of firm growth. Its empirical relevance is demonstrated with an analysis of the interaction between managerial ability and leverage in the process of expansion and survival of a representative farm firm in South Central Georgia.

Suggested Citation

  • Musser, Wesley N. & White, Fred C., 1975. "The Impact of Management on Farm Expansion and Survival," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 7(1), pages 63-69, July.
    • Handle: RePEc:cup:jagaec:v:7:y:1975:i:01:p:63-69_01
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    References listed on IDEAS

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    1. George F. Patrick & Ludwig M. Eisgruber, 1968. "The Impact of Managerial Ability and Capital Structure on Growth of the Farm Firm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(3), pages 491-506.
    2. William Lin & G. W. Dean & C. V. Moore, 1974. "An Empirical Test of Utility vs. Profit Maximization in Agricultural Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 497-508.
    3. H. R. Hinman & R. F. Hutton, 1971. "Returns and Risks of Expanding Pennsylvania Dairy Farms with Different Levels of Equity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(4), pages 608-611.
    4. Odell L. Walker & James R. Martin, 1966. "Firm Growth Research Opportunities and Techniques," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(5), pages 1522-1531.
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    Cited by:

    1. Ford, Stephen A. & Shonkwiler, J. S., 1994. "The Effect of Managerial Ability on Farm Financial Success," Agricultural and Resource Economics Review, Cambridge University Press, vol. 23(2), pages 150-157, October.
    2. El-Osta, Hisham S. & Morehart, Mitchell J., 1999. "Technology Adoption Decisions In Dairy Production And The Role Of Herd Expansion," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 28(1), pages 1-12, April.
    3. Buggie, Geoffrey J., 1977. "Allocative Ability And Farm Management A Comment," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 45(01-2), pages 1-6, March.

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