Abstract
Based on the Measurement Cost Theory, this study focuses on the coexistence of institutional arrangements in coordinating complex agribusiness systems. Under the rationale of “Organizational Tolerance”, the existence of plural forms is investigated in the acquisition of cattle, poultry, and swine by the meatpacking industry in the State of Mato Grosso do Sul. In general terms, the degree of organizational tolerance and its determinants are assessed in this study. To this end, 98 farmers were interviewed and the data analyzed by applying an Ordered Logit model. The main hypothesis is that Organizational Tolerance is related to the difficulty of measuring attributes of the transacted products. The findings show that the difficulty of measuring the animal condition is statistically significant (5%) for the existence of a higher Organizational Tolerance. Other variables such as tradition (5%), cooperation (10%), and adoption of contracts (1%) also explain the degree of Organizational Tolerance in agro-productive systems. Understanding the determinants of organizational choice is essential to the identification of efficient solutions for the coordination of productive systems in agribusiness, and for the establishment of public and private strategies for the sector.
Highlights
The efficiency of an Agro-Industrial System1 (AgS) is based on its ability to create, sustain, and distribute value
Finding institutional arrangements2 that minimize such costs and prevent the occurrence of opportunistic behavior and contractual breaches is imperative for an efficient coordination that results in creation and value protection (Monteiro & Zylbersztajn, 2012; Zylbersztajn & Caleman, 2012)
The present study focuses on the AgS of swine, poultry, and cattle, characterized by different organizational tolerance patterns, with the poultry sector presenting the highest rates of formal contracts adoption; and the beef cattle sector presenting the greatest diversity of arrangements, including coordination through the market, formal contracts, agreements, partnerships, marketing alliances, and vertical integration
Summary
The efficiency of an Agro-Industrial System (AgS) is based on its ability to create, sustain, and distribute value. Value creation is associated with innovation; sustaining is related to the way in which agents can design mechanisms to protect the value created (Monteiro & Zylbersztajn, 2012); and the value distribution results from the solution of distributional problems in transactions. Value creation can be associated with investment in specific assets that, subject to an environment of uncertainties, informational asymmetry, and limited rationality of the agents, leads to the occurrence of transaction costs. Finding institutional arrangements that minimize such costs and prevent the occurrence of opportunistic behavior and contractual breaches is imperative for an efficient coordination that results in creation and value protection (Monteiro & Zylbersztajn, 2012; Zylbersztajn & Caleman, 2012)
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