Search

The paper uses an ongoing business-to-business (B2B) relationship perspective to establish the interrelationships between trust, commitment, and relationship satisfaction (as relational constructs) and specific assets, formalization, and opportunism (as transaction cost variables) from a buyer's perspective, framed within micro-enterprises in the business banking industry in South Africa. Data were collected via self-administered online questionnaires from 381 micro-enterprise customers of one of South Africa's major banks. We first used confirmatory factor analysis (CFA) to assess the measurement model before structural equation modeling (SEM) was used to estimate the hypothesized relationships between the study constructs. The measurement and structural models fitted the data well. The research was approached using the dual theoretical lenses of relationship marketing and transaction cost theory to investigate relationship satisfaction from a buyer's perspective. The results support the notion that, in a B2B context, relationship satisfaction is an outcome of trust and commitment, with commitment being the stronger predictor. Relationship satisfaction, in turn, was positively related to both specific assets and formalization (the relationship with formalization being the strongest), and a negative relationship between relationship satisfaction and opportunism. Since our results found commitment to be a stronger predictor of relationship satisfaction than trust (contrary to much previous research that found the opposite to be true), the paper concludes with several commitment-related suggestions for banks. Although much research exists on trust, commitment, and satisfaction, to our knowledge this study is the first using dual theoretical lenses (relationship marketing and transaction cost theory) to investigate relationship satisfaction from a buyer's perspective among micro-enterprise customers in a banking context. The insights gained from our study therefore not only address this under-researched area (micro-enterprises), but also contribute toward expanding our understanding of forming (and maintaining) banking relationships with the customers of the smallest-sized businesses. [ABSTRACT FROM AUTHOR]

In this article, I seek to explore the ratio between the administrative transaction costs faced by organisations in South Africa for claiming skills development grants and the grants that they achieve. This simple trade-off of costs versus gains is a key factor in whether firms choose to participate in the training-related activities targeted by this system. Anecdotal sources have claimed that excessive administrative costs have led firms to under-claim grants available to them. However, no prior empirical research exists on such costs, presenting a gap in the literature. Accordingly, in this article, I explore the proportion of administrative transaction costs to direct gains in 14 case studies of South African organisations regarding their 2016 activities and expenditures. The results found half of the firms studied to have costs in excess of direct gains from grants. The remaining firms exhibited extreme variability in the cost-gain ratio from very low to near parity. Some evidence suggests that larger firms may enjoy a slight cost-benefit advantage. This research provides some support for the claim that the levy-grant system for skills development may present many organisations with excessive costs compared to gains. The high levels of variability suggest that policymakers should consider cost structures carefully and mitigate policy instruments. [ABSTRACT FROM AUTHOR]

This study uses an online laboratory experiment and a post-experimental survey to test whether the Mastercard Foundation (MCF) scholarship programme causally influences the creation of cognitive social capital among University of Pretoria recipients. Cognitive social capital, which is based on commonly shared norms among subjects, leads to honest and cooperative behaviour. It is necessary for ease of information flow, a reduction in transaction costs, and allowing communities to deal with social dilemmas like common-pool resource management. The study used incentivised economic experiments on randomly selected subjects drawn from a control group (non-MCF students) and a treated group (MCF students). The experimental results from the two groups were compared to check the differences in terms of levels of trust, reciprocity, altruism, cooperation, in-group favouritism and out-group discrimination. Our results show that the scholarship programme has a significant impact only on levels of in-group favouritism and out-group discrimination. The post-experimental survey showed that MCF and non-MCF subjects were similar in terms of stated pro-social behaviour perceptions and in-group social capital creation. [ABSTRACT FROM AUTHOR]

Financial inclusion efforts have resulted in a rapid increase in access to financial services. However, the usage of these financial services has not expanded at the same pace, especially in rural areas. The paper explores the factors that have caused usage to lag behind access using a qualitative approach. Data is collected from two predominantly rural provinces in South Africa using focus group discussions. While supply-side factors of distance and transaction costs are important, demand-side factors, including lack of employment, low and irregular incomes, financial illiteracy, and risk and trust perceptions, play a more significant role. We suggest that creating an enabling environment for the development of mobile money could overcome proximity barriers and result in better inclusion of rural communities. There is a need to invest in technology to improve network and Internet reception in rural areas. In addition, the government needs to reconsider the exclusive issuance of e-money by banks. Partnerships with supermarket money markets also have the potential to expand financial inclusion. Moreover, post-adoption financial education should complement efforts to expand financial inclusion. Simplified and transparent cost structures could help resolve the mistrust of banks. [ABSTRACT FROM AUTHOR]

Summary: Globally, there is a trend towards conserving biodiversity by promoting co-management with multiple stakeholders at landscape scales. Environmental policies emphasize stakeholder engagement in decision-making, yet landscape conservation is typically a bureaucratic–scientific endeavour. Building trusting relationships with stakeholders is key to negotiations that minimize trade-offs and maximize synergies. Incorporating shared stakeholder objectives improves co-management, as they act as incentives for participation and trust development. We explored the degree of alignment between the bottom-up stakeholder objectives and top-down management objectives of a landscape-scale conservation initiative on the West Coast of South Africa. We categorized stakeholders into six affiliations representing governmental, private and community organizations, and using a social-ecological inventory we identified ten shared objectives. Of these objectives, three were shared between all affiliations, namely biodiversity conservation, socioeconomic development and coordination of the landscape approach. The first two aligned with the top-down landscape management objectives and the latter did not. The importance of coordinating landscape approaches in multi-stakeholder landscape-scale initiatives is crucial to long-term success, and we recommend that it be formally included as a landscape management objective. Exploring the alignment between bottom-up and top-down objectives can highlight overlooked functions of co-management and can reduce the transaction costs of sustaining conservation efforts in the long term. [ABSTRACT FROM AUTHOR]

Smallholder farmers in developing countries are characterised by low uptake of improved farm inputs and weak links to markets. Among other reasons, the high transaction costs that these smallholder farmers incur, as a result of their location in remote areas, inadequate information and missing credit markets, inhibit them from participating in both input and output markets. Organising farmers into groups has been suggested as a potential mechanism for reducing transaction costs. Accordingly, farmer groups have been preferred channels for smallholder farmer support in South Africa, both by the government and donors. However, the impact of these groups on smallholder outcomes such as technology adoption is largely unknown. We investigated the extent to which membership in farmer groups influences the use of improved farm inputs such as inorganic fertiliser among smallholder farmers in South Africa. A sample of 984 households was analysed using the propensity score matching method. Group membership was found to play a positive role in inorganic fertiliser use with a 14% higher chance of inorganic fertiliser use among group members. Among fertiliser users, group members used 170 kg more inorganic fertiliser than did non-members. Further analysis indicated that the effect of group membership on inorganic fertiliser use was heterogeneous among group members. The results suggest that farmer groups play a positive role in the use of improved farm inputs in South Africa. For greater effectiveness of group membership, policymakers should target the less educated, increase the assets of the poor and improve access to extension and information. Significance: * The impact of farmer groups on smallholder outcomes such as technology adoption is largely unknown. * Farmer groups were found to play a positive role in the adoption of agricultural technologies such as inorganic fertilisers. * Effect of group membership on inorganic fertiliser adoption was heterogeneous among group members. * Variables that should be targeted for greater effectiveness of collective action were identified. [ABSTRACT FROM AUTHOR]

Abstract: During the last three decades, there has been an increased pursuit of participatory approaches to managing natural resources. In South Africa, this has been evident in the management of protected areas. In particular, land claims, which affect much of the conservation estate in South Africa, frequently result in co-management of protected areas by claimant communities and conservation agencies. This is occurring against a backdrop of declining state subsidies and growing expectations that South African conservation agencies will finance themselves while simultaneously stimulating local economic opportunities. In this context, it is important for co-management partners to understand and monitor the cost-effectiveness of management processes in achieving both the socio-economic and ecological targets of conservation management. Transaction costs are useful in gauging the cost-effectiveness of policies and institutions; however there is little methodological guidance for measuring transaction costs empirically. This study develops and tests a transaction costs model for a co-managed nature reserve in the Eastern Cape province of South Africa. Transaction costs were quantified by taking into account the total time spent in meetings annually, the daily opportunity cost of participants' time and the travel costs associated with attending such meetings. A key limitation in the development of this model was a lack of record keeping by the conservation agency. The model developed in this study offers a practical means for co-management partners in similar contexts to monitor how transaction costs change over time. [Copyright &y& Elsevier]

Minimising the cost of repeatedly estimating C (C) stocks is crucial to the financial viability of projects that seek to sell C credits. Depending on the price of C, this may imply less or more sampling effort than would be applied for science objectives. In systems with heterogeneous C pools, such as savannas, this translates into a variable-effort sampling strategy that maximises the marginal additional C that can be claimed per incremental unit of effort expended. Analysis of a savanna in north-eastern South Africa indicates relatively modest returns per hectare due to the small C quantities and low sequestration rates. Under these conditions, areas in excess of 1,000 ha and infrequent sampling frequencies of 5-10 years are required to make such projects financially viable. For such projects the sample variance, number of samples, cost per sample and establishment costs have negligible impacts on financial viability. It was also found that the soil-C pool contributes up to three times the net returns of the aboveground C pool and provides a strong argument to monitor soil C for certification and market trading. The financial viability estimates, however, do not include the management or opportunity costs incurred in changing the land use. The economies of scale identified in this study combined with the massive area covered by savannas indicate that these additional costs can be covered. Further research is recommended to quantify these costs and interrogate the feasibility of large scale (in excess of 10,000 ha) C-sink projects in savanna systems. [ABSTRACT FROM AUTHOR]

This paper uses data collected from 177 small-scale farming households in Mpumalanga in an effort to identify factors that significantly influence the degree of commercialisation or market participation. A logistic regression model was applied within the transaction costs framework. Results support the hypothesis that transactions costs rank among the main determinants of commercialisation. The following variables were statistically significant: age, ability to speak/understand English, region, ownership of transport, access to market information, distance to market, dependency ratio, trust, land size and ownership of livestock. Increases in the latter four have negative effects on commercialisation. The negative relationship between land size and commercialisation probably indicates that increased market participation is also a function of input (land) productivity. [ABSTRACT FROM AUTHOR]

Mohair is an exclusive natural animal fibre with niche market appeal. It is, however, questionable whether it is inherently suited to a commodity-based marketing western in a marketing environment that requires marketing systems to convey far more information than commodity-based systems do. Historically, mohair has been considered a commodity and the marketing system for mohair has been structured accordingly. It is, however, argued that the exchange between mohair growers and the buyers of greasy mohair requires increased levels of coordination to govern the exchange in a transaction costs efficient manner. The inefficiencies created by an inappropriate or incomplete marketing system for South African mohair are expected to lead to a loss of consumer value and a toss of potential profit throughout the mohair supply chain if a more coordinated governance structure is not implemented to curb these costs and augment the current spot market exchange. [ABSTRACT FROM AUTHOR]

Abstract: There has been growing interest in the application of institutionalist perspectives in the health economics literature. This paper investigates the institutionalist notion of social value and its use in economic evaluation with particular reference to a program to address HIV/AIDS and gender violence in Southern Africa (IMAGE). Institutions are the rules that govern the conduct between individuals, groups and organisations. Their social value stems from their capacity to reduce the uncertainty in human interactions thereby both reducing transaction costs and, importantly, enabling the initiation and sustainability of various activities (instrumental value). Furthermore, institutions tend to be formed around certain ethical positions and as a consequence, act in binding future decision making to these positions (intrinsic value). Incorporating such notions of social value within a conventional welfare-based measure of benefit is problematic as institutional development is not necessarily consistent with individual utility. An institutionalist approach allows for these additional domains to be factored into economic evaluation. IMAGE is an intervention to reduce gender violence and HIV through microfinance, health education and community development, and involves significant initial investment in institution-building activities, notably through training activities with program staff and community members. The key to employing an institutionalist approach to the evaluation of IMAGE is in understanding the nature of those actions that can be seen as institution-building and determining: (1) the instrumental value of follow-up activities by appropriate amortisation of transaction costs over an horizon that reflects the economies gained from the intervention; and (2) the intrinsic value of any transformation in the community through a cost-consequences approach informed by an a priori conceptual model. This case study highlights how health sector interventions can effect institutional changes and how these are captured within a theory-based economic evaluation framework. [Copyright &y& Elsevier]

This study tests the hypothesis that an efficient rental market for cropland is a significant determinant of agricultural investment in the communal areas of KwaZulu-Natal. An efficient rental market creates an opportunity cost for under-utilisation, which tends to transfer resources to more effective users. The efficiency of a rental market is compromised by the presence of transaction costs that reduce returns for both lessees and lessors. Transaction costs include risk arising from a possible breach of the rental contract. Potential losses caused by a breach of contract can be reduced by introducing a credible third-party to witness the contract. Likewise, moral hazard can be reduced by contracting with trusted persons. Data from household surveys conducted in two communal areas of KwaZulu-Natal were used to estimate a regression model explaining levels of investment in crop production amongst tenant farmers. The results confirm that tenants invest more when they contract with friends or family, and if their contracts are formally witnessed by a credible third-party. Interventions that reduce potential losses caused by a breach of contract are therefore expected to promote market efficiency and investment in crop production. In the short-run, the Provincial Department of Agriculture should sanction rental contracts negotiated by lessors and lessees. Ultimately, legal reform that leads to predictable contract enforcement in the communal areas is required to improve market efficiency and levels of investment in agriculture. [ABSTRACT FROM AUTHOR]

The objective of this research is to investigate whether agricultural cooperatives can facilitate smallholder farmer access to input and product markets. Farmers in two case study communal areas of KwaZulu-Natal face high transaction costs as reflected primarily in their low levels of education and literacy, lack of market information, insecure property rights, poor road and communication infrastructure, and long distances to markets. Analysis of the reasons why cooperatives were originally established in various parts of the world suggests that most of the causes (such as poverty, market failure and high transaction costs) also apply to the study farmers, as do the seven international principles of cooperation. Smallholder farmers in both case study regions have the potential to grow high-value crops such as vegetables, fruit and cut flowers. In the supply chain from farm to market, the optimum boundary for each organization involved in the chain (e.g. cooperative and investor-oriented firm) depends on the minimum operational and transaction costs for each business. [ABSTRACT FROM AUTHOR]

This study analyses the Ezemvelo Farmers' Organisation (EFO), a certified organic smallholder group in KwaZulu-Natal province (South Africa), as an institution to improve smallholder access to a niche market by reducing unit production and transaction costs in the supply chain. Using a multinomial logit model, results suggest that EFO is more likely to survive if it continues to secure fully subsidised information, transport, fencing, and certification services for its members, and if it improves the benefits of participating by synchronising harvest and delivery dates, negotiating price discounts for organic inputs, and by maintaining an office with telephone, fax and postal services. [ABSTRACT FROM AUTHOR]

This study examines transaction costs faced by small mussel and oyster growers to elicit the appropriate organisational design of contract institutions. The theoretical premise is that high transaction costs essentially constrain the participation of small growers in mussel and oyster mariculture. Transaction cost analysis is applied to contract fanning models and this approach is first discussed conceptually. Experience with contract farming by small growers in a developing context is synthesised and used in guiding the design of contract fanning models. This is followed by a brief overview of the mussel and oyster industries, which is used to gain insight into transaction costs associated with contract institutions. Contracting models and implications are assessed separately for each industry. For mussel mariculture, four farming models are examined and the appropriate model is subsequently selected. For oyster mariculture, the transaction costs of contract fanning are examined to assist in organisational design. [ABSTRACT FROM AUTHOR]

High transaction costs are detrimental to the efficient operation or existence of markets for inputs and outputs. The cost of information and the costs associated with the search for trade partners, the distance to formal markets and contract enforcement are likely to influence the marketing of food crops. This study hypothesises that the level of income generated from food-crop sales by small-scale farmers in the Impendle and Swayimana districts of KwaZuluNatal is influenced by transaction costs and certain household and farm characteristics. Regression analysis shows that the depth of marketing methods is significantly influenced by transaction cost proxies, such as cooperation with large commercial farmers and ownership of means of transport. Results from a block-recursive regression analysis show that the level of crop income generated is determined by the depth of marketing methods, the size of allocated arable land and off-farm income. Households with lower transaction costs, sizeable allocated land and off-farm income can be expected to generate higher income from food crops. Investment in public goods such as roads, telecommunications and an efficient legal system (to uphold commercial contracts), as well as farmer support services (input supply, extension, marketing information and research), would probably raise farm and non-farm income by reducing transaction costs. This would increase the effective demand for locally produced goods and services, thus contributing to rural employment and livelihoods within rural communal areas. [ABSTRACT FROM AUTHOR]