The Causality Model of Maize Farmers’ Income: Integrating Social Capital, Supply Chain, and Competitive Advantage

Abstract

Social capital structure, effective supply chain, and competitive advantage have been expected to increase maize farmers’ income. Maize, as a main income, has not been able to prosper farmers yet. Structural Equation Modelling was applied to analyze the effectiveness of social capital, supply chain, and competitive advantage on the maize farmers’ income. This study was conducted with 120 maize farmers as samples in one of Indonesia's maize production centers. Three indicators measure each variable. Social capital indicators are trust, social network, and norm; supply chain is the flow of goods, flow of information, and flow of capital; the competitive advantage is cost leadership, product differentiation, and focus. Furthermore, the indicators of farmers’ income are land area, production, and labor. The study revealed that social capital did not directly impact maize farmers' income by the test variables of social capital, supply chain, and competitive advantage. In this case, in increasing maize farmers’ income, social capital needs to be supported by supply chain and competitive advantage as intervening variables. The study further revealed that social capital significantly affected the supply chain and competitive advantage, in which these two variables significantly influenced maize farmers’ income. Moreover, supply chain and competitive advantage have reinforced social capital to increase maize farmers’ income. From the intervening variables, competitive advantage was more vital to reinforce social capital than supply chain in increasing maize farmers’ income.

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