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.

WeChat E-Commerce, Social Connections, and Smallholder Agriculture Sales Performance: A Survey of Orange Farmers in Hubei Province, China

“…Zeng et al [18] argue that the government should provide farmers with some policy measures, such as credit taxation and professional skills training, to reasonably control the digital dividend gap. In addition, inadequate network information infrastructure can easily produce the "digital divide" phenomenon, which makes it more difficult for poor rural areas to access information [5].…”

“…There is a high probability of missing market information during traditional offline trading [22]. Internet technology can optimize the flow and sharing of information in agricultural product trading and increase the mastery of information by trading participants [5]. This is because online channels for agricultural products organically integrate and share information on agricultural production, distribution, markets, and trading chains, which can effectively reduce transaction costs and increase market transparency [23].…”

“…WeChat e-commerce can reduce the cost of publicity by using relationships with a circle of friends and acquaintances to promote products. In addition, WeChat e-commerce can avoid intermediaries by directly connecting producers and consumers, thereby reducing transaction costs [5]. (2) Transaction price.…”

“…The online retail sales of agricultural products in China reached 1.79 trillion CNY in 2020 [2]. Many scholars have suggested that formal large e-commerce platforms, such as Taobao and Jingdong, can help smallholder farmers connect to large markets [3][4][5]. Most of these studies argue that rural e-commerce can help farmers escape from their disadvantaged market position of being exploited and squeezed by many trading intermediaries [6].…”

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“…Suppose there are two response variables and it is assumed to come from the variable and where [5] with…”