Village Environment, Capital Endowment, and Farmers’ Participation in E-Commerce Sales Behavior: A Demand Observable Bivariate Probit Model Approach

Abstract

With the recent developments in widespread internet usage and digital technology, an ultimate worldwide transformation in information and communications technology has occurred. Especially, how people engage in the virtual market for buying and selling goods has changed dramatically, which flourished the playground of electronic commerce (EC). Interestingly, it has become crucial to create an ample opportunity for farmers to utilize a more comprehensive market range for selling their products. However, farmers participating in e-commerce sales platforms may be interrupted by various internal and external factors. Therefore, the study’s primary goal is to evaluate the impacts of various external and internal factors on shaping farmers’ behavior in participating in e-commerce sales platforms. The study utilized a demand observable bivariate Probit model to analyze the village environment and capital endowment effects to craft the findings. The study utilized micro-survey data from 686 households in the leading kiwifruit-producing area as the empirical setup. The findings illustrated that the village environment is the main factor that restricts farmers’ e-commerce sales behavior, among which the infrastructure and policy environments have a significant contribution to farmers’ e-commerce sales intention and behavior. However, the effect of capital endowment on farmers’ e-commerce selling behavior has been found as significant. The village environment significantly affects both large- and small-scale farmers, and the capital endowment has a higher binding effect on small-scale farmers. Therefore, the paper suggests that improving the village environment for e-commerce development and laying the foundation for e-commerce development should be fostered. A differentiated incentive mechanism to improve the capital endowment of farmers should be constructed. A well-structured capital endowment triggering small farmers to capture the benefits of e-commerce sales should be imposed. The government should extend the support of the agricultural demonstration zone to facilitate practical training among the smallholder farmers. The formal and informal risk-sharing and financial institutions should prioritize building infrastructure to support farmers’ short- and long-term investments. Farmers should realize the importance of e-commerce for integrating the agricultural value chain.