The Transformation of African Smallholders into Customer Value Creating Businesses: A Conceptual Framework

ABSTRACT

An increasing number of the 600 million African smallholders are becoming integrated into the supply chains of supermarkets, fast food chains, and exporters. This process gradually transforms the smallholders into profit-oriented businesses that can make important contributions to rural development and food security. This article brings this issue to the attention of the readership of the Journal of African Business. It connects distinct lines of literature on smallholders, business training, and customer value creation. More specifically, it argues that to equip smallholders with the understanding of how markets function and what customers value, trainings that address fundamental marketing concepts are required. The arguments are captured in a conceptual framework explaining the livelihood performance of rural African smallholders. Based on these arguments, the article formulates implications for development workers and suggests directions for African business research.

KEYWORDS:

• Smallholders
• agriculture
• business
• customer value creation
• training
• Africa

In Africa, approximately 600 million people operate as smallholders (The Rockefeller Foundation, 2011). These smallholders provide up to 80% of the food supply in Sub-Saharan Africa (FAO, 2012). Still, the majority of African smallholders operate in rural areas that are often relatively isolated from markets due to lack of infrastructure (Collier & Gunning, 1999). They therefore often produce for self-consumption and for small exchanges with their communities. Since the introduction of export crops during the colonial period (Tosh, 1980), rural African smallholders have become an important source of internationally traded commodities such as coffee, tea and cocoa (Temu & Temu, 2005; UNCTAD, 2015). Recent agricultural policy reforms and economic growth have led to increased exports of tropical fruits and other high-value products, and an increase of processing of agricultural products in response to new demand from the growing middle classes (Reardon et al., 2015). Supermarkets, fast food chains and processing companies are pushing the market-frontier deeper into rural Africa (Rao & Qaim, 2013). Consequently, smallholders who were selling a share of their production to markets increase their market participation and new groups of smallholders enter markets. In doing so, they collectively make important contributions to food security and rural development (Barrett, 2008).

This article focuses on the smallholders who experience such steep increases in their market participation and are relatively new to the market. Because they lived for generations in relative isolation, smallholders’ knowledge of and ability to function as a business is highly constrained. They therefore often lack the knowledge and skills that are common to other small businesses (McKenzie & Woodruff, 2013). In particular, their production and marketing practices are often traditional and uncoordinated (FAO, 2014). According to the FAO (2014), smallholders in Kenya lack an understanding of product quality management, their maize sales often depend on urgent cash needs, they do not target preferred customers and they do not meet the standards required by modern value chains. Comparable disconnections between production and marketing are also widespread among smallholders in Ethiopia, Malawi, Mozambique, and Zambia where smallholder production fails to respond to the changing consumption patterns of urban markets (Jayne, Mather, & Mghenyi, 2010). In Benin, small-scale fishermen face difficulties in selling their shrimp to the European Union because their produce fails to meet basic safety requirements (Adekambi et al., 2016).

By bringing the discussion on African smallholders into the business realm, this article aims to contribute to a smooth and successful integration of smallholders with the global market system. By approaching smallholders as businesses, we also break new ground for African business research. While the literature on African smallholders is dominated by disciplines other than business such as development economics, sociology, and anthropology (e.g. Barrett, 2008; Fafchamps, 2001), the African business literature primarily discusses urban business sectors (e.g. de Wet & Gossel, 2016; Guma, 2015), mostly neglecting rural and peri-urban smallholders. The integration of these separately existing lines of literature in this article helps the readership of the Journal of African Business to, as MacInnis (2011, p. 138) says in her taxonomy of conceptual contributions, ‘see previously distinct lines of literature as inseparable’. We make the integration tangible by developing a conceptual framework that builds on both streams of literature. The article further complements the literature on smallholders and business training with customer value creation literature. Marketing theory holds that the fundamental logic for the existence of any business is to create value to satisfy the needs of customers (Slater, 1997; Woodruff, 1997). The only exception in which customer value creation is not applicable is in a situation in which there are no market exchanges (cf. Vargo & Lusch, 2004). This suggests that, when they become more integrated with the market, also African smallholders should increasingly create value to satisfy their customers and to make profits.

To address the knowledge deficiency that relatively newly integrated smallholders may have about the functioning of markets and creation of customer value, we draw on the literature on business training. Business management and entrepreneurship training has received growing attention from development workers as a potential approach for improving the business knowledge and skills of entrepreneurs (e.g. de Mel, McKenzie, & Woodruff, 2014; Mano, Iddrisu, Yoshino, & Sonobe, 2012). While business training is probably a necessary part of the transformation of African smallholders into customer value creating businesses, such trainings have been mostly offered in urban areas in Africa (e.g. Berge, Bjorvatn, Juniwaty, & Tungodden, 2012; Glaub, Frese, Fischer, & Hoppe, 2012; Mano et al., 2012; Sonobe, Mano, Akoten, & Otsuka, 2010) while mostly neglecting rural areas.

The article is structured as follows. It first provides a background on smallholders. Next, it presents a review of the literature on business training initiatives. It then describes customer value creation as the core reason for the existence of businesses and presents the conceptual framework. Then, marketing training is explained as a strategic approach to develop the knowledge to understand the market and what the customers need to create value to satisfy their needs. The article concludes by discussing the implications for development workers and African agribusiness research.

Background on African smallholders

Smallholders include small-scale farmers, forest keepers, fishers or pastoralists that either use commonly owned natural resources or manage private lands of less than 10 hectares (FAO, 2012). Though some take a broader definition of smallholders to include also wickerwork, processing, and artisanship (CFS, 2014; Maltsoglou & Tanyeri-Abur, 2005), the development literature largely concentrates on agricultural smallholders because of their important contribution to the economies of developing countries and to world food production (e.g. Barret, 2008; FAO, 2012; Poulton, Dorward, & Kydd, 2010). In Nigeria, Kenya and Benin, respectively, 80, 75 and 90% of food production comes from smallholders (UNDP, 2012). In Burundi, smallholders produce 71% of the tea, Burundi’s second largest cash crop (World Bank, 2008). Though smallholders usually make use of family labor (Narayanan & Gulati, 2002), in Ethiopia, Kenya, Tanzania and Uganda, smallholders account for over 75% of the employment (Salami, Kamara, & Brixiova, 2010).

The literature sometimes groups smallholders in terms of the markets that they serve. Sub-Saharan African smallholders serve local, regional and export markets (e.g. Shiferaw, Hellin, & Muricho, 2011; Temu & Temu, 2005). Although long-distance trade of agricultural outputs goes back far into African history (e.g. Wolf, 1982), the export market was mostly developed during colonial times. These “colonial products” often still account for an important share of the exports, like over 80% of Ethiopia’s and Uganda’s coffee production and over 90% of the Ghanaian and Ivory Coast’s cocoa production (World Bank, 2011). During the last decades, also more high-value products are being exported like fruits and vegetables (Henson, Masakure, & Cranfield, 2011).

Exporters are however not the only ones raising the demand for smallholders’ output. Also traders and retailers that fulfil the demand for food in the growing urban areas call upon smallholder production. As a consequence, smallholders in peri-urban areas have often become specialized producers that hardly produce for their own consumption. African smallholders that produce staple food sell most of their products in local markets (Taffesse, Dorosh, & Asrat, 2011). The growing demand also fosters trade within Africa. Smallholders from, among others, Tanzania, Cameroon, and Madagascar deliver, for example, fruits and vegetables to the expanding supermarkets in Kenya, Ghana, and South Africa (Neven, Odera, Reardon, & Wang, 2009; Weatherspoon & Reardon, 2003).

Though market participation, in particular at markets that represent higher purchasing power, generally has a positive effect on the livelihoods of smallholders (Gabre-Madhin & Haggblade, 2004; World Bank, 2015), several authors argue that smallholders also frequently face rejections of their products (e.g. Graffham, Karehu, & McGregor, 2009). Rejections may lead to disappointment with and sometimes even rejection of the market system (Jaffee, Henson, & Rios, 2011). Exporting companies, fast food chains, and supermarkets increasingly ask smallholders a timely and consistent supply of products meeting fixed quality standards (Neven et al., 2009). In Kenya, a substantial group of smallholders therefore failed to sustain their linkage with supermarkets (Fischer & Qaim, 2011). The most common barriers hinder smallholders in their market integration include the lack of supportive infrastructure (e.g. roads, information communication systems, and storage) (e.g. Barrett, 2008; Fratkin & Mearns, 2003), absence of key production inputs (e.g. land, equipment and finance) (e.g. Jayne et al., 2010), lack of information to make effective selling decisions and lack of technical support and extension services (Henson, Jaffee, Cranfield, Blandon, & Siegel, 2008).

Over the past decade, smallholder cooperatives have been suggested as a suitable approach to overcoming the barriers that smallholders face (Bernard & Spielman, 2009). The underlying assumption is that smallholders will act collectively and benefit from large-scale input purchase/production, cost reduction, and experience/information sharing to supply their products in large volume to markets and to bargain for better terms of exchange in the marketplace (Bernard & Spielman, 2009). In practice, however, they often lack marketing plans, business management, and training and technical support (Chriwa et al., 2005; Ortmann & King, 2007; Poulton et al., 2010).

An important part of the problem seems the relative remoteness of smallholders, as a consequence of which they are not exposed to the information, knowledge and skills that they need to be successful in the market. Instead, they therefore rely on traditional production practices that do not meet the standards (Fischer & Qaim, 2011). Due to the fact that many African smallholder cooperatives are restricted to the traditional and local knowledge within the boundaries of their local community, cooperatives are not a solution to that problem (ILO, 2014). Local (traditional) knowledge refers to the knowledge or practices that people in a given environment have developed over time and passed on from generation to generation within a community, and which often form the community’s work culture or traditional identity (Berkes, Folke, & Gadgil, 1995; UNESCO, 2014). Anthropologists describe local knowledge as highly contextualized, informal, and unstructured knowledge that is acquired or handed-down through cultural transmission and used in daily routines (e.g. Berkes et al., 1995; Blaikie et al., 1997). In this sense, many African smallholders conduct their production activities according to the experiences and practices inherited from forefathers rather than from the “eyes of the buyer.” Though unrelated to any of the infrastructural barriers, this knowledge gap may hinder their market participation most.

Business and entrepreneurship training initiatives in developing and emerging markets

Business training can potentially fill this knowledge gap. Business training has grown in developing and emerging markets as a means of enhancing the knowledge and skills of entrepreneurs to enable them to improve their livelihoods (ILO, 2014). Such training supports small-scale businesses in developing and emerging markets that are not capable of executing business practices that are common to small-scale businesses in high-income markets (McKenzie & Woodruff, 2013). By engaging in business management and entrepreneurial trainings, smallholders are expected to improve their business competencies (McKenzie & Woodruff, 2013). In this regard, the International Labour Organization (ILO)’s Start and Improve Your Business (SIYB) program is the most widely implemented business training. Other development organizations like UNCTAD, IFC, and GTZ have also implemented training programs.

Recent studies that have implemented and evaluated the impact of training programs show that almost all training programs help their target groups to improve their knowledge and abilities to exercise business practices, which leads to improved business outcomes (higher sales and profits) (see McKenzie & Woodruff, 2013 for a recent review). Several of the studies report that business and entrepreneurship training programs support entrepreneurs in improving their business knowledge (Gine & Mansuri, 2012), applying business practices (de Mel et al., 2014) and improving their business performance (Mano et al., 2012). Because of the roles that business and entrepreneurial trainings play on African small-scale businesses, studies suggest that more trainings to African entrepreneurs will help them to survive and grow as businesses (e.g. Ladzani & van Vuuren, 2002; Mano et al., 2012).

While business training is generally important for any entrepreneur to acquire or improve knowledge and perform better, its impact is likely to differ depending upon who receives the training and what the training offers (McKenzie & Woodruff, 2013). Table 1 presents a systematized review of the current business trainings. Many of these training programs have focused primarily on African urban areas. Urban areas in Sub-Saharan African countries have social and economic advantages over rural areas, such as exposure to education and educated people, formal businesses and media (World Bank & IMF, 2013). Compared to the many African smallholders who operate in rural areas, urban entrepreneurs therefore enjoy potentially more interactions with, and gain support from, educated people and formal institutions. Such interactions can help the entrepreneurs to develop their ability to be flexible and responsive to new developments. The business training for smallholders is therefore likely to differ from the trainings for urban entrepreneurs.

Table 1. Overview of Studies of Business and Entrepreneurship Trainings in Developing and Emerging Countries.

Studies	Country	Implemented in	Target: new or existing business?	Main topics covered
Abebe and Sonobe, 2012	Ethiopia	Urban	Existing	Introduction to entrepreneurship, marketing, production management and financial management
Berge et al., 2012	Tanzania	Urban	Existing	Accounting and finance (record keeping and separating household and business finances) and marketing techniques needed to take a product to market
de Mel et al., 2014	Sri Lanka	Urban	Existing	Accounting (record keeping), financial planning and marketing steps to take a product to market
Giné and Mansuri, 2011	Pakistan	Rural	Existing	Accounting and finance (record keeping and separating household and business finances)
Glaub et al., 2012	Uganda	Urban	Existing	Aspirations/Self-esteem
Ladzani and van Vuuren, 2012	South Africa	Urban	Existing	Motivation, entrepreneurship and business skills
Mano et al., 2012	Ghana	Urban	Existing	Accounting and finance (record keeping and separating household and business finances) and marketing
Sonobe et al., 2010	Kenya, Ghana	Urban	Existing	Business planning
				Financial management

An overview of the core topics covered by the business training programs, with a particular focus on studies conducted in Africa, is presented in column 5 of Table 1. The training programs share a set of common topics that include financial literacy (e.g. record-keeping, financial planning, and separating household and business finance). Other topics covered include costing and pricing, inventory management and the steps needed to take a product to market (routine marketing activities) (McKenzie & Woodruff, 2013). While the topics covered are important for businesses, there are challenges that likely influence the training’s effectiveness and degree of impact. According to McKenzie & Woodruff (2013), business training courses cover a combination of broader business concepts in ‘one menu’; this makes it difficult for impact evaluation studies to determine which component of the training explains the success story of the training programs.

The training content reflects the focus of the trainings on urban and peri-urban entrepreneurs. These target groups have some experience with the market system and they already have answers to the fundamental questions on how markets function, why customers are important, and why new technologies and quality practices help them to succeed on the market. For smallholders that have little or no experience with the market, these fundamental questions still should be addressed to ensure that their market integration is more smooth and stable. They underlie and connect the technical, production, marketing, and management practices conducted in the smallholder business. Business training for smallholders with little market experience may therefore benefit from treating marketing not only as a set of instruments and practices but also as a business philosophy (Kohli & Jaworski, 1990). As a business philosophy, marketing recognizes the customer as the focal point of all business activities and guides the coordination of business activities towards satisfying the needs of target customers (Deng & Dart, 1994).

Customer value creation

Figure 2 presents a conceptual framework that is produced from the integration of previously distinct lines of literature together. An integrative conceptualization accommodates existing but diversified knowledge into a unified whole to produce an interconnected perspective and to offer a pattern of relationships (MacInnis, 2011). Because customer value creation is the central concept within business philosophy (Kotler & Keller, 2012; Woodruff, 1997), it is the central variable in the framework.

Figure 1. Customer Value Creation Process (based on Webster, 2002; Kotler & Keller, 2012).

Figure 2. Conceptual Framework.

Customer value is one of the most widely discussed concepts in the strategic marketing literature (e.g. Slater, 1997; Woodruff, 1997). Marketing research has conceptualized customer value as a customer-direct concept (e.g. Woodruff, 1997) and as a supplier-direct concept (e.g. Rust, Lemon, & Zeithaml, 2004; Walter, Ritter, & Gemünden, 2001). From the supplier perspective, customer value is viewed as what the supplier derives (gains) from the customer that increases the value of the business (e.g. profitability) when delivering products or services to the customer (e.g. Woodall, 2003).

The ‘customer-direct’ concept considers value from the customer’s side and qualifies as what the customer wants from buying and using a supplier’s product (Woodruff, 1997). In accordance with this perspective, Woodruff (1997, p. 142) defines “customer value as a customer’s perceived preference for and evaluation of those product attributes, performances and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes.” Thus, customer value refers to the benefits that customers receive in the transaction relative to what they sacrifice (Zeithaml, 1988; Woodruff, 1997). Businesses that create more customer value are better than their competitors in satisfying their target customers and in retaining them (Flint, Blocker, & Boutin, 2011; Woodruff, 1997). Customers may also spread positive-word-of-mouth which enables the business to attract more customers (de Matos & Rossi, 2008). For these reasons, customer value creation is a key driver of financial performance (Woodruff, 1997).

As customer value is a perception, the different main customer groups of smallholders (exporters, emerging middle-class and low-income consumers) have a different idea of what is valuable. Exporters, for example, evaluate the value of the products on among others compliance with quality and safety standards (e.g. Henson et al., 2011), to the emerging middle class it can for example be health and indulgence (e.g. Tschirley, Reardon, Dolislager, & Snyder, 2015), and to low-income consumers it may be a low price and high quantity at acceptable quality levels (Sheth, 2011). The smallholder literature has shown that smallholders that consistently produce and supply products that meet the quality and safety standards of buyers like supermarkets and exporters enables the smallholders to obtain higher and stable returns (Maertens, Colen, & Swinnen, 2011; Minten, Randrianarison, & Swinnen, 2009). With such higher returns, these smallholders purchase consumer goods, cover medical expenses, invest in education for their children (Maertens et al., 2011), and also can accumulate capital (Lewis, 2002). Even smallholders that produce for customers with very little purchasing power are likely to be better off when such customers are loyal and speak favorably about them (e.g. Baiphethi & Jacobs, 2009). Hence, value-creating smallholders experience higher levels of livelihood performance. We thus propose the following:

P₁:

Customer value creation positively influences the livelihood performance of smallholders.

The value for customers is created based on how businesses integrate resources to make, communicate and deliver products that satisfy the needs of customers (Woodruff, 1997; Zeithaml, 1988). Flint (2004), Webster (2002), and McDonald (2006) have identified sequential steps that businesses undertake to create value, namely value-defining, value-developing and value-delivering (see Figure 1; Table 2). Value-defining activities are performed before the product physically exists. They include assessing the market, selecting the customers to target, and defining what they value (e.g. Lanning & Michaels, 2000). Value-developing entails procuring resources and designing and making a product that customers find consistently useful and want to buy repeatedly (Kotler & Keller, 2012; Webster, 2002). The product is developed to contain essential attributes (quality, features or style) that fit the expectation of the customer (Vantrappen, 1992). Finally, the value created is communicated and delivered to predefined customers (Flint, 2004; Lanning & Michaels, 2000).

Table 2. Customer Value Creation Activities Among Smallholders.

Value-defining	Market sensing	Information gathering about and interpretation of market conditions (e.g. price trends), preferences of exporters, wholesalers, supermarkets and retailors, as well as supply of similar products by other producers through:
		personal visits (observation) to marketplaces
		face-to-face discussions with exporters, supermarkets, wholesalers, retailers and end-consumers.
		discussions about customers and other suppliers of similar products with relatives, NGOs, government offices, etc.
		consulting development agents and experts about conditions in the local, regional and export markets, and how such conditions influence price of products.
		discussions about exporters, supermarkets, wholesalers, retailers and end-consumers with other producers who supply similar products to the market.
	Define the customers to serve	Specify the group of customers (exporters, the emerging middle-class or low income consumers) whom the smallholders should target and capably meet their needs.
	Define the value of target customers	Specify the value of the targeted customers in terms of specific product attributes (e.g. size, color, weight, volume, taste), and suitable place and time to supply the product.
Value-developing	Assemble inputs for production	Assemble (procure) inputs (e.g. feed in livestock sector, improved variety seed and fertilizer in farming, fishing net in fishing) that are important ingredients or tools needed to make the product.
	Make the product	Design and make the product based on the product quality attributes specified to meet the value of the predefined customers.
Value-delivering	Supply the product through an appropriate distribution channels to reach the targeted customers (e.g. exporters) at the specified place (right place) and in the right time.

Importantly, the strategic marketing literature suggests that the capacity of a business to integrate resources in a way that creates superior customer value depends on market knowledge (Li & Calantone, 1998). Market knowledge refers to the systematically developed and organized knowledge or understanding that pertains to the market, market trends (dynamics), and customers’ and competitors’ behavior that is required to guide creating and delivering superior value to satisfy customer needs (e.g. Glazer, 1991; Marinova, 2004). Market knowledge helps to create customer value because it gives businesses a better understanding of what the customer wants as businesses combine resources into offerings (Slater, Olson, & Sorensen, 2012). An understanding of concepts such as markets, customers, value, competitors, and target markets may create a mental model on the basis of which any new, contextual market information can be interpreted (Slater & Narver, 1995). As such, the information adds to the knowledge and helps smallholders in their decision-making and the coordination of activities within the business.

At this level of abstraction, value creation is not any different for smallholders. Given the options that are available where they live, they should decide whether they target exporters, upcoming middle-class markets, or low-income markets, and perhaps which specific traders, exporters or customer groups within these markets. To effectively integrate their resources like land, water, seeds, and fertilizers, they need information on the expectations and standards of exporters and/or traders. When buyers require a minimum quantity, smallholders may pool their output to create a larger-quantity value proposition, for example, in the context of cooperatives or credit groups. Also comparable to other businesses, smallholders will need a mental framework reflecting basic marketing concepts like target markets, customer value and satisfaction to understand how all their activities may help to maintain customers, acquire new ones and generate profits.

P₂:

The higher the market knowledge of smallholders, the more value they create for their customers.

The role of marketing training

The majority of rural African smallholders produce, however, on the basis of their traditional knowledge and experience that is available within their community (UNESCO, 2014). Arnould (2001), for example, reports that many onion producers in Niger produce onion based on culturally-based practices such as hand-lifted irrigation and traditional storage, leading to unnecessary losses of up to 60% of their produce. They sell their produce at farm gates during harvesting time at low prices. Comparable practices also exist among other smallholders. Remote East African pastoralists, for example, raise livestock to own large herd sizes and sell livestock only when they need cash or to avoid losses from drought (McCabe, 2004). Customers’ considerations are mostly absent in such mental models, let alone that they provide a frame to coordinate activities in the smallholding.

In such situations, the development of a more marketing-based worldview can be established by creating an understanding of basic marketing concepts. Teaching these basic marketing concepts is a key component of academic thinking in the field of marketing (Kotler & Keller, 2012). As such, insights that are developed within the marketing discipline regarding how to teach marketing concepts can also be used to help African smallholders develop the mindset of market-based interpretation, thus guiding their decision-making and coordination towards the creation of customer value.

Educational literature states that education can shape the minds of people in such a way that they can access and process information, memorize, use logical reasoning, make strategic decisions and find ways to create a better future (Bostrom & Sandberg, 2009; UNESCO, 2006). In that respect, education and training enhance the cognitive resources, such as understanding abstraction, memory, critical thinking and reasoning, that individuals need to accomplish tasks in a better way (Bostrom & Sandberg, 2009). The purpose of training is also to offer training participants with the potential and empowerment to envision different realities and make informed choices (UNESCO, 2006; Viswanathan, Sridharan, Gau, & Ritchie, 2009). This implies that marketing training can provide smallholders with the knowledge that helps them to envision different approaches to managing a profitable business.

Marketing training is a specific element of education planned to convey new, to modify or to expand marketing knowledge, skills and attitudes of learners or maintain levels of competence to respond to new developments and changing circumstances, as well as enhance productivity (e.g. Goldstein, 1993). Marketing literature suggests marketing training as an important approach to equip participants with market knowledge that provides an understanding of the market environment and what the customers want to make informed and reasoned production and marketing decisions (e.g. Petkus, 2007; Rosa, 2012; Viswanathan et al., 2009). Petkus (2007) argues that the knowledge that helps learners to integrate abstract concepts with concrete phenomena and analyze the phenomena and to make logical reasoning to shape their tasks and make critical decisions is an outcome of marketing education. In this process of building knowledge, learners must obviously understand the basic marketing concepts (Henke, 1985). As such, teaching fundamental marketing concepts in a way that is understandable to smallholders will increase the market knowledge of smallholders.

The importance of marketing training for entrepreneurs has also been assessed empirically. Viswanathan, Gajendiran, and Venkatesan (2008), for example, developed a marketing training for micro-entrepreneurs in Chennai, India, with an objective of improving the knowledge of the micro-entrepreneurs from the perspective of running a profitable business by satisfying customer needs. The training program designers have reported positive outcomes that the micro-entrepreneurs have gained knowledge from the training and started to recognize the benefits of putting customer needs first in doing business (Viswanathan et al., 2009). Like rural African smallholders, the micro-entrepreneurs in Chennai face conditions of resource scarcity that impede their efforts to acquire knowledge from the surrounding environment to function in and benefit from the markets. The evidence obtained from Chennai therefore highlights the important of marketing training to resource-constrained small-scale businesses including African smallholders. As such, a marketing training designed based on specific training needs, economic practices (e.g. farming, pastoralism, or fishing) and the particular markets (local, regional, or export) they serve will help African smallholders to develop knowledge that will enable them to process market information and to make informed decisions to coordinate the activities in their business.

P₃:

Smallholders who receive marketing training will develop more market knowledge.

Accounting for individual differences

Traditionally, training design focuses on three features: (1) assessment of training needs (learning outcomes), (2) use of appropriate training methods to deliver content based on needs, and (3) evaluation of the effectiveness of the training (Tracey & Tews, 1995). While deliberation on these features is inevitable, it excludes the consideration of individual participants’ differences that may influence the effectiveness of any training effort (Tracey & Tews, 1995). Existing business training literature emphasizes that individual differences before training will determine the potential effectiveness of training (e.g. Holton, Bates, & Ruona, 2000; Tracey, Hinkin, Tannenbaum, & Mathieu, 2001). Rosa (2012) also suggests that marketing training that is meant to build the knowledge and ability of marketers in subsistence marketplaces needs to account for individual characteristics. Accordingly, we include self-efficacy, aspiration, and education level, which training literature has identified as determinants of training effectiveness (e.g. Chiaburu & Marinova, 2005; Tziner, Fisher, Senior, & Weisberg, 2007).

Self-efficacy is defined as one’s belief in one’s ability to succeed in specific situations or accomplish a task (Bandura, 2004). An individual’s sense and awareness of self-efficacy plays an important role in how the individual approaches tasks and makes efforts to overcome challenges (Saks, 1995). Pre-training self-efficacy of participants has also been found to determine the effectiveness of the training program in transferring knowledge to the participants (Sookhai & Budworth, 2010). Participants with higher self-efficacy have the motivation and self-confidence to endeavor to acquire new insights and knowledge from the programme (e.g. Sookhai & Budworth, 2010; Tracey et al., 2001). In this regard, African smallholders with higher belief in their ability to succeed are likely to acquire more knowledge from a marketing training. Narayan, Patel, Schafft, Rademacher, and Koch-Schulte (2000) report that resource-constrained African rural communities feel that they do not have the power and capability to lift themselves out of poverty. As such, those African smallholders who feel that they do not have the required capacity to succeed with their businesses will less likely benefit from the training. Hence, smallholders’ self-efficacy will moderate the effectiveness of marketing training in enabling African smallholders to capture new insights and knowledge from the training programs (Saks, 1995).

P₄:

The higher the self-efficacy of smallholders, the stronger the relationship between marketing training and market knowledge.

Aspiration level: Aspiration refers to the desire, interest or motivation to achieve something higher compared to previous, current or peers’ performance (Baum & Dahlin, 2007). Trainees with higher aspirations achieve higher education outcomes than those with lower aspiration levels (Khattab, 2015). Trainees who aspire to achieve higher performance (goal-orientation) in their life make efforts to learn the knowledge and skills that lead them to attain their desired goals (Chiaburu & Marinova, 2005). Even when trainees possess the self-efficacy needed to learn the material emphasized in the training program, their performance in acquiring knowledge will be poor if their desire to learn and achieve some level of success is low or absent (Chiaburu & Marinova, 2005). Based on a large, worldwide sample of people living in poverty, Narayan, Pritchett, and Kapoor (2009) found that individuals with higher aspiration levels set goals and are more likely to lift themselves out of poverty while those with lower levels of aspiration remain in the same poverty situation. Hence, the pre-training aspirations of smallholders are likely to influence the effectiveness of a training in conveying the intended subject matter.

P₅:

The higher the aspiration levels of smallholders, the stronger the relationship between marketing training and market knowledge.

Education level: Education is considered to be an influential factor in individuals’ trainability and knowledge acquisition (Mathieu & Martineau, 1997). Research suggests that trainees with higher education levels process and relate one training content with another content, and acquire more knowledge from a training program than less educated trainees (Mathieu, Tannenbaum, & Salas, 1992). Individuals with low education levels lack the ability to obtain, process and relate one concept or piece of information with another concept or piece of information emphasized in a training program (Viswanathan et al., 2009). Unless learning outcomes are stated in concrete terms for low-literate training participants, these participants are less likely to grasp the concepts and benefits of the training program (Viswanathan et al., 2009). Because many smallholders in Sub-Saharan Africa have low levels of literacy (UNESCO, 2013), the effectiveness of marketing training may depend not only on their self-efficacy and aspiration but also on their education level.

P₆:

The higher the education level of smallholders, the stronger the relationship between marketing training and market knowledge.

Finally, our framework includes a box with control variables that refer to resources such as agricultural land, finance, access to water and pasture and equipment. These variables are likely to influence customer value creation because we previously defined value creation as a process of integrating resources. These particular resources are often addressed in the literature on smallholders (e.g. Jayne et al., 2010; Marenya & Barrett, 2007). Obviously, the degree to which such resources are accessible influences the value creation process of smallholders.

Conclusion

By integrating distinct lines of literature, this study created a conceptual framework to transform African smallholders into customer value creating businesses. Customer value creation is central to the framework because smallholders who create value for their customers are likely to improve their livelihood performance. As such, the transformation of smallholders into customer value creating businesses contributes to reductions in rural poverty and the problems associated with it, such as food insecurity, insufficient food production, and migration from rural to urban areas. Whereas strategic marketing literature recognizes market knowledge as a strategic resource for customer value creation in advanced business sectors, this article brings market knowledge as a factor that is highly influential in the successful transformation of African smallholders into customer value creating businesses. As smallholders create value out of Africa’s most distinctive resources like agricultural land and its diversity of flora and fauna, customer value creation in the context of smallholders deserves all the attention it may get from the side of African business researchers and educators. Educators are needed because marketing training develops smallholders’ market knowledge. In the implications for African business research section, we will describe potential research directions for African business researchers to study the effectiveness of marketing training to help smallholders develop market knowledge.

Implications for development workers

To foster the integration of African smallholders into markets, development workers, including policymakers, aid organizations, and researchers, have dedicated considerable efforts to creating enabling environments for smallholders. These efforts largely focus on resources such as roads, landholding, capital, and improved seed varieties (Tripp & Rohrbach, 2001). While creating an enabling environment is important to the market participation of smallholders, it may not be enough for smallholders who lack the basic knowledge and the mindset of making a profit by satisfying customer needs. Due to lack of foundational knowledge about the logic of doing business, smallholders benefit less from the enabling environment because they do not make their products from the customers’ perspective; customers reject products if they feel that the products are not made to meet their needs (Kotler & Keller, 2012). As such, policymakers should focus not only on creating enabling environment, but also on enabling smallholders to produce what their customers want to buy. Otherwise, smallholders facing frequent product rejections will lose profits and thus fall deeper into poverty. To escape from poverty, smallholders migrate from rural to urban areas seeking jobs and a better life, which has negative consequences such as dwindling rural productivity and rural-urban socioeconomic chaos (Narayan et al., 2000). Dwindling smallholder productivity also impacts food insecurity in Africa.

The framework developed in this article provides implications for policymakers to support smallholders to align their products with customer requirements. Policymaking should focus on marketing training as a means to provide smallholders with the basic knowledge that will enable them to grasp the logic of doing business and discover how to be in the profit making business. Because education is a tool to shape the mindset of individuals (UNESCO, 2006), policy that focuses on marketing training can empower smallholders to think beyond the traditional status quo and envision different approaches that enable them to produce and market higher quality products that offer superior value to target customers. With more developed market knowledge, smallholders can flexibly adapt their production system to consistently align products to customer preferences and purchasing patterns. As such, smallholders will make products that not only satisfy local markets but also meet the requirements of export or other high-value markets. This will enable the smallholders to sell their products at higher prices and consequently gain profits, which will result in better rural livelihood performance. We therefore suggest that policymakers focus on marketing training to help smallholders organize their activities towards creating customer value.

Aid organizations and business training designers can support policymaking regarding the transformation of African smallholders into customer value creating businesses by dedicating resources and designing marketing training programs that include and emphasize marketing as a business philosophy. By emphasizing marketing as a business philosophy, such programs have a high potential to create a mindset among smallholders that puts customers first in the production and marketing process. To create such a mindset, training programs can build on fundamental marketing concepts to deliver the foundational knowledge that smallholders will use to coordinate and guide their activities towards making the right products for their customers (Kotler & Armstrong, 2012). Structuring the trainings according to learning outcomes formulated from a set of basic concepts will potentially help smallholders gain a more logical and broader comprehension of their roles as key actors in the market environment. The set of basic marketing concepts that smallholders can benefit from include, among others, market, market exchange, market dynamics, customer-centric business, competition, marketing instruments, and value chain (Kotler & Armstrong, 2012; Kotler & Keller, 2012). Which concepts are needed to train the smallholders may depend on the specific training needs and specific economic activities of the smallholders who will participant in training programs. Also, the effectiveness of training programs in enabling smallholders to acquire knowledge can depend on hiring appropriate trainers who are knowledgeable about the concepts being taught, and have the desire to train, ability to communicate, and skills to get the smallholders to actively participate in the training.

As a final point of warning, we state that smallholders do not just learn from training but also from their experiences in the markets. By developing projects in the market environment of smallholders, NGOs are an important force that create the learning environment. NGOs should therefore try to make that environment functions along the rules of the market, such as that creation of value requires investments in the necessary resources. While giving resources for free to smallholders may be an effective way to overcome capital constraints, it can also provide a wrong signal for market knowledge development. Policies of NGOs that provide incentives to smallholders should therefore not interfere with training contents designed to develop the market knowledge of the smallholders.

Implications for African agribusiness research

Our framework offers several directions for future research. As we still know very little about how African smallholders perceive and understand their markets, more qualitative studies are needed in a wide variety of African smallholder contexts. These studies may help to develop an understanding of the knowledge gaps and marketing training needs of smallholders and therefore generate valuable input into the design of marketing trainings.

This study indicated that the capacity to create value for customers depends on market knowledge, and, in turn, the development of market knowledge depends on marketing training. African business research, however, has empirically studied none of these relationships in the context of transforming African smallholders into profit-oriented businesses. A promising approach that will lay a foundation for conducting empirical studies could be the design of a complete marketing training program. To design training programs, qualitative studies should assess the training needs of specific smallholders who need to be trained. Assessing training needs is important to identify the knowledge gap and to determine the concepts and methods needed to convey the required knowledge (Brown, 2002; Goldstein, 1993). Qualitative studies are important to design training programs that build on existing knowledge and practice of participants (Angelo, 1993; Halpern & Hakel, 2003) and will pave the way for quantitative investigations of the effectiveness of the training programs.

Cross-sectional and, in particular, longitudinal quantitative surveys could evaluate the progressive effects of marketing training. Cross-sectional surveys could be used to determine whether training participants achieved the training’s learning outcomes and whether the participants have acquired a foundation that is sufficient to apply their new knowledge in their production and marketing practices. Longitudinal studies could investigate the progressive impact of marketing training in enabling smallholders to translate into practice what they have acquired from the training. Specifically, a longitudinal experimental study could evaluate the effectiveness of the training by comparing differences in production and marketing activities between those who enrolled in training and those who did not. Findings from such studies will entice development workers to commit resources with the aim of offering and scaling up marketing training that could promote African smallholders from surviving to thriving.