Measurement costs and agribusiness governance: a multiple case study applied to beef agrichain

Abstract

Measurement Cost Theory (MCT) and Transaction Cost Economics (TCE) are both theoretical frameworks applied to the study of economic transactions. In the MCT, the attributes’ measurability is a key variable for identifying efficient modes of governance. The application of MCT to agri systems coordination is the context of this work, whose objective is to identify the governance mechanisms adopted in the beef chain. The transaction attributes of five beef chain subsystems and their degree of measurability (MCT) were analyzed according to TCE. An increasing gradient of coordination in function of the increase of asset specificity was observed, moving from one extreme of the spot market, exemplified by the commodity subsystem, to vertical integration, exemplified by organic beef. The same gradient is observed when the attributes’ measurability is considered as the explanatory variable, with the exception of the organic beef subsystem. It was concluded that the MCT is a theoretical framework that can be applied to the study of agri systems, as its analysis that is in line with that offered by the TCE, but is also more flexible and operational.