Comparative institutional arrangements of social intermediation in developing countries

TitleComparative institutional arrangements of social intermediation in developing countries
Publication TypeThesis
Year of Publication2008
AuthorsKistruck GM
AdvisorBeamish PW
Academic DepartmentBusiness Administration
DegreeDoctor of Philosophy Ph.D.
Number of Pages271
UniversityUniversity of Western Ontario (Canada)
CityLondon, ON
KeywordsAlliances, Enterprising Nonprofits, Intermediaries, Intermediation Theory, Market Microstructures, Social Enterprises, Social entrepreneurship, Social Purpose Businesses
Abstract

Despite extensive efforts on the part of governments, nonprofit organizations, and multilateral agencies throughout the past century, more than half of the worlds population continues to live in poverty. While many of these organizations continue to focus solely on skill training as a path towards poverty alleviation, a small but growing number are also beginning to actively engage in efforts at bridging underdeveloped, informal markets with more developed domestic and international markets. This process of social intermediation necessarily involves the restructuring of existing trading patterns that are currently dominated by exploitative middlemen. One of the biggest structural decisions faced by social intermediaries is whether to take on a direct or more indirect role. A direct, or transactional, intermediary role involves the intermediary taking actual ownership of the products for resale, while an indirect, or informational, role focuses more on facilitating the direct interaction between the producers and buyers. According to intermediation theory, neither informational nor transactional intermediation is thought to be a dominant strategy for achieving successful outcomes. Rather, the choice is thought to be one of comparative institutional arrangements, in which certain structural types are better aligned with certain contextual factors. While informational intermediaries are thought to be most efficient at reducing ex ante costs associated with search and negotiation, transactional intermediaries are thought to be best aligned with the need to reduce high ex post monitoring and enforcement costs. An investigation into the performance of these alternative types of market microstructures was conducted using a case study methodology to compile and compare themes across ten different cases in Africa and Latin America. Observations from the ten cases lent support to prior theory that more durable products, diversified products, frequently transacted products, and, most importantly, greater distances between producers and buyers aligned better with transactional intermediation. The data also revealed six new important contextual factors not addressed in prior theory: type of social enterprise, enforceability of contracts, organizing of producers, degree of product change, coincidence of wants, and diversity in product quality. Most importantly, enterprising nonprofit organizations appeared better aligned with informational intermediation, and social-purpose businesses with transactional intermediation.

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