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Management and ownership transfer in small and medium family farms

Renee D. Wiatt (Agricultural Economics, Purdue University, West Lafayette, Indiana, USA)
Maria I. Marshall (Agricultural Economics, Purdue University, West Lafayette, Indiana, USA)
Ryan Musselman (R. B. Pamplin College of Business, Virginia Tech University, Blacksburg, Virginia, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 3 February 2022

Issue publication date: 22 April 2022

777

Abstract

Purpose

This study investigated the succession process in small and medium family farms as two distinct but related processes of management transfer and ownership transfer. Past studies focused on the broad subject of succession, without dissecting succession into the components that it contains. Furthermore, this study aimed to evaluate which business, family and owner characteristics were significant in the progress of each process toward the actual transfer of management and ownership.

Design/methodology/approach

Telephone interviews were conducted to gather information from rural family businesses in Illinois, Indiana, Michigan and Ohio. A bivariate ordered probit regression was utilized to model the processes of management and ownership transfer as separate but related processes. Both management transfer and ownership transfer were modeled utilizing three distinct stages of transfer.

Findings

Business and owner characteristics were significant to both management and ownership transfer, whereas family characteristics only influenced ownership transfer. Farm family businesses that discussed goals, identified a successor and were educated on how to start the transfer process were more likely to have made progress in both management and ownership transfer.

Originality/value

The authors contribute empirically to the literature by modeling the components of the succession process, management transfer and ownership transfer, as separate but interrelated processes. The authors specifically investigate which business, owner and family characteristics influence the progression of management and ownership transfer in farm family businesses.

Keywords

Acknowledgements

This paper reports results from the Intergenerational Transfer for Strong and Sustainable Small and Medium-Sized Farm Family Businesses Project. This project was supported by Agricultural and Food Research Initiative Competitive Grant no. 2009-55618-05056 from the USDA National Institute of Food and Agriculture. The data collection and preliminary analysis were funded.

Citation

Wiatt, R.D., Marshall, M.I. and Musselman, R. (2022), "Management and ownership transfer in small and medium family farms", Agricultural Finance Review, Vol. 82 No. 3, pp. 505-521. https://doi.org/10.1108/AFR-04-2021-0046

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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