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Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form

Author

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  • Sykuta, Michael E.
  • Klein, Peter G.
  • James, Harvey S., Jr.

Abstract

The rise of contract farming and vertical integration is one of the most important changes in modern agriculture. Yet the adoption and diffusion of these new forms of organization has varied widely across regions, commodities, or farm types, however. Transaction cost theories and the like are not fully effective at explaining the variation of adoption rates of different organizational forms, in part because of their inherent static nature. In order to explain the adoption, diffusion and evolution of organizational form, a more dynamic framework is required. This paper lays out such a framework for understanding the evolution of organizational practices in U.S. agriculture by drawing on existing theories of economic organization, the diffusion of technological innovation, and organizational complementarities. Using recent trends as stylized facts we argue that the agrifood sector is characterized by strong complementarities among its constituent features and that these complementarities help explain the stylized facts. We also discuss several testable hypotheses concerning changes in organizational form in agriculture.

Suggested Citation

  • Sykuta, Michael E. & Klein, Peter G. & James, Harvey S., Jr., 2005. "Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form," 2005 Annual meeting, July 24-27, Providence, RI 19390, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19390
    DOI: 10.22004/ag.econ.19390
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    References listed on IDEAS

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    Cited by:

    1. Grashuis, Jasper & Cook, Michael, 2016. "Governance and Performance in the U.S. Agri-Food Industry: A Comparative Study of Firms and Cooperatives," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235676, Agricultural and Applied Economics Association.
    2. Altman, Ira J. & Klein, Peter G. & Johnson, Thomas G., 2006. "Scale as a Transaction Cost Variable in the U.S. Biopower Industry," 2006 Annual meeting, July 23-26, Long Beach, CA 21141, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Maciejczak, Mariusz, 2015. "Will the institution of coexistence be re-defined by TTIP?," GMCC-15: Seventh GMCC, November 17-20, 2015, Amsterdam, the Netherlands 211478, International Conference on Coexistence between Genetically Modified (GM) and non-GM based Agricultural Supply Chains (GMCC).
    4. Hrabrin BACHEV, 2010. "Framework For Analisis Of Agrarian Contracts," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 2(1), pages 39-66, March.
    5. Bachev, Hrabrin, 2010. "Management of farm contracts and competitiveness," MPRA Paper 99854, University Library of Munich, Germany.
    6. Bachev, Hrabrin, 2012. "Framework for assessing efficiency of farms and agrarian organizations," MPRA Paper 40136, University Library of Munich, Germany.
    7. Boland, Michael A. & Golden, Bill B. & Tsoodle, Leah J., 2008. "Agency Theory Issues in the Food Processing Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(2), pages 623-634, August.
    8. Lanjiao Wen & Lioudmila Chatalova, 2021. "Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany," Sustainability, MDPI, vol. 13(2), pages 1-18, January.
    9. Altman Ira J & Klein Peter G. & Johnson Thomas G., 2007. "Scale and Transaction Costs in the U.S. Biopower Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-19, December.
    10. Bachev, Hrabrin, 2010. "Study on Agrarian Contracts in Bulgaria," MPRA Paper 22946, University Library of Munich, Germany.
    11. Peter G. Klein & Michael L. Cook, 2006. "T.W. Schultz and the Human-Capital Approach to Entrepreneurship," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 344-350.

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