Essays on the Governance of Agricultural Products. Cooperatives and Contract Farming Defended on Thursday, 4 October 2007
This thesis studies decision making procedures and decision rights allocation of two governance structures in agricultural sectors: cooperatives and contract farming. The main research questions are how authority coordinates upstream and downstream activities within various governance structures in a transitional institutional setting (China), and under what conditions one particular governance structure is efficient. The theoretical research focuses on the role of the board of directors in agricultural cooperatives, while the empirical research focuses on the organizational and strategic attributes of Chinese farmer specialized cooperatives and the contracting arrangements in the Chinese fruit and vegetable industry. It is found that, firstly, the board of directors adds value to cooperatives because of its dual screening characteristic. The screening levels are strategic substitutes. Secondly, the Chinese farmer specialized cooperatives are co-governed by both core members and non core-members based on relations and abilities. Human asset specificity in terms of establishing and maintaining relations and access to markets seems to be more important than physical asset specificity in accounting for governance structure choice in the current institutional setting. Thirdly, under contract farming, many decision rights are shifted from farmers to firms. Quality, reputation and specific investments by firms positively influence the number of decision rights allocated to agri-business firms, while monopsony-oligopsony power and specific investments by farmers do not play a role in allocating decision rights.
Cooperatives, Contract farming, Board of directors, Dual screening, Systems of attributes, complete contracts, incomplete contracting, Decision rights, Income rights