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Third sector organizations in rural development: a transaction cost perspective

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  • Valentinov, Vladislav

Abstract

In many parts of the world, rural development is supported by third sector organizations, such as nongovernmental organizations, farmer associations, and cooperatives. This essay develops a transaction cost explanation of these organizations role in rural areas. Since the traditional transaction cost theory is concerned with the choice of governance mechanisms within the for-profit sector, this essay adopts an alternative conceptualization of the notion of transaction cost by building on the theory of the division of labor. This theory regards transaction cost as a constraint on the division of labor causing the replacement of exchange with self-sufficiency. The proposed transaction cost explanation of rural third sector organizations consists of two arguments: 1) third sector organizations embody partial reliance on self-sufficiency; and 2) rural areas exhibit rurality-specific transaction cost acting as a constraint on the division of labor and thus creating a niche for third sector organizations. The essay concludes with suggesting a research program on developing an economic theory of the rural third sector.

Suggested Citation

  • Valentinov, Vladislav, 2009. "Third sector organizations in rural development: a transaction cost perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 18(1), pages 3-15.
    • Handle: RePEc:zbw:espost:203054
    DOI: 10.2137/145960609788066825
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    1. Saxe, Annegret, 2013. "Nonprofit Organizations and the Market-Hierarchy-Continuum: A research sketch," ZögU - Zeitschrift für öffentliche und gemeinwirtschaftliche Unternehmen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 36(1), pages 73-80.
    2. Stefano Ciliberti & Angelo Frascarelli & Gaetano Martino, 2020. "Drivers of participation in collective arrangements in the agri‐food supply chain. Evidence from Italy using a transaction costs economics perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(3), pages 387-409, September.
    3. Chaddad, Fabio & Valentinov, Vladislav, 2017. "Agency costs and organizational architecture of large corporate farms: evidence from Brazil," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 20(2), pages 201-220.
    4. Valentinov, Vladislav, 2012. "Understanding the rural third sector: insights from Veblen and Bogdanov," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 41(1/2), pages 177-188.
    5. Vladislav Valentinov & Lioudmila Chatalova, 2014. "Transaction Costs, Social Costs and Open Systems: Some Common Threads," Systems Research and Behavioral Science, Wiley Blackwell, vol. 31(2), pages 316-326, March.
    6. Pies, Ingo & Hielscher, Stefan, 2014. "Miteinander oder Gegeneinander? Zur Verhältnisbestimmung von Unternehmen und zivilgesellschaftlichen Organisationen," Discussion Papers 2014-3, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    7. Lioudmila Chatalova & Daniel Müller & Vladislav Valentinov & Alfons Balmann, 2016. "The Rise of the Food Risk Society and the Changing Nature of the Technological Treadmill," Sustainability, MDPI, vol. 8(6), pages 1-10, June.
    8. Tortia, Ermanno & Valentinov, Vladislav & Iliopoulos, Constantine, 2013. "Agricultural cooperatives," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 2(1), pages 23-36.
    9. Vladislav Valentinov & Gabriela Vaceková, 2015. "Sustainability of Rural Nonprofit Organizations: Czech Republic and Beyond," Sustainability, MDPI, vol. 7(8), pages 1-17, July.
    10. Valentinov, Vladislav & Vaceková, Gabriela, 2015. "Sustainability of Rural Nonprofit Organizations: Czech Republic and Beyond," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(8), pages 9890-9906.
    11. Vladislav Valentinov & Karin Larsen, 2010. "Toward a transaction cost economics of rural development," Local Economy, London South Bank University, vol. 25(1), pages 24-31, February.

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