Transaction costs and inter-organizational relations between farmers and farm product buyers in Ghana
Date
2021
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Emerald Publishing Limited
Abstract
Purpose – The purpose of this paper is to provide an understanding of what motivates farmers to participate
in inter-organizational relationships with farm product buyers. Interest in inter-organizational relationships in
the Ghanaian agri-food sector has been stimulated in recent years by policies seeking to reduce farmers’ market
risks while improving buyers’ access to commodity inputs. The decision of how to sell farm produce is an
economic imperative for the farmer; therefore, the coexistence of spot markets and inter-organizational
relationships suggests that the farmers who use them must be having some gains from them.
Design/methodology/approach – This study employed binary logit regression using both qualitative and
quantitative data and the transactions cost theory to understand the Ghanaian farmers’ motivation for
participating in inter-organizational relationships.
Findings – This study found that a farmer having better information regarding product buyers’ needs was an
important motivator for participation. The farmers’ certainty about the price they would get and the quantity
they would sell were also major factors that motivated farmers’ participation. Again, the motivation to engage
in inter-organizational relationships with processors was also influenced by the nature of the crop. Fruit
farmers, for example, were 3.7 times more likely to participate in these relationships than non-fruit farmers.
Research limitations/implications – This study considered analysis at the farmer level. However, some
farmers produced multiple crops. This means that the farmers who participate in inter-organizational relations
with buyers for one crop enterprise may be nonparticipant with the other crop(s). Future studies could target
analysis at the crop level while accounting for the associated transactions costs.
Originality/value – This study explores how a combination of transaction costs theory and the different
crops that farmers produce explains farmers’ decision to participate in inter-organizational relationships.
Description
Research Article
Keywords
Inter-organizational relationships, Transaction costs, Human action, Crop enterprises