Determinants of individual social capital in dairy cooperatives in West Shoa, Ethiopia

ABSTRACT While previous studies recognise the importance of social capital for cooperatives’ social and economic outcomes, there are no empirical studies on the determinants of farmers’ social capital in cooperatives. This paper investigates the determinants of social capital using data from farmers in dairy cooperatives in Ethiopia. First, principal component analyses (PCAs) are performed on the data set of dimensions of social capital: structural, relational and cognitive. After applying PCA, composite indicators are developed as measures of farmers’ dimensions of social capital. Second, seemingly unrelated regression is employed to identify the determinants of the dimensions of social capital. The results suggest that marital status, education level and length of membership have a positive effect on the structural dimension. The relational dimension has a positive relationship with the ownership of a radio, the number of close friends, and membership in associations, while training access and number of close friends positively influence the cognitive dimension. The study concludes that improving farmers’ social capital in dairy cooperatives requires investment in the educational system, creating and developing local associations, promoting cooperatives through mass media, and strengthening the existing training programmes.