Organizational tolerance in agro-industrial systems: an empirical application for the meat sector

Caleman, Silvia Morales de Queiroz; Zylbersztajn, Decio; Pereira, Matheus Wemerson Gomes; Oliveira, Gustavo Magalhães de

doi:10.1016/j.rausp.2016.11.001

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Strategy and Business Economics • Rev. Adm. (São Paulo) 52 (4) • Oct-Dec 2017 • https://doi.org/10.1016/j.rausp.2016.11.001 copy

Organizational tolerance in agro-industrial systems: an empirical application for the meat sector

Tolerância organizacional em sistemas agroindustriais: uma aplicação empírica para o setor de carnes

Tolerancia organizacional en sistemas agroindustriales: una aplicación empírica para el sector de carnes

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

Based on the Measurement Cost Theory, this study focuses on the coexistence of institutional arrangements in coordinating complex agribusiness systems. Under the rationale of "Organizational Tolerance", the existence of plural forms is investigated in the acquisition of cattle, poultry, and swine by the meatpacking industry in the State of Mato Grosso do Sul. In general terms, the degree of organizational tolerance and its determinants are assessed in this study. To this end, 98 farmers were interviewed and the data analyzed by applying an Ordered Logit model. The main hypothesis is that Organizational Tolerance is related to the difficulty of measuring attributes of the transacted products. The findings show that the difficulty of measuring the animal condition is statistically significant (5%) for the existence of a higher Organizational Tolerance. Other variables such as tradition (5%), cooperation (10%), and adoption of contracts (1%) also explain the degree of Organizational Tolerance in agro-productive systems. Understanding the determinants of organizational choice is essential to the identification of efficient solutions for the coordination of productive systems in agribusiness, and for the establishment of public and private strategies for the sector.

Keywords:
Agribusiness; Institutional arrangements; Coordination; Diversity

	Contracts	Agreements^a a For the data tabulation, "contracts" were understood as formal written contracts, duly signed. The "agreements" category involves a set of informal solutions such as unsigned contracts between the parties, verbal agreements based on the reputation of the agents—cattle ranchers and industries. In the case of "agreements", reputation is a guarantee of the transaction, not the courts.	Market	Others
Poultry	100%	0.0%	0.0%	0.0%
Swine	66.7%	15.2%	0.0%	0.0%
Cattle	3.0%	42.4%	63.6%	9.1%

Classification	General hypotheses	Variable description	Detailed hypotheses	Type of variable	Expected signal
Producer profile	Variables of control	Tradition in activity	Having tradition in the activity implies less organizational tolerance / less diversity of institutional arrangements (path dependence)	Dummy	-
		Time in activity (years)	Longer time in the activity implies lower organizational tolerance / lower diversity of institutional arrangements (path dependence).	Continuous	-
		Cooperation	Being part of an association and / or cooperative implies adopting several nego tiating models (more op tions for members), thus, a greater diversity of institutional arrangements.		+
Transac tion Attributes	H1a; H1b	Difficulty in measuring the attribute "weight" of the animal (high, average, and low)	H1a/ H1b –The high er / lower the difficult y of mea suring the animal's weight, the lower / higher the Organizational Tolerance.	Dummy	+
		Difficulty of measuring the attribute "age" of the animal (high, average, and low)	H1a/ H1b –The high er / lower the difficult y of mea suring the animal's age, the lower / higher the Organizational Tolerance.	Dummy	+
		Difficulty of measuring the attribute "quality" of the animal (high, average, and low)	H1a/ H1b – The higher / lower the difficulty of measuring the animal's quality, the lower / higher the Organizational Tolerance.	Dummy	+
		Difficulty of measuring the attribute "compliance" of the animal (high, average, and low)	H1a/ H1b –The higher / lower the difficulty of mea suring the animal's compliance, the lower / higher the Organizational Tolerance.	Dummy	+
Transac tion Stand ard		Adoption of formal contracts for the transaction	H1a –The smaller the measurement difficult y, the higher the po ssibili ty of adop ting formal contrac ts and the smaller the Organizational Tolerance.	Dummy	-
Organizational Tolerance	Depend ent Variable	Governance mod e of the transaction	Based on the ob served diversit y of forms of contracting animals for slaughter, there are: High Organiza tional Tolerance (Cattle); Average Organization al Tolerance (Swine), and Low Organizational Tolerance (Poultry).	Dummy

Variable	Description	Measured in	General
			Average	Standard deviation
Time (temp)	Time in the activity	Years	16.41	11.17
Tradition (trad)	Tradition in the activity	1st generation = 1 2nd generation = 2 3rd generation = 3 >3rd generation = 4	1.82	0.912
Cooperativism (coop)	Participation of producers in some association or cooperatives	(Yes = 1, No = 0)	0.806	0.3973
Transaction standard (trans_cont)	If the transaction standard occurs via formal contract	(Yes = 1, No = 0)	0.5714	0.4974
Difficulty in measuring compliance (dif_conf)	Producer difficulty in measuring product compliance	(Average/high = 1, low = 0)	0.2857	0.454

Explanatory variables	Coefficient	Standard deviation
Trad	-0.93006^ Significant at 5%.	0.3824
Coop	1.6215^* ***** Significant at 10%; ns not-significant.	0.87627
trans_cont	6.1547^* * Significant at 1%.	1.2399
dif_conf	1.6765^ Significant at 5%.	0.6783
(cut point 1) µ ₁	2.0476	1.179
(cut point 2) µ ₂	65,908	1.6327
Pseudo R²	0.5962

OT	Probability
Pr (Y_i = 1) Low Organizational tolerance	0.45373
Pr (Y_i = 2) Average Organizational tolerance	0.32125
Pr (Y_i = 3) High Organizational tolerance	0.2250

	Variable	Coef.	Standard deviation
$\frac{\partial \Pr (yi = 1)}{\partial x_{i}^{j}}$	Trad	0.13499^* ***** Significant at 10%; ns not-significant.	0.07410
	Coop	-0.30327^NS	0.2024
	trans_cont	-0.86081^* * Significant at 1%.	0.07240
	dif_conf	-0.19283^ Significant at 5%.	0.09838

$\frac{\partial \Pr (yi = 2)}{\partial x_{i}^{j}}$	Trad	-0.0876^NS	0.05933
	Coop	0.25165^NS	0.18676
	trans_cont	0.44632^* * Significant at 1%.	0.1100
	dif_conf	0.07904^NS	0.08055

$\frac{\partial \Pr (yi = 3)}{\partial x_{i}^{j}}$	Trad	-0.04733^NS	0.02899
	Coop	0.05161^NS	0.03224
	trans_cont	0.41449^* * Significant at 1%.	0.0861
	dif_conf	0.1137 ^NS	0.08543

Departamento de Administração da Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo Avenida Professor Luciano Gualberto, 908, sala F184, 05508-900 São Paulo / SP Brasil, Tel./Fax 55 11 3818-4002 - São Paulo - SP - Brazil
E-mail: rausp@usp.br

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[1] * Corresponding author at: Avenida Senador Filinto Muller, Unidade 10, Caixa-postal: 549, CEP 79070-900, Campo Grande, MS, Brazil. E-mail:silviacaleman@gmail.com (S.M. Caleman).

Log L^• = -31.50	χ²_tab ^••• = 3.84
Log L _* ^•• = -42.76	LR > χ²_tab
LR = 22.52	Rejects Ho at the level of 1% of significance.