Market Orientation and Financial Performance of Irish Potato Farmer Co-operatives in Rwanda

Abstract

Co-operatives are considered key vehicles for increased market orientation among smallholder farmers. Nonetheless, there are limited studies on its influence on the performance of co-operatives in developing and emerging economies. The paper examined the effect of market orientation dimensions on financial performance among Irish potato farmer co-operatives (IPFCs) in Rwanda. Data were collected by interviewing 387 members from 32 co-operatives.
Secondary data from audited financial statements were collected to analyze financial performance between selected IPFCs in terms of Return on Equity (ROE). Pearson correlation and multiple linear regression were used for data analysis. The results showed a positive significant relationship between customer orientation and financial performance (b = 0.091, p < 0.001), and competitor orientation and financial performance (b = 0.065, p < 0.001), while supplier orientation has shown a negative correlation (b = -0.023, p < 0.05). Furthermore, the results revealed a non-significant relationship between inter-functional coordination and
financial performance (b = 0.03, p > 0.001). Based on the findings, the most IPFCs experience ineffective market orientation due to limited financial capacity, which impairs their financial performance. In order to raise capital and implement the market orientation concept, it is recommended that IPFC's leaders address the barriers that prevent members from increasing their shareholdings. This study could serve as a framework for IPFCs leaders, policy makers and community development partners to formulate appropriate strategies for IPFCs to be market-oriented. The study contributes to the literature by analyzing market orientation dimensions that affect the financial performance of agricultural co-operatives in developing and emerging economies.