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Modelling trust and contractual arrangements in a local economy

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  • Dalel Ayari
  • Lokman Zaibet

Abstract

This article investigates trust among dairy value-chain actors to understand the innovative process in a local productive sector in Tunisia. It uses a sample of 45 smallholder farmers chosen randomly nearby existing collection centres in the region. A trust variable is constructed employing 11 ordinal variables based on principal component analysis, and institutional arrangements then modelled to examine the effect of trust on contracting decisions and cooperative membership. The results show that trust is defined by values such as “integrity”, “competence”, and “existence of credible information”, which are preconditions to sustainable contracts. The article contributes to the growing literature which considers social capital, networking and trust as determinants of farmer’s behaviour, as opposed to the classical model of rationality.

Suggested Citation

  • Dalel Ayari & Lokman Zaibet, 2019. "Modelling trust and contractual arrangements in a local economy," Development in Practice, Taylor & Francis Journals, vol. 29(4), pages 525-533, May.
    • Handle: RePEc:taf:cdipxx:v:29:y:2019:i:4:p:525-533
    DOI: 10.1080/09614524.2019.1574715
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    Cited by:

    1. Enthoven, Laura & Van den Broeck, Goedele, 2023. "How to boost the local trade of participatory guarantee system (PGS)-certified produce? A value chain perspective in Huánuco, Peru," Ecological Economics, Elsevier, vol. 212(C).

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