Getting Rid of Organizational Legacy - the Costs of Restructuring Czech Agricultural Production
Markus Brem, INSITUTIONAL CHANGE IN AGRICULTURE AND NATURAL RESOURCES, KATO Research Project, Shaker Verlag, 2006
Posted: 10 Jan 2006
Agricultural production in transition countries has been vigorously restructured in the 1990s. Whereas in market economies agriculture is mainly organized in individual farms decreasing in number, in post-socialist Central and Eastern European Countries (CEEC) the number of organizations engaged in farming increased sharply and, consequently, the average size of these organizations decreased. This paper considers the trade-off between intra-organizational transaction costs (e.g. agency costs) and the costs of exiting from the former deployment of socialist human and physical assets (e.g. switching costs). It seeks answering the question of why restructuring agricultural production in transition countries has mainly resulted in an increased number of organizations with significantly smaller farm sizes, which, however, are still of large-scale farming type. The quantitative analysis characterizes the downsizing process of distinguish-able restructuring paths of 87 farms.
Keywords: Reorganization, transaction, specificity, transition, Czech agriculture
JEL Classification: L23, L33, P31, Q15
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