About Management and Efficiency of Agri-Business Organisations

Hrabrin Bachev

doi:10.4172/2162-6359.1000188

Abstract

Unprecedented development in theory of economic organisations in past decades has brought about to significant evolution in understanding of essence and efficiency of agri-business organizations. Nevertheless traditional approach for assessing management and efficiency of economic organisationsis (“black-box” approach, through “technical or financial efficiency” of production factors, “productivity of employed resources”) is widly used. Concequently it cannot be excplained: why there are so many organizations performing with great variation in efficiency for long period of time. This paper incorporates achievements of interdisciplinary New Institutional Economics and suggests a framework for assessing management and efficiency of organizations for agri-biusiness and innovation. According to this new approach we have to study firm and farm as a governing rather than as production structure; assess comparative efficiency of alternative market, contract, internal, and hybrid modes of governance; take into account transaction costs and institutional, behavioral, dimensional, technological and natural factors; enrich (reformulate) criteria of economic efficiency of business organization; and better determine effective horizontal and vertical boundaries of business organisations. Specificity in the area of agri-business research and innovations is also clarified. Effective boundaries of different governing modes are assessed, and needs and forms for public intervention in agrarian research and innovation are clarified.

Highlights

Unprecedented development in teconomic theory in past decades has brought about to significant evolution in understanding of essence and efficiency of business organisations [1,2,3]
Comparisons are made of levels of efficiency across business organizations of different type, sectors and countries independent to specific economic, institutional or natural environment
Part of transactions/activity will be effectively governed through free market exchange; another part will be effectively organized through special contract mode(s); part of transactions will be entirely integrated within firms of different types, while trest protected though special private organization(s) outside firm gates

Summary

Introduction

Unprecedented development in teconomic theory in past decades has brought about to significant evolution in understanding of essence and efficiency of business organisations [1,2,3]. Part of transactions/activity will be effectively governed through free market exchange; another part will be effectively organized through special contract mode(s); part of transactions will be entirely integrated within firms of different types, while trest protected though special private organization(s) outside firm gates At this stage qualitative analysis is made on comparative efficiency of diverse type of business organizations in specific socio-economic, institutional and natural environment. When there is a mutual (capacity, technology, quality, timing of delivery) assets dependency a long-term contract is preferable form to govern transactions Such strong bilateral co-ordination between farmers and processor exist in beef, swan, and poultry industries, and it is supported by tight interlinked marketing, inputs, innovation and extension supply contracts, and a total production management or even a complete vertical integration by a processor. Pure public organization (in-house production, public provision) will be the most effective as in the case of basic agrarian research, education, agro-market information, agrometeorological forecasts, border sanitary and veterinary control etc

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Conclusion