Comparative analysis of governance between supermarkets and conventional and organic farmers in Brazil and the United States: the influence of transaction and measurement costs

Abstract

It is generally assumed that the institutional environment plays an important role in determining governance, as this may entail different transaction costs for economic agents. Based on the new institutional economics (NIE), the objective of this paper was to understand the complexities of the governance structure between supermarkets and suppliers of organic and conventional products (fresh fruits and vegetables - FFV) in two different institutional environments (Brazil and USA). To test these hypotheses 128 interviews were conducted, which were analyzed through the creation of indices and then using regressions using ordinary least squares (OLS) with robust estimates of the deviations. The results showed that the influences on complexity of the governance structures differ depending on the institutional environment, but some similarities between the two countries analysed were also observed. It is possible to conclude that there is empirical evidence, demonstrated through the creation of these indices, that the institutional environment has an impact on the complexity and the selection criteria of the governance structure to be used.