Coordination in Agribusiness: an Empirical Analysis Among Brazilian Natural Rubber Producers and Processors
Abstract: The New Institutional Economics, in particular the Transaction Costs approach, has been applied to Brazilian agribusiness systems analysis. Nevertheless, there are as yet few studies concerning transactions between raw material suppliers and processors. This study tests the alignment of theoretical prediction and empirical findings on the matching of governance modes and transaction dimensions in the natural rubber cluster in the State of Sao Paulo. This cluster has more than 5,000 producers (or rubber tree farmers) and 16 rubber processors, who are an international productivity benchmark in farm rubber production per hectare and produce more than 50% of Brazilian natural rubber output. Our approach features a qualitative research survey and statistical tests using ordered logistic regressions (Ologit). In addition, we test the hypothesis that governance attributes and asset specificity are endogenously determined. The results suggest that the quantity of rubber transacted is positively correlated with highly coordinated modes of governance, and that transaction frequency is associated with relational contracts. The endogeneity hypothesis is rejected.
