Coordination of collective action in the agro-food sector

Collaboration between stakeholders in the agro-food sector is nowadays a common phenomenon. Despite the huge diversity observed, this paper argues that collective action always results in the establishment of a collective organization (whether formally organized or not), which is characterized by the presence of a coordination centre. This organism represents all partners united in the collective and performs tasks by order of the individual members and the group. From a theoretical point of view, all collective organizations qualify as hybrid organizations, which can be studied through the lens of Transaction Costs Economics. Hybrids governance structures are a large set of arrangements that are situated between markets and hierarchies. When organizing transactions, hybrids do not purely rely on the price mechanism or authority, but rather on an interplay of four coordination mechanisms. These coordination mechanisms are the central element of this paper and we hypothesize that their degree of formalization is positively correlated with the complexity of the tasks faced by the coordination centre. To test this hypothesis, a survey was designed and information was gathered on some general and organizational characteristics of 65 collective initiatives in the Flemish agro-food sector. Information on the coordination mechanism could thereby be directly gathered, but the complexity of the tasks was approximated by the collective organization’s objectives, the characteristics of the specifications in force and the entry rules for members. The analysis proves that there is indeed a positive relationship between the degree of formalization of the coordination mechanisms on the hand and the complexity of coordination centre’s tasks. Information devices occurs in combination with informal cooperation in small groups, contracts are adopted by groups of 5 to 14 members to realize medium complex objectives and formal coordination (extern regulation and new governance bodies) is finally linked to quality differentiation, which requires considerable efforts in the definition and enforcement of product and/or process specifications.