From Contracts to Networks: New Directions in the Study of Governance of Agro‐Food‐Energy Networks

The debate about the governance of complex systems of production represents a rich branchof the literature of applied organization theory. The particular application to agro‐relatednetworks is a relevant example since agriculture plays new roles in modern society. The coreof the analysis is centered in the rationale for allocation of residual decision rights anddistribution of the rights regarding the value created. Contributions based in transaction costeconomics, resource‐based view, dynamic competences, and incomplete contract theoryexplore different dimensions related to the allocation of property rights.The question of how joint strategies are defined, and how value added (or subtracted) isshared among network players is still relevant. Indeed, the questions of how residual decisionrights are defined and how residual rewards of resources applied in production are sharedare relevant for the modern theory of organizations in general. Most of the traditionalliterature considers the transaction as the unit of analysis, following the tradition of thealignment hypothesis proposed by Williamson (1996). Hence the literature as developed sofar deals with two limitations. First, the dyadic perspective, which narrows a complex andmultidimensional task down to two actors, one transaction, and a choice of internal orcontractual mechanisms of coordination. Second, the traditional perspective places itsattention on the existing value, whether real or potential, that can be revealed by choosingthe efficient mechanism of allocation of authority. This is only part of a larger and morecomplex frame, where value generation becomes a central question.