Evaluating Driving Factors Behind Relational Contracts in Agricultural Capital Equipment

Frances Dell, Purdue University

Abstract

Evaluating key factors that influence the strength of a relational contract between agricultural producers and equipment dealers or brands is imperative to increasing profitability and improving marketing tactics in agricultural equipment sales. This paper bridges the gap between loyalty and relational contract research and evaluates the driving factors behind loyalty and relational contracts in agricultural equipment. Using marginal probability effects probit models, we found that the strength of relational contracts with a brand depends on the amount of additional performance, or effort offered by the brand, while the strength of a relational contract with equipment dealers relies mostly on the existing, repeated relationship with the supplier and salespeople. This paper adds to the limited existing research on what drives loyalty in agriculture, with findings that can be used to increase client retention and profitability of the company.

Degree

M.Sc.

Advisors

Downey, Purdue University.

Subject Area

Agriculture|Behavioral psychology|Marketing|Psychology

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