Transactions in Paraná’s dairy AGS: a study based on transaction and measurement costs

Abstract

Abstract: This article aimed to understand how governance structures and the search for value protection influence transaction costs in the relationship between dairy producers and processors in Paraná, Brazil. These aspects are treated by Transaction Cost Economics (TCE) and by Measurement Cost Economics (MCE). For data collection, 30 semi-structured interviews were conducted and Content Analysis was used for data treatment and results analysis. For the theory, the study contributed demonstrating that although the alignment between transaction attributes and governance structures contribute for value protection as proposed by TCE, in the absence of complete information, this alignment is still not enough to guarantee economic rights, as predicted by MCE. Empirically, it contributed suggesting the use of formal contracts and the importance of formal information available to milk producers and processors to improve their results in the activity. Thus, considering the governance structures in Paraná’s dairy AGS, it is predicted that even if the hybrid structure is adequate, under TCE view, due to its alignment with transaction attributes, MCE concepts help to explain why agents still need guarantee mechanisms. Those mechanisms, such as long-term relationships, normative instructions and informal agreements, attempt to protect value, given informational problems.