Inter-firm coordination in the Mexican avocado (Persea americana) industry: the packer-buyer relationship

Vertical coordination is an effective response to uncertainties in marketing environments. This article presents evidence relating the influence of transaction characteristics on interfirm coordination to respond what conditions determine the level of inter-firm coordination between packers and buyers. Based on transaction cost analysis, we measured inter-firm coordination using two variables, information exchange and duration of the arrangement with the buyer. Data were gathered from 44 non-forwardly integrated packers participating in the Mexican avocado (Persea americana) industry. We showed that higher levels of interfirm coordination not only require coordinated response, but also cooperative response. Although information exchange is contingent on the magnitude of asset specificity and presence of environmental uncertainty, duration of the arrangement between packer and buyers has been a main factor to explain reduction of opportunism associated to the fulfillment of the arrangement, as well as the presence of higher levels of information exchange when asset specificity is significant. As a result, packers with higher levels of inter-firm coordination have increased sales and reduced stock outs. Key words: environmental uncertainty, inter-firm coordination, information exchange, duration.