Property rights and reputation in the dairy agro-industrial system

Abstract

Purpose: The purpose of this study is to understand the effect of governance structure alignment, property rights protection, and reputation in generating efficiency in dairy agro-industrial system in Paraná, Brazil, and Midi-Pyrénées, France. Design/methodology/approach: Descriptive qualitative research, comprising semi-structured interviews with producers, processors and key agents of the dairy agrindustrial system in Brazil and France, in 2016/2017. Findings: As a result, it was identified that measurement generates information about transacted dimensions and when it is shared can generate affect reputation in transactions that leads to system improvement. It was also observed that, in the dairy agro-industrial system, reputation acquired does not reduce all the measurement costs, as the product requires measurement in each all collection, regardless of the reputation created. Research limitations/implications: As a limitation of the study, there is a difference in the moments when the interviews were done. In 2016, in France, the context was low prices, while in 2017, in Brazil, there was a rise in prices. This difference could have influenced some responses to the interviews, mainly about efficiency by producers. Practical implications: Reputation, protecion of property rights by measurement and information sharing allows reduction costs (transaction, measurement and negotiation costs). This efficiency implies improvement to the system, in cases of milk producers and processors. Social implications: Improvements in the dairy system can have repercussions on several other improvements such as better distribution of income among agents in the chain; better-paid producers, which implies the improving quality of lives of these people; better products offered to consumers. Originality/value: From a complementary perspective of transaction cost economics and measurement cost economics, reputation and protection of property rights are discussed with a focus on efficiency. Empirically, the paper contains heterogeneous data collected from two countries: Brasil and France.