Trust, transaction costs, and contract enforcement: evidence from apple farmers in China
Abstract
Purpose
The purpose of this paper is to examine the impact of trust and transaction costs on farmers’ contract enforcement choices using cross-sectional data collected from apple farmers in China.
Design/methodology/approach
This study employs ordered probit model in a two-stage regression procedure to conduct the empirical analysis.
Findings
The empirical results show that trust and transactions costs significantly influence smallholders’ contract enforcement choices. In particular, longer distance to collective place and delayed payment have negative and significant impacts on contract enforcement, while farmers’ cognition trust has a positive and significant impact on contract enforcement. Factors such as education, distance to main road and price premium also tend to have positive and statistically significant impacts on contract enforcement choices.
Originality/value
This study used first-hand survey data to examine the impact of transaction costs and trust using proxy variables on apple farmers’ contract enforcement choices.
Keywords
Acknowledgements
The authors are grateful to the National Natural Science Foundation of China (71203088).
Citation
Cai, R. and Ma, W. (2015), "Trust, transaction costs, and contract enforcement: evidence from apple farmers in China", British Food Journal, Vol. 117 No. 10, pp. 2598-2608. https://doi.org/10.1108/BFJ-10-2014-0335
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited