Negotiating new institutional logics: market access amongst smallholder farmers in Zambia and Malawi
Summary (2 min read)
Introduction
- Market access amongst smallholder farmers in Zambia and Malawi, also known as Negotiating new institutional logics.
- If you wish to cite this item you are advised to consult the publisher’s version.
2.1 Institutional voids and logics in rural developing markets
- From a new institutional economics perspective (NIE), markets are bundles of institutions that provide a platform for social and economic exchange of goods and services (North, 1990).
- Weak institutions result in high and unpredictable transaction costs thereby reducing market access and dis- market exclusion, weak institutions result in the formation of institutional voids through ‘empty spaces’ (Mair et al., 2012).
- In these extreme settings, bricolage and cultural entrepreneurship are characterized by informal activities which are supported by informal institutions that rely on relation-based transactions.
- The very notion of institutional voids is contested.
- It also demonstrates the construction of legitimacy in markets in terms of how goods are traded and how narratives are constructed around this (Anteby, 2010).
2.2 Building inclusive markets amid multiple institutional logics
- According to Smith et al. (2016), when exogenous and endogenous elements get combined in a given business environment, the business model that results will likely be a dynamic and contextually adapted one.
- To navigate institutional environments that have (2012) and Venkataraman et al. (2016) propose that the distinct logics can be leveraged to create social structures to fill institutional voids and enable market participation by the vulnerable.
- The advantage of a pragmatic approach is its attention to contextualized knowledge.
- The authors focus on two broad cases of smallholder farmers in Zambia and Malawi and they discuss each in turn.
- Both countries were colonized by the British towards the end of the 19th century and were joined by the British in a single Federation before their dissolution share many common institutional characteristics, history and geography, and climatic conditions.
Insert table 1 here
- Data for researching the case study was collected through semi-structured questionnaires and interviews that comprised open-ended questions.
- With the permission from the respondents, the interviews were electronically recorded and transcribed verbatim to come up with the themes necessary for analysis.
- Analysis of the data proceeded in iterative stages as proposed by Ingham-Broomfield (2015).
- Based on the theory, the codes were then categorized between formal and informal navigation strategies, and the reconciliation of institutional logics in the presence of institutional change.
- To enhance the research credibility the findings were based on interviews with respondents that were directly involved with audit trail was maintained.
4.1 Reconciling institutional logics in Malawian smallholder tobacco farming
- Malawi is Africa’s largest exporter of burley tobacco supplying close to 82% of the burley tobacco exported from the continent.
- Growers of tobacco in Malawi are classified into two groups – estate growers and smallholder farmers.
- Under this system the objective is to achieve automatic price discovery through open bids.
- As a result of international developments in tobacco markets including the growing influence of the anti-tobacco lobby and increased litigation against leading tobacco manufacturers in developed countries, the tobacco industry has tried to improve its image and has pursued the Sustainable Tobacco Program (STP).
- From the 2015 selling season, contract marketing has become the predominant selling mode of tobacco in Malawi.
4.2 The Zambian case: The role of intermediaries in creating new institutional logics
- The Zambian smallholder farming sector demonstrates much of the same characteristics of institutional voids as neighboring Malawi.
- Thereby the collective actions of smallholder farmers can assist in penetrating markets which would be impossible for single farmers to do (Markelova & Mwangi, 2010).
- The interventions may be successful in overcoming local constraints but if the institutional voids persist and if the intermediary interventions are not fully codified then once the intermediaries withdraw the danger is that the voids strangle the new institutional ‘offshoots’ (to use a botanical analogy).
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Cites background from "Negotiating new institutional logic..."
...Arguably, large parts of Africa are characterised by weak institutions (Ahen and Amankwah-Amoah, 2018; Amaeshi et al. 2016; Luiz et al. 2019)....
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References
2,357 citations
"Negotiating new institutional logic..." refers background in this paper
...Khanna and Palepu (1997) identify five categories of institutional voids that affect supply chains in emerging markets, namely product markets voids, labor markets voids, capital market voids, regulatory voids, and contracting voids....
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...These voids tend to be severe in subsistence markets where formal institutions are often most ineffective and affected by corruption (Khanna & Palepu, 1997)....
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1,132 citations
"Negotiating new institutional logic..." refers background in this paper
...…regions (Saripalli & Chawan, 2017), on overcoming institutional voids, on the perspective of markets as social spaces for economic exchange (Bourdieu, 2005; Zelizer, 1979, 2013), and the development of African management solutions that are cognizant of the importance of embedding business…...
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...market inclusivity and the role of social entrepreneurs and intermediaries (Pärenson, 2011), builds on the perspective of markets as social spaces for economic exchange (Bourdieu, 2005; Zelizer, 1979, 2013), and the development of African management solutions that are cognizant of the importance of embedding business solutions in social realities (Luiz, Ganson, & Wennmann, 2019; Seny Kan, Apitsa, & Adegbite, 2015)....
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...Such analyses see markets as social spaces for economic exchange and as socially constructed (Bourdieu, 2005)....
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Frequently Asked Questions (16)
Q2. How many respondents participated in the study?
In Zambia, a total of fifteen respondents participated in this study comprising five private sector intermediaries, six smallholder farmers, three NGOs involved in agriculture andlasted between one and three hours.
Q3. What was the role of the ARET before the STP?
Prior to the STP, the Agricultural Research and Extension Trust (ARET) was central to theformulation and dispensation of key messages for the farmers in coordination with farmer associations and government extension workers.
Q4. What are the main factors that affect the impact of capital voids?
Farmers also rely on club structures (smallholder farming groups of seven to 10) to dampen the impact of capital voids which provide some insurance through pooling of risk and resources.
Q5. What was the main reason for the changes in Malawi’s tobacco regulations?
Abrupt changes in Malawi’s tobacco regulations started in the early 1990s as a result of the World Bank’s structural adjustment programs which abruptly liberalized the sector and cut government support.
Q6. What is the impact of the IPS on smallholder farmers?
Under the IPS, buyers initiallycountered the capital market voids and a lack of accessibility to smallholder farmers by linking their farmers with financial institutions which provide the farmers with loans in the form of inputs.
Q7. What is the purpose of the Sustainable Tobacco Program?
As a result of international developments in tobacco markets including the growinginfluence of the anti-tobacco lobby and increased litigation against leading tobacco manufacturers in developed countries, the tobacco industry has tried to improve its image and has pursued the Sustainable Tobacco Program (STP).
Q8. How much burley tobacco exports from Malawi?
4. Research findings and discussionMalawi is Africa’s largest exporter of burley tobacco supplying close to 82% of the burleytobacco exported from the continent.
Q9. What is the name of the NGO that works with smallholder farmers?
Parmalat is an agro-processor that collaborates with smallholder farmers through NGOs that seek to build capacity with cooperatives.
Q10. What are the five categories of institutional voids that affect supply chains in emerging markets?
Khanna and Palepu (1997) identify five categories of institutional voids that affect supply chains in emerging markets, namely product markets voids, labor markets voids, capital market voids, regulatory voids, and contracting voids.
Q11. Who were the actors that were deemed relevant to this study?
In addition to the farmers and the buyers, other actors that were deemed relevant to this study were the Tobacco Control Commission, which is a state institution responsible for tobacco industry activities, farmer associations, and the market operators (see Table 1 for a list of respondents).
Q12. What is the reason for the lack of recognition of indigenous institutions?
Part of the reason for this comes from the lack of recognition of indigenous institutions and how the imposition of new institutional pressures may weaken these traditional institutions and leave farmers even more vulnerable.
Q13. What is the main reason for the asymmetry in the market?
In attempting to deal with the information asymmetry buyers are employing supplier management activities that are further negatively affecting the smallholder farmer through market exclusion:
Q14. What is the common format for selling tobacco at the floors?
Selling of tobacco at the floors takes two formats – the American auction system and thecontract/silent marketing system (Malawi tobacco industry, 2016).
Q15. What is the role of cooperatives in the Zambian economy?
These cooperatives operate as viable institutions and they link private off-takers with the smallholder farmers and are able to talk the same business language (Markelova & Mwangi, 2010).
Q16. What is the impact of the STP on Malawian tobacco farmers?
As the authors discuss in 4.1.2 the imposition of the STP has changed the institutional dynamics in tobacco farming in Malawi and has affected smallholder farmers particularly adversely as they are the least able to adapt to these new requirements.