IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v83y2019icp215-226.html
   My bibliography  Save this article

Does social identity matter in governance decisions? Evidence from an agrarian reform settlement in Brazil

Author

Listed:
  • Foscaches, Caroline
  • Macchione Saes, Maria Sylvia
  • Bigio Schnaider, Paula Sarita

Abstract

To what extent can Social Identity (or the sense of belonging to a group) induce one of the transacting parties to sell his product by using the governance structure endorsed by the group to which he/she belongs (even if that decision contradicts the efficient alignment principle outlined by Transaction Cost Economics - TCE)? To this end, we incorporate the idea underlying the microfoundations of strategy into TCE. First, we revise the motivation driving economic behavior in vertical trading transactions by incorporating Social Identity into the utility function of one of the transacting parties. This implies that he/she would also wish to maximize his/her acceptance by the group to which he/she belongs. Second, we explore the conditions in which social identities matter most to the governance decision, as well as their respective effect on the governance choice: will the discriminating alignment hold or will other decisions prevail? Empirically, we conducted a survey together with 109 rural producers in one of the oldest agrarian reform settlements to be supported by the Social Movement MST in Brazil. We sought to see how they sold their produce (market relationships, vertical integration or cooperatives — the arrangement endorsed by MST). Our choice was motivated mainly by the identification of these producers with MST. The results indicate a positive and significant relation between Social Identity and the use of the governance mechanism encouraged by the group to which the agent belongs (in our case, MST). This effect is stronger than is that of transactional attributes when said social identities are strong. This implies that the efficient alignment might not hold when social identities are very high, because the motivations driving economic relations can be more complex than are transactional attributes alone.

Suggested Citation

  • Foscaches, Caroline & Macchione Saes, Maria Sylvia & Bigio Schnaider, Paula Sarita, 2019. "Does social identity matter in governance decisions? Evidence from an agrarian reform settlement in Brazil," Land Use Policy, Elsevier, vol. 83(C), pages 215-226.
  • Handle: RePEc:eee:lauspo:v:83:y:2019:i:c:p:215-226
    DOI: 10.1016/j.landusepol.2019.01.033
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837718307117
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.landusepol.2019.01.033?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 search for a different version of it.

    References listed on IDEAS

    as
    1. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts and the Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 39-84.
    2. Lyons, Bruce R, 1994. "Contracts and Specific Investment: An Empirical Test of Transaction Cost Theory," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(2), pages 257-278, Summer.
    3. Ning Wang, 2007. "Measuring Transaction Costs: Diverging Approaches, Contending Practices," Division of Labor & Transaction Costs (DLTC), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 111-146.
    4. John B. Davis, 2007. "Akerlof and Kranton on identity in economics: inverting the analysis," Cambridge Journal of Economics, Oxford University Press, vol. 31(3), pages 349-362, May.
    5. ZYLBERSZTAJN, Decio & MIELE, Marcelo, 2005. "Stability of contracts in the Brazilian wine industry," Brazilian Journal of Rural Economy and Sociology (Revista de Economia e Sociologia Rural-RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 43(2), pages 1-19, June.
    6. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    7. Macher, Jeffrey T. & Richman, Barak D., 2008. "Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences," Business and Politics, Cambridge University Press, vol. 10(1), pages 1-63, April.
    8. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    9. Macher Jeffrey T & Richman Barak D, 2008. "Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences," Business and Politics, De Gruyter, vol. 10(1), pages 1-65, May.
    10. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    11. Erin Anderson & David C. Schmittlein, 1984. "Integration of the Sales Force: An Empirical Examination," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 385-395, Autumn.
    12. Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
    13. Shelanski, Howard A & Klein, Peter G, 1995. "Empirical Research in Transaction Cost Economics: A Review and Assessment," Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(2), pages 335-361, October.
    14. Boulu-Reshef, Bã‰Atrice, 2013. "Economics of identity and economics of the firm: why and how their three central questions overlap," Journal of Institutional Economics, Cambridge University Press, vol. 9(3), pages 363-379, September.
    15. Bruce R. Lyons, 1994. "Contracts and Specific Investment: An Empirical Test of Transaction Cost Theory," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(2), pages 257-278, June.
    16. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    17. Claude Ménard & Peter G. Klein, 2004. "Organizational Issues in the Agrifood Sector: Toward a Comparative Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 750-755.
    18. Zylbersztajn, Decio, 2005. "Papel dos Contratos na Coordenação Agro-Industrial: um olhar além dos mercados," Brazilian Journal of Rural Economy and Sociology (Revista de Economia e Sociologia Rural-RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 43(3), pages 1-36, September.
    19. Bruce Kogut & Udo Zander, 1996. "What Firms Do? Coordination, Identity, and Learning," Organization Science, INFORMS, vol. 7(5), pages 502-518, October.
    20. Ranjay Gulati & Jack A. Nickerson, 2008. "Interorganizational Trust, Governance Choice, and Exchange Performance," Organization Science, INFORMS, vol. 19(5), pages 688-708, October.
    21. Sergio G. Lazzarini & Gary J. Miller & Todd R. Zenger, 2008. "Dealing with the Paradox of Embeddedness: The Role of Contracts and Trust in Facilitating Movement Out of Committed Relationships," Organization Science, INFORMS, vol. 19(5), pages 709-728, October.
    22. Robert J. David & Shin‐Kap Han, 2004. "A systematic assessment of the empirical support for transaction cost economics," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 39-58, January.
    23. Martins, Franco M. & Trienekens, Jacques & Omta, Onno, 2017. "Governance structures and coordination mechanisms in the Brazilian pork chain – Diversity of arrangements to support the supply of piglets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 20(4), March.
    24. Jeffrey H. Dyer & Wujin Chu, 2003. "The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea," Organization Science, INFORMS, vol. 14(1), pages 57-68, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bart S. Vanneste & Onesun Steve Yoo, 2020. "Performance of trust-based governance," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-28, December.
    2. Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
    3. Peter G. Klein, 2010. "Vertical Integration," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 17, Edward Elgar Publishing.
    4. Hermano, Víctor & Martín-Cruz, Natalia, 2013. "How to Deliver Foreign Aid? The Case of Projects Governed by the Spanish International Agency," World Development, Elsevier, vol. 43(C), pages 298-314.
    5. McCarter, Matthew W. & Wade-Benzoni, Kimberly A. & Kamal, Darcy K. Fudge & Bang, H. Min & Hyde, Steven J. & Maredia, Reshma, 2020. "Models of intragroup conflict in management: A literature review," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 925-946.
    6. Geoffrey M. Hodgson, 2010. "Limits of Transaction Cost Analysis," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 28, Edward Elgar Publishing.
    7. López-Bayón, Susana & González-Díaz, Manuel, 2010. "Indefinite contract duration: Evidence from electronics subcontracting," International Review of Law and Economics, Elsevier, vol. 30(2), pages 145-159, June.
    8. Alex Eapen & Rekha Krishnan, 2019. "Transferring Tacit Know-How: Do Opportunism Safeguards Matter for Firm Boundary Decisions?," Organization Science, INFORMS, vol. 30(4), pages 715-734, July.
    9. Kira R. Fabrizio, 2012. "Institutions, Capabilities, and Contracts: Make or Buy in the Electric Utility Industry," Organization Science, INFORMS, vol. 23(5), pages 1264-1281, October.
    10. Bill McEvily & Akbar Zaheer & Darcy K. Fudge Kamal, 2017. "Mutual and Exclusive: Dyadic Sources of Trust in Interorganizational Exchange," Organization Science, INFORMS, vol. 28(1), pages 74-92, February.
    11. Christian A. Ruzzier, 2009. "Asset Specificity and Vertical Integration: Williamson’s Hypothesis Reconsidered," Harvard Business School Working Papers 09-119, Harvard Business School.
    12. Mikko Ketokivi & Joseph T. Mahoney, 2020. "Transaction Cost Economics As a Theory of Supply Chain Efficiency," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 1011-1031, April.
    13. Francisco Brahm & Jorge Tarzijan, 2016. "Relational Contracts and Collaboration in the Supply Chain: Impact of Expected Future Business Volume on the Make-or-Buy Decision," Journal of Supply Chain Management, Institute for Supply Management, vol. 52(3), pages 48-67, July.
    14. Daniel W. Elfenbein & Todd Zenger, 2017. "Creating and Capturing Value in Repeated Exchange Relationships: The Second Paradox of Embeddedness," Organization Science, INFORMS, vol. 28(5), pages 894-914, October.
    15. Peter G. Klein & Michael E. Sykuta (ed.), 2010. "The Elgar Companion to Transaction Cost Economics," Books, Edward Elgar Publishing, number 4136.
    16. Delbufalo, Emanuela, 2015. "Subjective trust and perceived risk influences on exchange performance in supplier–manufacturer relationships," Scandinavian Journal of Management, Elsevier, vol. 31(1), pages 84-101.
    17. Michael Powell, 2015. "An Influence-Cost Model of Organizational Practices and Firm Boundaries," Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(suppl_1), pages 104-142.
    18. Robert Gibbons, 2010. "Transaction‐Cost Economics: Past, Present, and Future?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 263-288, June.
    19. Matthew J. Bidwell, 2012. "Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing," Organization Science, INFORMS, vol. 23(6), pages 1622-1642, December.
    20. Nickerson, Jack A. & Yen, C. James & Mahoney, Joseph T., 2011. "Exploring the Problem-Finding and Problem-Solving Approach for Designing Organizations," Working Papers 11-0107, University of Illinois at Urbana-Champaign, College of Business.

    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:lauspo:v:83:y:2019:i:c:p:215-226. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.