IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v182y2026ics1389934125002734.html

The king's laws yield to village customs: An exploratory study of relational contracting in sustainable forestry

Author

Listed:
  • Velasquez, Santiago
  • Nong, Thi Nhu-Mai
  • Nguyen, Quynh Phuong
  • Venkatesh, Sundar

Abstract

Vietnam's forestry sector faces unique governance challenges due to a landscape characterized by highly dispersed smallholder ownership, contrasting with concession-based models. As international markets increasingly demand sustainability certifications (e.g. FSC or PEFC), cost and complexity deter most smallholders, prompting wood processing firms to finance certification themselves. Such investments of processing firms can be at risk of opportunistic behaviour by smallholders who may side-sell at harvest. The risk can be compounded by weak legal enforcement. Drawing on transaction-cost economics and network theory, we employ a relational contracting lens to examine how such agreements persist. We analyse 15 key stakeholder interviews and six documents. We find evidence that contract stability rests less on legal stipulations and more on relational mechanisms: flexible contingent terms, co-investment in technical capacity, and embedded governance via local authorities and social networks. These informal institutions and networked enforcement substitute for formal mechanisms, enabling sustainable long-term contracting in emerging markets.

Suggested Citation

  • Velasquez, Santiago & Nong, Thi Nhu-Mai & Nguyen, Quynh Phuong & Venkatesh, Sundar, 2026. "The king's laws yield to village customs: An exploratory study of relational contracting in sustainable forestry," Forest Policy and Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:forpol:v:182:y:2026:i:c:s1389934125002734
    DOI: 10.1016/j.forpol.2025.103694
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934125002734
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2025.103694?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:182:y:2026:i:c:s1389934125002734. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.