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Sustainability Standards and the Reorganization of Private Label Supply Chains: A Transaction Cost Perspective

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  • Alessandro Banterle

    () (Department of Economics, Management and Quantitative Methods, Università degli Studi di Milano, Via Celoria 2, Milan 20133, Italy)

  • Stefanella Stranieri

    () (Department of Economics, Management and Quantitative Methods, Università degli Studi di Milano, Via Celoria 2, Milan 20133, Italy)

Abstract

Private standards are among the main measures that can be implemented to differentiate food production. Retailers have been particularly active in setting food safety and quality systems for the development of their private labels. The purpose of this paper is to identify the effects of introducing measures that guarantee the environmental sustainability of food production on vertical dyadic relations. We focus our attention on the adoption of integrated pest management (IPM) systems that are designed by retailers to support private label products, with the aim of studying how these systems affect the governance structure of transactions between retailer and farmer/processor. Transaction cost analysis is used as theoretical framework to assess changes in vertical coordination after the adoption of an IPM system. Four case studies related to food retailers in Italy were analyzed to identify changes in transaction characteristics, costs, and governance that are related to the adoption of this system. The results show that the introduction of an IPM system leads to an increase of transaction asset specificity ( i.e. , especially of human and material asset specificity) among the agents of the supply chain, and a decrease of the degree of transaction uncertainty. The variations in transaction characteristics determine changes in transaction costs. These changes lead to new hybrid forms of transaction governance, namely dyadic contracts, and a centralized organization of vertical relationships.

Suggested Citation

  • Alessandro Banterle & Stefanella Stranieri, 2013. "Sustainability Standards and the Reorganization of Private Label Supply Chains: A Transaction Cost Perspective," Sustainability, MDPI, Open Access Journal, vol. 5(12), pages 1-17, December.
  • Handle: RePEc:gam:jsusta:v:5:y:2013:i:12:p:5272-5288:d:31144
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    References listed on IDEAS

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    1. repec:gam:jsusta:v:9:y:2017:i:6:p:999-:d:101045 is not listed on IDEAS
    2. Stranieri, S. & Cavaliere, A. & Banterle, A., 2015. "Voluntary traceability standards: which is the role of economic incentives?," 2015 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 206213, International European Forum on Innovation and System Dynamics in Food Networks.
    3. repec:gam:jsusta:v:9:y:2017:i:6:p:1027-:d:101509 is not listed on IDEAS
    4. Stranieri, S. & Cavaliere, A. & Banterle, A., 2015. "Voluntary traceability standards: which is the role of economic incentives?," 144th Seminar, February 9-13, 2015, Innsbruck-Igls, Austria 206213, European Association of Agricultural Economists.
    5. repec:gam:jsusta:v:10:y:2018:i:4:p:1125-:d:140225 is not listed on IDEAS
    6. repec:eee:ecolec:v:148:y:2018:i:c:p:54-65 is not listed on IDEAS

    More about this item

    Keywords

    sustainable food chains; transaction costs; case studies; IPM;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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