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Several authors [35 38, 67, 68] have shown the benefits of contractualization as a means to vertically coordinate actors in the agriculture sector and as a component of efficiency in market development.
Most failures to vertically coordinate will probably reveal themselves in resource misallocations, technical inefficiencies and other risks.
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pleft({x}_{mathrm{i}}right)=Pr left[{mathrm{VC}}_{mathrm{i}}=1|{x}_{mathrm{i}}right] (2) Table 1 Descriptive statistics of variables for coordinated and non-coordinated farms Variables All sample Vertically coordinated farms Non-coordinated farms (obs. 2450) (obs. 183) (obs.
The aim of this research was to test the economic benefits of two types of supply chain relationships (vertically coordinated and non-coordinated), verifying their influence on farms' performance.
The current paper aims to fill this gap by verifying whether farms vertically coordinated, when compared with non-coordinated ones, gain benefits in terms of higher selling price, cost reduction or overall profitability.
The adopted empirical approach aims to estimate the coordination premium for farms due to being vertically coordinated.
Fig. 1 Estimated function of propensity for a farm to be vertically coordinated.
An econometric model was implemented to calculate the probability of being vertically coordinated or propensity score.
Only those farms that have a similar propensity of being vertically coordinated were compared.
However, for treated, we intend vertically integrated/coordinated farms and for untreated, or control group, those farms not vertically coordinated.
On the contrary, female entrepreneurship and the absence of salaried employees decrease the farms propensity to be vertically coordinated (Table 2). Figure 1 illustrates the estimated probability for a farm to be vertically coordinated.
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