Human–social capital and market access factors influencing agro-processing participation by small-scale agripreneurs: The moderating effects of transaction costs

Orientation: Participating in the agriculture and agro-processing chain has the potential to enhance the competitive advantage of small-scale agricultural enterprises in South Africa. Research purpose: The study empirically investigated the extent to which agro-processing participation is determined by human and social capital factors, while accounting for the moderating effects of transaction costs. Motivation of the study: Research is required that examines levels of human and social capital of small-scale agripreneurs, as these act as major constraints towards improved competitiveness of agribusinesses. Design: To test the study hypotheses, a structured questionnaire was administered to 166 small-scale agripreneurs at farmer gatherings across regions in South Africa. Findings: Based on the survey results, both human and social capital factors showed a positive and significant influence on agro-processing participation. The findings further highlight the importance of market access and transaction costs to small-scale agripreneurs. Practical implications: Policy-makers need to be aware of how human capital factors such as previous education and experience impact participation in agro-processing activities and help to mitigate transaction costs. Contribution: Study findings are highly relevant to South Africa as agro-processing and value-adding activities are not always scale dependent, and hence, a focus on human and social capital is valuable