Vol - 16, Issue - 5
About the Journal
Download [This article belongs to Volume - 16, Issue - 5]
Journal of the Austrian Society of Agricultural Economics (JASAE)
Journal ID : JASAE-06-07-2020-31
Total View : 262

Title : The Role of Trust and Transaction Cost Attributes to Reduce Side Selling in Sesame Contract Farming in Ethiopia
by Mekdelawit Yeshitila, Isriya Bunyasiri, Prapinwadee Sirisupluxana,
Abstract : Based on the concept that relational contracts complete a formal contract in the absence of a legal enforcement mechanism, this study assessed the coexistence of relational and formal contracts to reduce side selling in sesame contract farming. Thus, trust and communication are used as relational contract elements, and the need for a formal contract was assessed based on transaction cost attributes (asset specificity and behavioral uncertainty). A structural equation modeling was used to analyze the relationship between the attributes of relational contracts and transaction cost economics and their direct and indirect effect on reducing side selling. The result indicates trust has a positive significant direct effect on reducing side selling with an effect coefficient of 0.248. Based on the result, while asset specificity, satisfaction, communication, and commitment have a total significant positive effect on reducing side selling, uncertainty encouraged side selling. Even if it is appealing for farmers to side sell when the market price is higher, the cost of losing secured market outlet and long term buyer exceed the short term benefit. Therefore, both farms and the firm need to foster trust to have a sustainable relationship. Alongside trust, it is better to execute contract legislation and enforcement mechanisms to circumvent uncertainty.

Our Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates
Certificates