It takes two to tango: combining asset specificity and uncertainty to explain the diversity of plural forms

Abstract

In this paper, we rely on an extended version of the traditional transaction cost economics (TCE) framework to explain the variety of plural forms in the governance of food supply chains. Relying on the interplay of two transactional attributes – asset specificity and uncertainty – we explore not only the existence of plural forms, but their empirical diversity. This aspect has been largely under-explored and very little has been done empirically so far in this respect, despite its empirical significance. From an organizational point of view, this diversity requires an explanation as they carry different governance properties. We propose that while both are important drivers for the prevalence of plural forms, each of them plays a different role in their composition. Whereas uncertainty determines the type of plural form, asset specificity determines the level of coordination within the plural form and sheds light in the relative weights of each organizational arrangement composing it. An embedded case study of the Korin firm in Brazil, a leading firm in the organic food market, illustrates.