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British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

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Article
Publication date: 5 October 2015

Sevasti Chatzopoulou

The need for food safety and food quality standards is acknowledged by public regulators, private actors, and the society. The purpose of this paper is to identify the types of…

698

Abstract

Purpose

The need for food safety and food quality standards is acknowledged by public regulators, private actors, and the society. The purpose of this paper is to identify the types of actors in the multilevel transnational food chain regulatory governance and how their interlinking affects regulatory outcomes over time.

Design/methodology/approach

Food chain regulatory standards emerge within a complex process beyond the state. Based on interdisciplinary theoretical perspectives, namely regulatory governance and political economy, this paper provides a integrative framework of analysis by identifying the types of actors and their interactions in the food chain regulatory governance.

Findings

Food chain regulatory standards setting have been mainly studied either from the public regulator or the firm self-regulating point of view. This paper demonstrates how the political and economics dynamics of the interactions among public and private actors operate within the transnational food standards setting process. The study identifies the groups of interdependent actors (public and private) that interact within the transnational food chain regulatory process and develop public-private regulations, self-regulations, and co-regulations over time. In this process, the actors’ different power, operational and regulatory capacity, experience, resources affect the regulatory outcome with socio-economic and governance implications.

Research limitations/implications

The paper does not examine in detail how these interactions operate empirically on specific regulations.

Practical implications

The paper offers an integrative thorough understanding of the food chain regulatory standard setting process, relevant for academics, policy makers, the industry, and society.

Originality/value

The paper constitutes new research by identifying the actors and interactions in the integrative regulatory governance of the food chain standards.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Aaron Grau, Heinrich Hockmann and Inna Levkovych

The business environment of the EU dairy sector has altered drastically because of changes in EU agricultural and trade policy, consumer demand, and innovations since the turn of…

1018

Abstract

Purpose

The business environment of the EU dairy sector has altered drastically because of changes in EU agricultural and trade policy, consumer demand, and innovations since the turn of the millennium. This created new market income opportunities for dairy processors, but also fostered the necessity for investments to access these markets. A literature review sees cooperatives to be disadvantaged at this point, because their organisational structure hinders their access to external financial resources. Confronted with these equity constraints, the purpose of this paper is to investigate how German dairy marketing cooperatives adapted to the new business environment and have been performing from 2000 to 2012.

Design/methodology/approach

An approach combining descriptive data from public sources and financial ratio analysis was used to test hypotheses, derived from Transaction Cost Theory.

Findings

Contrary to assumptions, cooperatives gained market shares on the German dairy market. However, dairy cooperatives managed to overcome the internal equity constraints only partially via mergers, which intensified structural change. Focusing on cost leadership, German cooperatives were not able to successfully diversify their product portfolio and still operate mainly in the fluid, low margins dairy market segments. Frustrated by their diminishing influence on the decision making process in the vastly grown cooperatives, a majority of farmers cancelled their cooperative membership.

Practical implications

Until today an absolute turning point for the cooperative organisational form has not yet occurred, but if cooperatives do not find the means to invest more heavily in the new markets, a slow decline of cooperatives is expected.

Originality/value

The paper contributes to the existing literature on marketing cooperatives by providing insights on the performance of cooperatives through combination of from theory derived assumptions with qualitative and quantitative analysis methods.

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Publication date: 5 October 2015

Floor H. W. Ambrosius, Gert Jan Hofstede, Bettina B. Bock, Eddie A.M. Bokkers and Adrie J.M. Beulens

The purpose of this paper is to develop a framework that models farmers’ strategic decision making, taking into account that farmers adapt to institutional changes, given the…

1087

Abstract

Purpose

The purpose of this paper is to develop a framework that models farmers’ strategic decision making, taking into account that farmers adapt to institutional changes, given the social structure in which they are embedded.

Design/methodology/approach

First, a theoretical framework was developed using the reasoned action approach, innovation diffusion research, identity research, and the theory of structuration. Second, the framework was refined based on insights gained through semi-structured interviews with seven pork farmers and six pork farming experts on innovation decisions in general and added-value market adoption in particular.

Findings

The farmer decision-making framework distinguishes personal characteristics, social influence related to reference groups, and the institutional context that determines the space for manoeuvre. The interviews reveal the importance of context specific factors, such as trust in policy and market requirements, and point at general mechanisms of path dependency as a result of previous decision making and social influence related to identity reference groups.

Originality/value

The authors include feedback mechanisms between on the one hand social structure and institutional context, and on the other, farmer decision making. The framework is designed to explore the combined influence of factors of decision making on sector behaviour and study the relation between individual and collective behaviour.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Kristine Van Herck and Johan Swinnen

In the past decade, there has been a dramatic decline in agricultural employment in Bulgaria and several reports have pointed at supply chain modernisation and poor milk quality…

655

Abstract

Purpose

In the past decade, there has been a dramatic decline in agricultural employment in Bulgaria and several reports have pointed at supply chain modernisation and poor milk quality as the main reasons for the dramatic decline in the number of farms. However, to date the policy debate is been based on ad hoc claims, while there is relatively little micro-level evidence. The purpose of this paper is to analyse the determinants of structural change in the Bulgarian dairy sector in the period 2003-2009.

Design/methodology/approach

This paper analyses the determinants of structural change in the Bulgarian dairy sector in the period 2003-2009, using a unique panel survey of 296 farm households in the North and South Central Region of Bulgaria. In order to control for sample attrition bias, the authors use a two-step Heckman model of farm survival and growth model.

Findings

The data confirms the rapid outflow of agricultural labour from dairy farming activities: 55 per cent of the farm households supplying milk to a dairy company in 2003 stopped supplying in 2009. The main reasons for quitting are ageing of the household, health problems and an increase in off-farm employment alternatives and not supply chain modernisation and milk quality standards. The institutional innovations which are associated with integration in modern supply chains, such as the provision of farm assistance programmes, have a positive impact on small farms’ growth.

Originality/value

The study is one of the first to use panel data to analyse the impact of standards on the survival and growth of small farms in value chains. The authors analyse the determinants of farm survival and growth in the Bulgarian dairy sector in the period 2003-2009, using panel surveys of 296 dairy farm households in the North and South Central Region of Bulgaria and panel data from interviews with dairy companies. The findings are relevant beyond the Bulgarian dairy sector as supply chain modernisation and changes in quality regulations are taken place in many other transition and developing countries.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Antonella Di Fonzo and Carlo Russo

Geographical Indications (GI) are complex and multi-purpose institutions. Their objectives include encouraging diversification of agricultural production, improving farmers’…

526

Abstract

Purpose

Geographical Indications (GI) are complex and multi-purpose institutions. Their objectives include encouraging diversification of agricultural production, improving farmers’ income, countering depopulation of rural areas, satisfying consumer demand for high-quality good, and protecting consumers from food fraud. The authors argue that such objectives are not necessarily aligned as divergence may arise among stakeholders (such as farmers, consumers or rural communities) about the optimal design of the GI. The paper aims to discuss these issues.

Design/methodology/approach

The authors developed a simple, static game-theory model describing the basic choices that a planner faces in designing a GI.

Findings

The authors conclude that the optimal organization requires finding trade-offs among conflicting but equally desirable objectives. Perfect monitoring is not a sufficient condition to resolve such conflicts. Sub-consortia and flexible production agreements may increase the efficiency of a GI.

Research limitations/implications

The authors described basic trade-offs in GI design using the simplest possible model. To this purpose the authors introduced limiting assumptions that may be relaxed in future research. The representation of the GI agreement focussed on the quality level only, abstracting from all other consideration. Using a static model prevented us from explicit modeling of (loss of) reputation effects. The simplifying assumptions about consumer behavior and cost functions have reduced the generality of the results. Extensions of the model may consider introducing additional elements in the GI agreement such as production areas or governance models, dynamic games and general functional forms.

Practical implications

The authors found that in designing a GI: first, promotion approaches revolving around small groups of local leaders (i.e. efficient, high-quality producers) might overshoot quality, resulting in unsustainable production agreements; second, introducing degrees of flexibility in the production agreement may help achieving a sustainable GI; and finally, sub-consortia/optional labels may help dealing with producers’ heterogeneity.

Social implications

The authors found that setting a high standard in the production agreement is not sufficient condition for delivering quality food to consumers, as producers might have incentive to commit frauds. A simple command and control approach to quality in GI’s is not always the most efficient strategy, because it may reduce participation. In designing the GI, the goals of identity preservation and food quality must be balanced with consideration of producers’ incentives. The involvement of producers in the design of the GI is a critical success driver. Yet, this practice can be problematic because of producers’ heterogeneity.

Originality/value

The paper provides theoretical foundation for best practices in forming a GI, including: multi-stakeholder involvement, management of farmer heterogeneity and monitoring.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Francesca Passuello, Stefano Boccaletti and Claudio Soregaroli

The purpose of this paper is to investigate the governance implications of non-genetically modified (GM) voluntary private standards on the private label poultry meat value chain…

533

Abstract

Purpose

The purpose of this paper is to investigate the governance implications of non-genetically modified (GM) voluntary private standards on the private label poultry meat value chain of the leading Italian retailer. Considered aspects are: first, the organizational practices adopted along the chain to assure effective segregation; second, the changes in the characteristics and governance of the key transaction (meat processor-retailer); finally, what makes the chain economically sustainable.

Design/methodology/approach

A picture of the chain is obtained collecting information from the businesses involved; the snowball selection criterion is used in identifying people to interview. Transaction Cost Economics (TCE) is used to conceptualize the organizational changes in the meat processor-retailer transaction; the coherence of expected-actual variations in asset specificity, uncertainty and frequency, as well as of the observed governance with TCE predictions is assessed.

Findings

The creation of the non-GM chain required investments by both the key actors involved and the establishment of a partnership based on trust and mutual dependence. The increase in uncertainty coupled with the rise in asset specificity led to higher transaction costs, requiring a shift of the governance structure toward the right side of the market-hierarchy continuum to economize on costs and improve supply chain performance. TCE well explains the changes occurred. The retailer values the return on image as a strategic asset and bears the non-GM extra costs making the chain economically sustainable.

Research limitations/implications

The implications of the findings are twofold. First, they help to identify the critical factors for an effective and economically sustainable segregation of non-GM products/raw materials along agro-food value chains. Second, they show how chain actors could adopt tighter governance structures in order to comply with binding technical and quality specifications, economize on transaction costs and improve supply chain performance.

Originality/value

Retailer-led private standards used as regulation and enforcement mechanisms in vertical relations, as well as their organizational implications in the governance of transactions between actors in agro-food value chains have received insufficient attention. This research contributes to fill out this gap.

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Publication date: 5 October 2015

Jerker Nilsson and Lena W. Lind

– The purpose of this paper is to explain institutional changes in the Swedish meat industry after major external events.

526

Abstract

Purpose

The purpose of this paper is to explain institutional changes in the Swedish meat industry after major external events.

Design/methodology/approach

Analysis based on secondary data sources and interviews with people involved when the dominant meat co-operative in Sweden underwent major changes.

Findings

The decline in the Swedish meat industry is interpreted using the theory of institutional change presented by Aoki (2007, 2011). The country’s former national agricultural policy created a specific set of norms and values. Co-operatives were considered to be indispensable. The co-operative sector was large and hierarchically organised. Therefore, external signals did not create sufficient endogenous processes within the co-operatives. Co-operative adaptation to rising competitive pressure took place only reluctantly and belatedly. Hence many farmer-members defected and the major co-operative faced finally insurmountable problems. A strong ideological conviction caused the once dominant co-operative to collapse and much of the Swedish meat industry to disappear.

Originality/value

This study shows that strong ideology (here a conviction about the advantages of politically governed co-operatives) can hamper endogenous processes within an organisation. Management may ignore outside influences, to the extent that even a large industry is impaired. Other large, hierarchically structured and top-governed organisations with a strong ideology may behave in a similar way.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Selene de Souza Siqueira Soares, Maria Sylvia Macchione Saes and Luiz Fernando de Oriani Paulillo

The purpose of this paper shows and analyzes recent changes undergone by the Brazilian ethanol industry, comparing two specific years (2000 and 2012) to evaluate the performance…

258

Abstract

Purpose

The purpose of this paper shows and analyzes recent changes undergone by the Brazilian ethanol industry, comparing two specific years (2000 and 2012) to evaluate the performance of governance structures adopted by fuel distributors in the resale of ethanol in Brazil in this period.

Design/methodology/approach

In this work, the analysis is restricted to the ethanol trade, using survey data from Soares (2012), who mapped the governance structures in the sector and its control mechanisms. Next, a temporal analysis of governance structures in 2000 and 2012 is conducted to identify recent changes in the transactions between distributors and stations.

Findings

The paper concludes that there has been a significant change in the ethanol negotiation models, highlighting the contractual hybrid governances of large distributors, such as which governance structure presented more robust results in terms of gaining market share and increasing average sales per unit of fuel resold in the period analyzed.

Originality/value

This paper is a review of innovative organizational dynamics distributor sector of ethanol in Brazil after deregulation in the late nineties and after the insertion of hybrid vehicles in the domestic market in 2003 (automobiles powered by gasoline and ethanol). The paper makes a comparison of the strategies of firms between the years 2000 and 2012 bring important explanations for the functioning of this market and righligths the advantages and limitations of the public regulatory model chosen by the Brazilian government.

Details

British Food Journal, vol. 117 no. 10
Type: Research Article
ISSN: 0007-070X

Keywords

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Article
Publication date: 5 October 2015

Anna Grandori

The variety and change of organization forms in the agri-business industry are analyzed, extending available comparative economic organization approach (most notably transaction…

985

Abstract

Purpose

The variety and change of organization forms in the agri-business industry are analyzed, extending available comparative economic organization approach (most notably transaction cost economics) with negotiation analysis and organization design theory. The paper aims to discuss these issues.

Design/methodology/approach

Three extensions are proposed and argued to be particularly useful for analyzing economic organization in conditions such as those prevailing in agri-food industries. First, more consideration is given to horizontal structures and associational contracts as a particularly important response to transactional problems in this field. Second, it is acknowledged that different conditions of substitutability in different stages of the chain make it likely that transaction costs are different for different parties, bringing them to have different preferences over governance solutions, whereby a negotiation problem on efficient arrangements has to be solved. Third, the very process of integrating different parties’ interests contributes in explaining the emergence of “hybrids” and in designing more efficient and more fair forms within the (very) large class of hybrids, and even within any sub-type of hybrid, such as sub-contracting, licensing, franchising, consortia, etc.

Findings

New Pareto-improving and Nash-improving solutions are specified, and shown to provide indications for organizational change that differ from those predicted and prescribed by standard organizational economics. Those solutions are also shown to be realistic (possible in reality) through case studies on actual non-main-stream experiences approximating those arrangements. Both the analytic method proposed, and the solutions found, provide useful and currently missing tools to private and public policy makers for improving the organization of the sector.

Research limitations/implications

The study specify pre-conditions for reaching superior agreements, that suggest hypotheses for empirical further research on the factors that may favor or hinder those changes.

Practical implications

A “trend” for change is recommended for the agri-food sector, toward more associational and horizontal arrangements, rather than either toward market or hierarchical governance or any hybrid intermediate point between them. It has been shown that this prescription should hold not only across stages of the value chain, but also among firms within the same stage (in the case, the farming stage).

Social implications

The proposed changes should improve the fairness of economic organization in the sector. Re-equilibrating negotiation power is an alternative way of reducing transaction costs across stages and a pre-condition for reaching more efficient and fair agreements across stages.

Originality/value

Both the analytic method proposed, and the solutions found, extend economic organization theory, and provide useful and currently missing tools to private and public policy makers for designing and assessing the organization of the sector.

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