Strategic choice along the vertical coordination continuum

Abstract

International Food and Agribusiness Management Review 4 (2001) 149-166. doi:10.1016/S1096-7508(01)00079-92016-03-04T18:49:26

Sustainability Experiments in the Agri-Food System: Uncovering the Factors of New Governance and Collaboration Success

“…Hybrids are all organisational forms located between the spot market with immediately completed transactions without a durable relationship between anonymous transacting parties, and hierarchical forms of governance [49,50]. At present, hybrid forms (e.g., relation-based alliances, joint ventures, multi-actor networks, group of producers) are also the most common forms of governance in the agri-food system [47,[51][52][53]. Therefore, most business evaluation criteria are derived from transaction cost economics such as transaction characteristics (e.g., product features or uncertainty) and coordination mechanism (e.g., contract type or allocation of decision rights) [54,55].…”

“…They are directly linked to the coordination mechanism which contains the contract type, allocation of decision rights and intensity of control. The type of contract allows to distinguish between a written contract or oral agreement and evaluates the legal enforceability of the agreements which aim to decrease opportunistic behaviour of actors [36,53,[59][60][61][62][63]. The relational governance is specified by choice of partners and type of relationships.…”

The role of empirical research in the study of complex forms of governance in agroindustrial systems

“…According to Peterson et al (2001), as we move from the spot market towards vertical integration, the market gives way to coordination efforts in a constant search for reduction of transaction costs. In this sense, the performance of a particular agribusiness system is related to its coordination capabilitiesi.e., structures of governance -which include not only the current price system (the market), but also the role played by "non-market", contractual relations (hybrid forms and hierarchy).…”

The boundaries of the firm: why do sugar producers outsource sugarcane production?

“…This characteristic describes the degree to which the contract arrangement is linked to the specialised physical capital, site specific assets, human assets, co-ordination or temporal specificity requirements of one of the contracting parties. The presence of asset specificity, thus, increases the possibility of opportunistic behaviour by one party and a degree of dependency by the other party and, therefore, increases the cost of contracting (Klein et al, 1988;Williamson, 1988;Foss, 1995;Peterson and Wysocki, 1998). Contract cost can also be affected by the level of trust that exists between the contracting parties (Ring and van den Ven, 1992;Anderson et al, 2000) as well as by commodity specific cycles that affect certain industries in cyclical patterns (Ruth et al, 1998).…”

“…The range of governance structures for co-ordinating activities in an agricultural supply chain can be conceptualised as a continuum that runs from open markets to full vertical integration (Peterson and Wysocki, 1998). Similarly, Williamson (1979) proposed that any activity can be co-ordinated by a continuum of contracts that range from classical to relational.…”