Hiding and revealing: a perspective on the paradox of information transparency in diverse agri-food value chain contexts

Abstract

Pressing societal goals such as environmental sustainability, food safety, and ethical food production have led to a rapid increase in calls for firms to share information in agri-food value chains (AVCs). However, there is a notable gap in the debate on information sharing: a lack of critical examination of the market conditions necessary for information to be shared among firms, and if shared, how effectively. We posit that the feasibility of information sharing as a realistic goal varies according to the AVC context [the transformation stage correlated with predominant firm scale, the product cycle phase (commoditization or product differentiation), and transparency costs]. The incentives, methods, and types of information shared depend on whom the intended recipient is, consumers or other firms. Drawing from the economic theory of product differentiation, we argue that firms’ information sharing to consumers is driven by public and private motivations, constrained by transaction and opportunity costs. Furthermore, based on Prospect Theory, we argue that firms are more likely to share information with other firms if it helps avoid losses, such as from food safety outbreaks, but may hide information if it could yield competitive advantages. Policymakers can introduce regulations and institutions to facilitate and protect information sharing. The private sector needs to invest in new technologies to reduce the cost of transparency, and seek cooperative, shared solutions. Researchers need to provide science-based evidence on the effectiveness of these regulations and mechanisms that can induce more shared solutions.