Third sector organizations in rural development: a transaction cost perspective
Valentinov, Vladislav (2009)
Valentinov, Vladislav
Julkaisusarja
Agricultural and Food Science
Volyymi
18
Numero
1
Sivut
3-15
MTT Agrifood Research Finland The Scientific Agricultural Society of Finland MTT Agrifood Research Finland The Scientific Agricultural Society of Finland
2009
Julkaisun pysyvä osoite on
http://urn.fi/URN:NBN:fi-fe2015090311198
http://urn.fi/URN:NBN:fi-fe2015090311198
Tiivistelmä
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.