Determinants of Risk Management and Risky Decision-Making strategies from Colombian Coffee Growers

Abstract

The main object of this paper is to identify the determinants of risk management and risky decision-making strategies from Colombian coffee growers through relationship between risk management by the institutions underlying the Colombian coffee sector and risk perceptions by Colombian coffee growers from a neo[1]institutional approach. In order to explain the risk perceptions and individual behaviours of coffee growers, and establishing the effecst of institutions on risk perception and management of Colombian coffee growers; we use a survey from a selected sample from 459 Colombian coffee growers. The study was performed by using Structural Equation Model (SEM), through which the existing relationship between risk management offered by Colombian coffee sector inst itutions, and risk perceptions of Colombian coffee growers were empirically evaluated. This was possible by studying risk perceptions from past experiences and the way coffee growers deal with the risk associated to situations they must face, risk attitudes and management strategies. We demonstrate that the set of risk management instruments offered by the institutions underlying the coffee sector lower risk exposure of Colombian coffee growers, and determine their risk management strategies.