What is it about?
Transaction cost theory posits that the most efficient governance structure will be chosen or evolves to coordinate transactions between exchange parties. We have shown that plural governance exists in agrifood chains due to ambiguity over the best mode of coordination, but strategic behavior by agribusiness firms explains its persistence.
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Why is it important?
Our findings unite hitherto opposed schools of thought on the stability of plural forms of governance. The results of the study imply that incentives and disincentives for plural sourcing by agribusiness firms must be considered in designing policies to promote contract farming.
Perspectives
Plural governance is common in agrifood chains. Prior research on this topic has mainly focused on agrifood chains in South America. It was a great pleasure for me to work with my co-authors to investigate the phenomenon in the African context. The development of this article also led us to the discovery that the focal agribusiness firm selected producer groups to work with in a way that creates discontinuities akin to a natural experiment environment - this opens new methodological possibilities to determine the impact of contract farming in developing countries.
Mr Innocent Mugwagwa
Wageningen Universiteit en Researchcentrum
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This page is a summary of: Why do agribusiness firms simultaneously source from different contract farming arrangements? Evidence from the soybean industry in Malawi, International Food and Agribusiness Management Review, January 2019, Wageningen Academic Publishers,
DOI: 10.22434/ifamr2018.0079.
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