Mutual commitments in transactions of horticultural products in the Serra Fluminense

Abstract

This article aims to identify the factors that explain the establishment of mutual commitments between the smallholders growing horticultural products and their buyers in the Brazilian region of Serra Fluminense. It uses the theoretical framework of transaction cost economics to analyze 567 transactions performed by a sample of smallholders in seven Brazilian municipalities. The empirical study departs from previous research in constructing a variable that captures two types of transactions; in the first type, the buyer provides inputs or technical assistance to the farmer, whereas no such commitment exists in the second. The descriptive statistics and a logit model show that the “with mutual commitment” transactions are associated with a higher level of asset specificity and a broad set of coordination routines. Further, the building of trust emerges as a fundamental coordination mechanism, even in the “without mutual commitment” transactions.

Keywords

• Economic organization
• coordination of transactions
• family farming
• horticultural products
• hybrid forms