Article
Awareness towards Action: Legal Awareness and Governance Capability as Antecedent of Entrepreneurial Risk-Taking in Farmer Producer Organizations
Though entrepreneurial risk-taking is perceived as the behavioural essence of entrepreneurship, in collective agrarian enterprises like Farmer Producer Organizations (FPOs), it does not appear in isolation but is shaped by the institutional framework of the members and the FPO board. This paper shifts the legal and regulatory awareness and governance capacity from being compliance-oriented organisational characteristics to institutional determinants that influence the FPOs willingness to take a calculated risk in their business operations. With a structured questionnaire, 75 respondents related to FPOs are covered, with the help of which four constructs are captured, namely Legal and Regulatory Awareness (LRA), Regulatory Compliance Capability (RCC), Governance Capability (GC) and Collective Entrepreneurial Performance (CEP), of which entrepreneurial risk-taking is treated as a separate indicator in CEP. Descriptive statistics (mean, standard deviation, coefficient of variance, agreement percentage and index scores) indicate that, although LRA (Index = 73.0%), GC (73.4%) and overall CEP (73.8%) are rated positively, the specific item measuring willingness to take calculated risks scores comparatively lower (Mean = 3.52; Agreement = 57.3%) than five of the six CEP indicators and RCC records the weakest construct-level score overall (71.8%). The patterning observed here is suggestive evidence, not statistical proof, that institutional readiness (knowledge of, a sense of governance) lags behind the ability to act entrepreneurially on the risk, and that less than optimal compliance capability could possibly constrain risk appetite. The paper proposes a conceptual model that connects LRA and GC to entrepreneurial risk-taking, where RCC is a boundary condition, and provides correlational and regression analyses testing for these relationships that could be conducted by an additional study using respondent level data. In addition to measures for compliance, it is recommended that legal-awareness programmes and governance capacity-building serve as levers to enable FPOs to take calculated risks, which collective entrepreneurship entails.