Transaction-cost economics and the organization of agricultural transactions

Masten, Scott E.

doi:10.1016/s0278-0984(00)09050-7

Cited by 75 publications

(94 citation statements)

References 32 publications

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“…It is based on a detailed description of a set of large wineries in Argentina that aim to market a wide range of wine categories, 4 including high-end brands. Theoretically, it draws on transaction cost economics (TCE) by focusing on the main transactional factors that influence the choice of a governance structure, in particular "ease of measurement", uncertainty and asset specificity (Barzel, 2005;Masten, 2000;Tadelis, 2002;Williamson, 1985). It also goes deeper into the efficiency argument, drawing on contract completion (Arrunada et al, 2001(Arrunada et al, , 2005 and plural procurement literature (Dutta et al, 1995, Heide, 2003.…”

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Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Codron

Étienne

Rousset

2013

Journal on Chain and Network Science

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Sourcing grapes from independent growers for use in top quality wines sold on the international market is a major organisational challenge for corporate wineries. Our paper adds to the small existing literature addressing these coordination issues in the New World wine sector, by going deeper into the specifics of the contracts, as well as the "transaction cost economising" argument. Based on a case-study carried out in the Argentine province of Mendoza, this article presents an in-depth analysis of the technical process, in order to identify the contractual hazards posed by asset specificity, measurement costs, and non-contractible actions. Drawing on contract completion and dual sourcing literature, it analyses the contractual and non contractual mechanisms (price incentives, grower monitoring, allocation of decision rights to the winery, role of backward integration into production) used to govern such grape transactions. Through our analysis, we were able to arrive at four main conclusions. Firstly, most agreements are still verbal, with the exception of occasional written contracts, limited to a few legal provisions. It became clear to us that this approach to forging agreements is not always adequate in managing the inherently complex interactions between grape varieties, soil, farming practices and wine-making processes in high-end wine production. Secondly, extensive decision rights are allocated to wineries, to deal with incompleteness. These are key decisions to be taken during the cropping and harvesting process. Thirdly, pricing is generally kept flexible, with grape prices negotiated ex-post. This means that trade imbalances tend to be resolved in the long term. Winegrowers also benefit from financial rewards to compensate for allocations. Finally, any potential opportunistic behaviour by wineries with regards to asset specificity (in particular yield limitation) and allocation of rights is kept at bay by mechanisms such as winery reputations and credit third-party guaranty. This type of behaviour by growers is similarly deterred through monitoring and vineyard ownership on the part of the wineries.

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confidence: 99%

“…(d) Human assets such as professional skills and capabilities are often considered to be readily re-deployable in agriculture and viticulture (Masten, 2000;Traversac et al, 2011).…”

mentioning

confidence: 99%

Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Codron

Étienne

Rousset

2013

Journal on Chain and Network Science

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“…Transaction Cost Economics (TCE) has arguably been the dominant theory for analyzing economic organization between firms (Rindfleisch and Heide, 1997;Masten, 2000;Leiblein, 2003). Over the past decade, TCE has received considerable attention not only in economics, but also in management information systems (Bakos and Kemerer, 1992;Subramani, 2004), as well as in organization theory (e.g.…”

Section: Transaction Cost Economicsmentioning

confidence: 99%

Inter-organizational information exchange, supply chain compliance and performance

Peng¹

2011

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“…According to the authors, contracts encompassed 39% of the transactions in 2003, 36% in 2001, 28% in 1991, and 11% in 1969. In line with this trend, the issue of agricultural contracts has been broadly studied (MASTEN, 2000;MENARD, 1996;MARTINEZ, 2002;MONDELLI and ZYLBERSZTAJN, 2008;BARJOLLE, 2001;JAMES et al, 2007;LOADER, 1996;SAUVÉE, 2002;RAYNAUD and SAUVEE, 2004) 6 .…”

Section: Introductionmentioning

confidence: 99%

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

Monteiro

Saes

Caleman

et al. 2012

Rev. Econ. Sociol. Rural

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Abstract:The growing complexity of supply chains poses new challenges for Agricultural Research Centers and statistical agencies. The aim of this perspective paper is to discuss the role of empirical research in understanding the complex forms of governance in agribusiness. The authors argue that there are three fundamental levels of analysis: (i) the basic structure of the market, (ii) the formal contractual arrangements that govern relations within the agroindustrial system and (iii) the transactional dimensions governed by non-contractual means. The case of the agrochemical industry in Brazil illustrates how traditional analyses that only address market structure are insufficient to fully explain the agricultural sector and its supply chain. The article concludes by suggesting some indicators which could be collected by statistical agencies to improve understanding of the complex relationships among agribusiness segments. In doing so, the paper seeks to minimize costs and to enable a better formulation of public and private policies. Key-words: complex forms, empirical research, market structure, contracts, nonmeasurable attributes. Resumo: A crescente complexidade das relações entre os agentes das cadeias produtivas coloca novos desafios para os centros de pesquisa e estatística do setor agrícola. O objetivo do presente artigo é discutir o papel da pesquisa empírica para o entendimento das formas complexas de governança no setor agroindustrial. Os autores argumentam que há três níveis fundamentais de análise: (i) a estrutura básica do mercado, (ii) o regime contratual formal que rege as relações dentro do sistema agroindustrial e (iii) as dimensões transacionais governadas por meios não contratuais. O caso da indústria de agroquímicos no Brasil

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Transaction-cost economics and the organization of agricultural transactions

Cited by 75 publications

References 32 publications

Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Inter-organizational information exchange, supply chain compliance and performance

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

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