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Market participation among smallholder farmers in Tanzania: determining the dimensionality and influence of psychological contracts

PurposeSmallholder farmers in Tanzania were investigated in this paper to determine the dimensions and influence of psychological contracts on smallholder farmers' decisions to participate in the market.Design/methodology/approachData were collected through structured questionnaires, of which a cross-sectional design was conducted in central Tanzania, the Dodoma region in which 467 smallholder farmers were surveyed. First, a preliminary Exploratory Factor Analysis (EFA) was conducted by involving psychological contracts and market participation items derived from previous studies. This was followed by the Confirmatory Factor Analysis (CFA) to verify the items obtained in the EFA. The regression analysis was then performed to test the causal effects of psychological contracts on market participation among smallholder farmers.FindingsThe path analysis revealed that transactional, relational, and ideological contracts have a positive and statistically significant impact on the participation of smallholder farmers in the market. Therefore, smallholder farmers have own set of expectations for participating in the marketplace. As a result, smallholder farmers' relationships with market participation decisions can be strengthened.Research limitations/implicationsThis study covered only smallholder farmers. However, future studies can include large-scale farmers, because psychological contracts and market participation difficulties also apply to them. This may increase the generalizability of the findings.Originality/valuePast studies have not extensively covered the psychological contracts in smallholder farming, especially in market participation. Based on prior empirical and theoretical research from other disciplines, the findings of this study contribute to a better understanding of the psychological contract framework and the significance of multiple psychological obligations between smallholder farmers and market management.