Stakeholder management and organizational form of arable farms: a comparison of paddy farm corporations in Japan

Abstract

As agricultural operations are increasingly industrialized, the role of stakeholders (SHs) becomes critical to the sustainability of the farming business. Arable farms are particularly expanding their geographical scales and socioeconomic impacts on the surrounding community, which gives particular importance to stakeholder management in relation to internal and external parties. Although the majority of arable farming comprises family farms, they have been on the decline because of succession problems, while non-family farms have been increasing. Success or failure of SHM is closely related to organizational forms because the form represents primal SHs. However, little research has examined the impact of SHM on performance in arable farming. This paper empirically investigates how SHM in various organizational forms is associated with the corporate performance of Japanese paddy farms. A questionnaire survey of Japanese paddy farm corporations was conducted in 2014, and 217 questionnaires from 63 family, 64 joint-stock, and 90 community farms were used in our estimates. Our estimation examines the following hypotheses: (i) SHM is associated with the corporate performance of paddy farms, and (ii) effective SHM varies depending on the organizational forms. The results suggest that, first, effective SHM is linked to organizational forms. In other words, the choice of form can offset the impact of SHs. Second, excessive emphasis on listening to opinions from the surrounding community may harm their performance, particularly at joint-stock farms, which expand in scale. Third, at family farms, attracting younger employees is crucial for running the business. Last, harmonious relations with the community are most important at community farms compared with other types of farms.