The Determinants of Risk-Sharing Strategies of Food-Retailers: A Study on Chittagong, Bangladesh

Abstract

Food-retailers have access to various risk management strategies to manage the risks in food processing and trading. Risk-sharing is a powerful instrument amongst risk management strategies. It comprises a negotiation of risk allocation between at least two agents to reduce risk and to increase expected utility. The objective of the study is to identify the factors that affect the selection of risk-sharing strategies of food-retailers. In this regard, the study explains risk-sharing instruments from three perspectives: risk reduction; risk mitigation; and risk coping strategies. Food-retailers choose these risk-sharing strategies according to their preference. We link a theoretical understanding of the existing risk-sharing strategies with an empirical model. For quantitative analysis, primary data encompassing 24 variables is sampled from 109 randomly selected food-retailers from and around the city of Chittagong, Bangladesh. This study uses a multiple regression model to identify the significant factors in selecting risk-sharing strategies. The results infer that Family Employment, Hired Employment, Value Chain Challenges, Institutional Challenges, Societal Challenges, Risk Attitudes on Marketing and Promotion, Risk Attitudes on Innovation, Risk Attitudes on Business-in-General, Gender and Expectation for Succession, have a significant effect on the selection of risk-sharing strategies. The analysis is performed on SPSS (version-26). This study covers only off-business risk-sharing instruments of food-retailing. Consequently, this result is irrespective of on-business risk management strategies.