Formal institutions and social capital in value chains: The case of the Ethiopian Commodity Exchange

G.W. Meijerink, E.H. Bulte, D. Alemu

Research output: Contribution to journalArticleAcademicpeer-review

14 Citations (Scopus)

Abstract

We explore whether the creation of the Ethiopian Commodity Exchange (ECX) and its formal monitoring and enforcement institutions has affected social capital and trust in the Ethiopian segment of the sesame value chain. Consistent with a simple theoretical marketing model, our panel data suggest this is indeed the case. Trade in sesame is increasingly governed by formal rather than informal institutions, and in response traders have broadened their trading network, rely more frequently on traders with whom they do not have social relations, and have reduced the provision of credit that cements personalized relationships. They also have lower levels of trust in the intentions and capabilities of their trading partners, and attach less weight to trust. (c) 2014 Elsevier Ltd. All rights reserved.
Original languageEnglish
Pages (from-to)1-12
JournalFood Policy
Volume49
Issue number1
DOIs
Publication statusPublished - 2014

Fingerprint

commodity exchange
social capital
value chain
panel data
credit
cement
supply chain
Sesamum
commodity
marketing
monitoring
Social Relations
Marketing
Theoretical Models
Weights and Measures
enforcement
Social Capital
Formal institutions
Traders
Social capital

Keywords

  • trade credit
  • market
  • trust

Cite this

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Formal institutions and social capital in value chains: The case of the Ethiopian Commodity Exchange. / Meijerink, G.W.; Bulte, E.H.; Alemu, D.

In: Food Policy, Vol. 49, No. 1, 2014, p. 1-12.

Research output: Contribution to journalArticleAcademicpeer-review

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AU - Alemu, D.

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AB - We explore whether the creation of the Ethiopian Commodity Exchange (ECX) and its formal monitoring and enforcement institutions has affected social capital and trust in the Ethiopian segment of the sesame value chain. Consistent with a simple theoretical marketing model, our panel data suggest this is indeed the case. Trade in sesame is increasingly governed by formal rather than informal institutions, and in response traders have broadened their trading network, rely more frequently on traders with whom they do not have social relations, and have reduced the provision of credit that cements personalized relationships. They also have lower levels of trust in the intentions and capabilities of their trading partners, and attach less weight to trust. (c) 2014 Elsevier Ltd. All rights reserved.

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KW - market

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