Determinants of long-term business relationships in the dairy value chain in transition countries: the case of Albania

Blendi Gërdoçi, Engjell Skreli, Edvin Zhllima and Drini Imami

Studies in Agricultural Economics, 2017, vol. 119, issue 3

Abstract: Building on transaction cost economics theoretical framework, we examined the determinants of long-term business relationships between farmers and buyers in the Albanian dairy chain in a context characterised by weak institutions and lack of formal contract. Logistic regression analysis was employed to test the model on primary data collected from a sample of 315 Albanian farmers engaged in the production of sheep and goat milk. The study results support our hypotheses that trust, uncertainty and investment in specific assets are key determinants of long-term relationships. Implications at managerial and policy-making levels are discussed. At a managerial level, dairy owners and managers need to build trust with farmers and mitigate uncertainties as a precondition for long-term relationships. At the policy level, the government subsidy schemes need to be further refined in order to motivate farmers to increase flock size and strengthen vertical relationships in the dairy value chain, the latter being a precondition also to achieve traceability and improve standards.

Keywords: Agribusiness; Agricultural and Food Policy; Agricultural Finance; Financial Economics; Institutional and Behavioral Economics; Livestock Production/Industries; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2017
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:stagec:266793

DOI: 10.22004/ag.econ.266793

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