Introduction
This article proposes a study of coordination issues, using an analytical approach based on the theory of meso-institutions (Ménard, Reference Ménard2014; Ménard and Martino, Reference Ménard and Martino2025). It is widely acknowledged that the division of labour entails a decomposition of tasks, which in turn raises the issue of coordination, its organisational modalities, and associated costs (Ménard, Reference Ménard, Ménard and Shirley2005, pp. 284-286). Coordination problems of various kinds are widespread in an economy (Prüfer, Reference Prüfer2016; Greif, Milgrom and Weingast, Reference Greif, Milgrom and Weingast1994). Coordination means integrating or linking together different parts of an organisation to collectively accomplish a set of tasks (Van de Ven et al., Reference Van de Ven, Delbecq and Koenig1976, p. 322). Malone and Crowston (1994, pp. 93-94) define coordination as the act of managing dependencies between activities performed to achieve a given goal. Richardson (Reference Richardson, Foss and Loasby1998, pp.44-48) argued that ‘coordination can come about through market transactions’ by independent decision-making or cooperation, in a context of interdependence and predictability of expectations from the counterparty. Inspired by these sources and the transaction cost approach, what follows refers to coordination as the organisational alignment of the agents’ plans and activities with the goal of executing an economic transaction (or a series of transactions) by designing, negotiating, and selecting the appropriate micro-institutional arrangements. Coordination solutions are therefore achieved through micro-institutions and their contractual dimensions (Ménard and Shirley, Reference Ménard and Shirley2014). This study explores more specifically the relationship between contractual arrangements and coordination solutions.
To do so, we focus on the case of interbranch organisations (IBOs) in the agri-food supply chains. Originating, although not exclusively, from the French model of interprofessions, IBOs are found across several European countries, and similar entities can be found in other contexts as well (Bodiguel, Reference Bodiguel2016 p. 31). In the European Union, IBOs are defined by their role in coordinating relationships between the various occupational categories involved in the production, marketing, and, when relevant, processing of agricultural products (Commission Communication, 1990). Scholars seem to conflate the IBO’s coordinating role with the role of contracts because of their emphasis on horizontal arrangements (Lambaré, Dervillé and You, Reference Lambaré, Dervillé and You2018; Falkowski and Ciaian, Reference Fałkowski and Ciaian2016, p. 30 and pp. 34-35). Recent analyses are tentatively innovating in this area (Bodiguel, Reference Bodiguel2016), but the ways in which IBOs and similar arrangements facilitate coordination have not been comprehensively explored and fully understood.
This study seeks to answer a question left open by these contributions: How do IBOs facilitate the coordination of the parties to Agri-food transactions? Our aim is to provide empirical evidence and a conceptual justification for the role of IBOs in facilitating the coordination of parties in the organisation of transactions (Maseland, Reference Maseland, Ménard and Shirley2025). Namely, we conjecture that IBOs establish coordination among agents in the supply chain under consideration by performing meso-institutional tasks and functions. Meso-institutions are intermediary institutions that translate constitutive norms and rules into specific mechanisms, guidelines, and protocols for allocating rights, as well as for implementing and monitoring their usage (Ménard, Reference Ménard2014). For instance, empirical studies have shown that the effectiveness of food safety norms is significantly shaped by the trade-off between centralised and decentralised meso-institutional functions (Ménard et al., Reference Ménard, Martino, de Oliveira, Royer, Saes and Schnaider2022a). De Oliveira et al. (Reference de Oliveira, Miranda, Saes and Martino2023) have identified a causal relationship between the establishment of specific meso-institutions and improvements in food safety performance within Brazil’s dairy sector. Furthermore, the critical role of meso-institutional functions in the implementation of general legislation has been extensively illustrated in the context of urban water supply (Jensen and Ménard, Reference Jensen and Ménard2024). However, this body of literature has yet to address how meso-institutions can tackle the issue of coordination within supply chains.
Our study adopts a process-tracing approach (Beach and Pedersen, Reference Beach and Pedersen2019), which is particularly well-suited to institutional analysis (Skarbek, Reference Skarbek2020; Banikoi, Reference Banikoi2024). It is implemented through the case study of the Italian tomato industry, a sector of particular economic and social importance in this country that also involves many different actors (various types of farms, cooperatives, producers organisations (POs), and processing companies), and that represents a high volume of annual exchanges. Observations have been gathered on the activities of the IBO under review and have been evaluated to assess whether or not they provide evidence that it fulfils meso-institutional functions (Beach and Pedersen, Reference Beach and Pedersen2019). The evidence thus collected should allow either to reject or not reject our conjecture.
Following the framework proposed by Ménard and Martino (Reference Ménard and Martino2025), we will show more specifically how this IBO frames the coordination among actors involved through the development of a complex contractual system, embedding organisational choices within higher-order institutional levels (Ménard, Reference Ménard2014). The resulting insights highlight the potential for better design of IBOs. Besides enabling a rigorous understanding of the nature and operational mechanisms of IBOs, the study suggests practical steps for advancing empirical research in the field of meso-institutions.
The article is organised into six sections. Section 2, ‘Empirical data, analytical framework, and research strategy’, introduces key data pertaining to the Italian tomato sector. Section 3, ‘Methodology’, presents the method adopted, with a particular emphasis on the use of the Process-tracing approach. Section 4, ‘Data analysis: the role of IBO’, digs into observations collected to identify the functions and tasks fulfilled by this IBO, and correlates them with the contractual system that this IBO has designed to coordinate the agents. Section 5, ‘Discussion’, discusses the results, this case study providing empirical evidence that this IBO performs meso-institutional functions. Consequently, they support the hypothesis that through these functions, the IBO facilitates the coordination of agents in the organisation of their transactions. Section 6, ‘Conclusion’, concludes.
Empirical data, analytical framework, and research strategy
In this section, we introduce the case study and the dataset and define the coordination problem with reference to the transaction between farmers and processors in the industrial tomato sector in Italy. We then present our analytical framework, based on the theory of meso-institutions. The section concludes by hypothesising a coordination relationship established by the IBO, a conjecture subsequently submitted to control by the evidence gathered through the case study.
Research topic: The coordination problem
The case under review
This study concerns the transactions between farmers (or POs or farmers’ cooperatives) and processors in the Italian Tomato sector. For the sake of brevity, we label this transaction as T1. The tomato Italian sector is a major actor worldwide. The total amount of produced tomatoes worldwide was approximately 37 million tons in 2022: California holds the top position, accounting for 26.1% of global production, followed by Italy with 14.1% and China with 14.0% (period 2019–2022).
In recent years, two organisations of the supply chain have been established in Italy. The IBO Distretto Nord (IBO-DN) was recognised by the European Union in 2012 and by the Italian Ministry in 2017. It includes 21 processing companies and 16 POs that manage more than 90 % of the entire tomato production of Northern Italy. IBO-DN operates within the industrial tomato sector across the regions of Emilia-Romagna, Lombardy, Piedmont, Veneto, and the Autonomous Province of Bolzano. The South-Centre IBO (IBO-SC), established in 2018, involves 22 POs (managing approximately 28 000 hectares of tomato crops) and 51 companies processing 2.3 million tons of tomatoes, corresponding to 90% of the products obtained in the South-Centre Italy. This volume has recently grown at an annual rate of 11.3% (from 2.626.519 tons in 2018 to 2.876.863 tons in 2019 and 2.922.941 tons in 2020), which represents, respectively, 56.5%, 59.9%, and 56.6% of the total Italian production. Over the past four years, the IBO-SC has performed better than the Italian average. The amount of processed tomatoes in the South-Centre Italy actually increased by 22.3% (Italian rate 17%) in 2021, 12% (-10%) in 2022, remained stable (-3%) in 2023, and increased again by 10% (-2.5%) in 2024.
IBO-DN and IBO-SC coordinate the Italian industrial tomato supply chain, fostering stakeholder collaboration, sustainability, and consumer responsiveness. They support production planning, ensure fair producer-processor relations, monitor payments, manage phytosanitary issues, and promote sectoral knowledge through data collection, thereby enhancing the competitiveness of regional agriculture. They do not, however, participate in annual contract negotiations – which remain the responsibility of agricultural producers and industrial processors – nor do they intervene in the determination of reference prices. In the Italian tomato sector, there is a basic asymmetry of market power between farmers and processors, which pushed farmers to establish horizontal relationships to improve their negotiating power.
This study concentrates on IBO-SC. To develop the analysis, we need to identify the attributes of T1. Indeed, these attributes raise a number of coordination challenges which contribute to defining the coordination problem at stake; they also condition a comprehensive understanding of the contractual dimension of the organisation of the transaction (T1) and of its correlation with the functions performed by IBO-SC.
Attributes of the transaction T1: The coordination challenges
Uncertainty
The industrial tomato processing sector faces multiple sources of uncertainty that complicate procurement and production strategies. Quality uncertainty stems from microclimate variability and farmers’ technical skills, generating significant measurement costs due to suppliers’ heterogeneity (Raynaud et al., Reference Raynaud, Sauvée and Valceschini2009). Market uncertainty arises from fluctuating consumer preferences and unpredictable supply conditions, often driven by weather events (Schnaider, Ménard and Saes, Reference Schnaider, Ménard and Saes2018). Technological uncertainty further challenges the decision-making of farmers and processors, as they must anticipate the impact of innovation on quality, productivity, cost-efficiency, and environmental sustainability (Schnaider, Ménard and Saes, Reference Schnaider, Ménard and Saes2018). The resulting complexity increases the need for technical assistance, often formalised through contracts. Performance uncertainty, linked to compliance with contractual obligations, is exacerbated by informational asymmetries (for instance, on the tomato quality attributes). Opportunistic behaviour may emerge, such as misattributing non-compliance to external factors like weather, particularly in organic farming contexts. To mitigate moral hazard, firms must verify either the implementation of agreed practices or the achievement of quality standards. However, collective arrangements may be undermined by free-rider behaviour and adverse selection, where less capable farmers are more likely to accept POs negotiated contracts.
To manage these various forms of uncertainty, tomato supply chain actors have adopted hybrid governance structures rather than relying solely on market mechanisms (Raynaud et al., Reference Raynaud, Sauvée and Valceschini2009). These micro-institutional arrangements intend to enable IBO-SC to address these uncertainties, their impact, and the transaction costs their monitoring generates.
Relation-specific investments
Relation-specific investments are also a major constraint for the coordination of parties. On the farmers’ side, this specificity is basically coming out of the tight time constraint (once the crop has been undertaken, the high investment made cannot be redeployedFootnote 1 ) and of high human specificity (farmers’ competencies). On the processing side, processors face site specificityFootnote 2 . Time specificity also has important effects: processing companies actually need to cover a long period of activity, from August to October, to reach the scale economies necessary to make plants manageable, so that they need to purchase tomatoes from different varieties harvested at different periods of the year.
In this context, parties look for efficient micro-institutional solutions, but such solutions could require extremely costly negotiations, especially when it comes to contractual clauses regarding quality, safety, and technology-oriented attributes (Hobbs, Reference Hobbs1997). In the following section, we develop an analytical framework that elucidates the mechanisms through which IBOs facilitate the identification of viable coordination solutions by agents involved in T1.
The challenges outlined above help identify the coordination problem within transaction T1. Indeed, both uncertainty and relation-specific investments generate high search and negotiation costs, as agents must identify suitable partners and establish mutually satisfactory agreements embedded in efficient micro-institutions. Similarly, quality-related issues – particularly those concerning variability and verification – significantly increase monitoring and enforcement costs. The micro-institutional arrangements adopted in T1 are therefore designed to address and mitigate these costs.
Analytical framework
So far, we have assumed that IBOs operate as meso-institutions. We now introduce the analytical framework underlying this qualification, with special attention to the role these institutions play in dealing with the coordination problem pointed out above.
Conceptualising the coordination problem: substantive and auxiliary theory
Ménard and Martino (Reference Ménard and Martino2025) have proposed a research strategy based on the complementarity of substantive and auxiliary theories in investigating the nature and role of institutions. Let I be the set of rules and norms embedded in devices and mechanisms C that frame the conditions under which agents or classes of agents A coordinate to deal with states of nature Θ. The purpose of a substantive theory is to analyse these components, their interactions, and the loop between the states of nature that agents are facing and the existing institutions within which they deal with these situations. An auxiliary theory is more specific in that it intends to connect the substantive theory to empirical observations: it involves a subset of concepts and associated modalities of effectuation that capture a specific class of social phenomena, allowing to move towards empirical analysis.
To investigate these phenomena, hypothetical constructs have to be drawn from the auxiliary theories in a continuing process of interaction and in order to connect concepts to procedures designed to collect information that supports or challenges propositions rooted in auxiliary theories. These constructs are ‘hypothetical’ in that they propose ways to identify attributes (qualitative analysis) or variables (quantitative analysis) connecting empirical evidence to questions raised by a substantive theory boiled down to the more specific questions embedded in the relevant auxiliary theory. Our research strategy develops a specific analysis of IBOs that integrates these elements in a continuous interaction between empirical level, hypothetical constructs, and theories (Ménard and Martino, Reference Ménard and Martino2025).
Meso-institution theory as auxiliary theory
We hereafter consider meso-institutions as an intermediate set of institutions that bridge the gap between macro-institutions (the level at which rules, norms, and beliefs are established) and micro-institutions (the level at which agents organise their activities) (Künneke, Ménard and Groenewegen, Reference Künneke, Ménard and Groenewegen2021). Institutions from the meso layer differ from those at the micro layer in that they do not create economic value. They would rather perform specific functions that enable the creation of economic value at the micro-level. Recent contributions have exhibited three key functions that meso-institutions are expected to fulfil (Künneke, Ménard and Groenewegen, Reference Künneke, Ménard and Groenewegen2021) and that substantiate the auxiliary theory of meso-institutions. These functions are as follows:
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a) Translate: they interpret and translate general rules and norms to make them context-specific;
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b) Monitor: they monitor the operationalisation of these specific rules and norms by those micro-institutions that actually organise the production and distribution of specific goods and services;
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c) Enforce: they enforce these rules, guaranteeing that micro-institutions respect regulatory constraints and providing feedback to policy-makers about the obstacles or even the irrelevance of specific rules and/or conditions of their implementation.
Translation does not create new rules, but plays an essential role in making existing rules operational in a specific context (for a discussion, see Ménard,Reference Ménard2014; Künneke, Ménard and Groenewegen, Reference Künneke, Ménard and Groenewegen2021). Monitoring is needed to ascertain compliance with the rules thus translated, while enforcement mobilises specific resources to motivate or constrain agents (whether individuals or collective) to conform.Footnote 3 We shall refer to these three functions to empirically address the modalities by which an IBO contributes to implement the coordination required by T1: they provide the effective constructs to match observation and theory.
Conjecturing a coordination relationship in T1
The issues of uncertainty and relation-specific investments that characterise the transaction T1 (see 2.1.2) might make the cost of its organisation prohibitive, inducing agents to exit from the contracting process.Footnote 4 We shall argue that by carrying meso-institutional functions identified above, IBOs contribute to reducing these costs and facilitating coordination. The macro background is defined by European Union Reg. EU 1308/2013, which explicitly states that IBOs are expected to design contract models to be implemented by the parties in order to coordinate themselves in T1.Footnote 5 We intend to show that by aligning contracts with the law, parties coordinating through IBOs could achieve contractual agreements with lower transaction costs. So, in order to answer our research question, we conjecture that by fulfilling the translation, monitoring, and enforcing functions, IBOs facilitate the coordination among agents in T1. In particular, an IBO would facilitate coordination and reduce its cost by:
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a) designing contractual models that translate the macro-rules from Reg EU 1308/2013 into specific ones (Translating);
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b) designing and implementing instruments to monitor parties in a way that makes the rules operational (Monitoring);
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c) designing and implementing specific enforcing instruments to make the parties to the transaction comply with the rules and to help the alignment between micro-decisions and macro-rules (Enforcing).
The fulfilment of these functions operates through a system of contracts adopted by members of the IBO that shape the micro-institutional arrangements chosen for the organisation of T1. Figure 1 illustrates how the meso-institutional functions of the IBO frame the coordination relationship among parties.Footnote 6
Figure 1. Components of the coordination relationship.
Methodology
The methodology adopted entails the development of a case study through the Process-tracing approach. This section first presents the rationale behind the selection of the case study as well as of the chosen methodology. As will be shown, the intended outcome is to gather evidence that enables the adoption or rejection of the hypothesised role of coordination played by the IBO under review. The second and third parts then summarise the procedures for data collection and coding that support the discussion of the role of IBO.
Case study: process-tracing approach
In seeking to match observations with abstractions through the auxiliary theory of meso-institutions, qualitative methods enhance the possibilities of addressing the empirical predictions of ‘thick’ theories (Skarbek, Reference Skarbek2020). To address our research question, we selected to concentrate on the South-Centre interbranch organisation (IBO-SC), which is a major component of the Italian tomato industry. We decided to focus on this single case study because:
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a) with its well-established legal basis, IBO-SC makes a representative case of meso-institution;
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b) the possibility to make clear predictions based on the theory of meso-institutions since IBO-SC defines a critical case (Yin, Reference Yin2018) that allows confirming or challenging the conjecture drawn from the theory;
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c) IBO-SC also deliver a ‘revelatory case’, thanks to the full development of a contract system, complemented by other elements, as we shall see, that connects the arrangement to assigned social purposes (Yin, Reference Yin2018).
As already mentioned, we explored this case study through a Process-tracing approach. Process-tracing mainly involves carefully identifying and examining the steps in a process to infer how it unfolds and whether it produces the expected outcome – in this case, a system of contracts easing coordination in T1. In doing so, the Process-tracing approach proves particularly effective in investigating, from an institutional perspective, the components of the conjectured coordination relationship.
Based on the conceptualisation of the coordination relationship (Section 2.2.3), the Process-tracing approach requires collecting observations and analysing them in order to identify the hypothesised mechanisms involved (Beach and Pedersen, Reference Beach and Pedersen2019). To this end, and following recent developments in the theory of meso-institutions (Ménard and Martino, Reference Ménard and Martino2025), we assume that functions are fulfilled through subsets of tasks that define hypothetical constructs. A meso-institutional task is hypothesised as an elemental activity of IBO-SC. Their identification informs and guides the subsequent data analysis, in conformity with our research strategy. Referring to the data thus collected should then allow us to assess whether or not the observed subsets of tasks provide evidence that IBO-SC performs the meso-institutional functions (Beach and Pedersen, Reference Beach and Pedersen2019). This will be done by: a) checking if the interviewees are directly connected to the activities and events under investigation; b) assessing the confidence in the accuracy of the observations; c) ascertaining the temporal continuity of the mechanisms of coordination thus identified. If this tracing process supports the evidence of IBO-SC performing the expected functions, it becomes possible to infer confirmation of the hypothesised coordination relationship.
Data gathering
Along the line suggested above, data related to the relationships between farmers and processors were gathered from December 2020 to October 2021. Thirteen interviews (each lasting at least 1 hour) were conducted with 9 actors. Three additional interviews of 30 minutes each with managers of POs were carried out in 2025. The actors interviewed were selected to include managers of IBO-SC and actors of the supply chain, well-informed of how the organisational arrangement works. Data collected is intended to meet triangulation requirements, contrasting the data gathered through interviews with document analysis (Statute, reports of the association of industrial firms, texts of the contracts).
Questions submitted to interviewees were standardised and intended to gather empirical data about how respondents viewed the coordination problem. Following Ravitch and Carl (2020), the core questions primarily referred to issues related to the coordination of transactions along the value chain. Interviews were recorded, transcribed, and contrasted with the documents collected and analysed, with the purpose of accurately describing the coordination role of IBO-SC in relation to transaction T1 by:
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a) identifying the agents involved in T1;
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b) showing the role of IBO-SC in shaping their views on the modalities and the advantages of organising the transaction within the IBO-SC;
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c) specifying the efforts spent in searching partners, negotiating and enforcing the arrangements, and setting incentives;
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d) clarifying the capacity of IBO-SC to restrict the possibility of outside contracting;
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e) identifying the role of IBO-SC in setting standards, including for quality.
We considered “theoretical saturation” reached in the interviews once no further themes emerged. The themes thus identified were then confronted with the content of the documents available (Statute, text of the contracts, Rules for sanctions) and codified. As usual in qualitative data and their analysis, establishing a relation between observations and the concept (in our case, establishing that IBOs are meso-institutions) faces semantic problems (Goertz & Mahoney, Reference Goertz and Mahoney2012, p. 140) to be discussed in section 4.
Coding procedures
Transcribed interviews and information from the documents available were then codified (Ravitch and Carl, Reference Ravitch and Carl2019; Saldaña, Reference Saldaña2013) along the key components of our theoretical model, namely the data about IBO-SC characterised as meso-institutional tasks and functions.
We codified excerpts of interviews or documents in order to capture these “hypothetical constructs” (Saldaña, Reference Saldaña2013, p. 3; Miles, Huberman, and Saldaña, Reference Miles, Huberman and Saldaña2020, p. 63). Indeed, ‘hypothetical codes’ (Miles, Huberman, and Saldaña, Reference Miles, Huberman and Saldaña2020, p. 70; Saldaña, Reference Saldaña2013) we established draw on the assumption that meso-institutional tasks, which are derived from the functions characterising the auxiliary theory of meso-institutions, are defined as many hypothetical constructs. In particular, we heuristically generated constructs that ‘translate’ the data collected (Miles, Huberman, and Saldaña, Reference Miles, Huberman and Saldaña2020, p. 63), and we organised and categorised them in a systematic order (Saldaña, Reference Saldaña2013, p. 9). Coding was carried out in two cycles. The first cycle relied on the hypothetical codes thus identified, which connect to the auxiliary theory of meso-institutions and allowed us to qualify the IBO-SC as a meso-institution since the resulting network of codes corresponds to the functions the IBO-SC is expected to fulfil. The second cycle of coding was conducted by categorising each code according to the functions characterising meso-institutions. This process allows us to highlight the tasks and functions of the IBO-SC, making them clearly identifiable and empirically substantiated.
In sum, the coding procedure enables the retrieval of the most meaningful components of a highly diversified material and to condense it into analysable units (Miles, Huberman, and Saldaña, Reference Miles, Huberman and Saldaña2020, p. 63): tasks and functionsFootnote 7 .
Data analysis: the role of IBO
This section presents the results of the empirical analysis based on the data collected and coded according to the methodology described above.
First, we expose the coordination problem from the perspective of the agents involved, highlighting the differences between the situation before and after the constitution of the IBO-SC. To capture the efficiency effects of the IBO-SC, it is necessary to refer to the organisational choices made prior to and following the constitution of the IBO-SC. Indeed, the IBO-SC now manages over 90% of the production in the South-Centre region, making the comparison with a genuine alternative at the same point in time is meaningless since it no longer existsFootnote 8 .
Second, we identify the contractual system, showing how the IBO-SC contributes to reducing transaction costs in T1 and demonstrating how the activities carried out by the IBO-SC correspond to meso-institutional functions.
The coordination problem before the constitution of the IBO-SC
Coordination challenges
Prior to the establishment of the IBO-SC, farmers independently determined cultivation areas without prior knowledge of prices or contractual terms, such as harvesting procedures or quality assessment criteria. Prices were set by a limited group of industrial buyers and subject to mid-contract changes, often favouring buyers’ interests. Contractual rules were vague; for example, determining weight varied depending on whether crate weight was included. Farmers’ bargaining power was limited, as delivery volumes and crate allocations were arbitrarily controlled by the buyers. Some POs were influenced by traders, with minimal concern for farmers’ welfare (Manager 1, PO).
Quality was assessed only post-harvest, based on industrial processing outcomes, using subjective methods such as visual inspection. This excluded quality from pre-contractual negotiations and frequently led to disputes. Farmers lacked access to objective market information and relied on intermediaries, so there was no genuine price negotiation. Characterised by high uncertainty and the specificity of investments required (see par. 2.1.1), exchanges in T1 therefore offered no effective safeguards and a significant imbalance of market power between producers and processors (Managers 2 and 3, PO). These specific challenges manifest as distinct complexities within the coordination problem, for which micro-institutional choice is required to provide efficient solutions.
Beliefs about the coordination in T1
Prior to the establishment of IBO-SC, agents’ view of exchanges in T1 – particularly among farmers – was strongly shaped by the critical elements highlighted above. European regulations aim precisely to overcome these issues by promoting the creation of entities such as IBOs, designed to foster the development of efficient exchange relationships. However, these entities – entirely new within the socio-economic context and, to some extent, especially within the Italian context – possess characteristics whose effectiveness was not immediately understood by the agents. There were considerable difficulties in grasping their operational mechanisms and strategic pathways, and in understanding how these could effectively contribute to changing the existing state of affairs (President, IBO-SC). As Greif and Mokyr (Reference Greif and Mokyr2017) have shown, beliefs are part of the cognitive rules that connect decisions to their outcomes, and therefore play a role in shaping incentives and guiding agents in the orientation of their actions. This is why the initial efforts undertaken by the governance of IBO-SC to make it truly operational focused on reshaping the prevailing beliefs (President, IBO-SC). The foundation of the IBO-SC largely relied on the actions of organisations (Anicav; farmers’ Unions, POs and their Associations, cooperatives) that built up common beliefs about the opportunities and advantages provided by the IBO-SC (President, IBO-SC).
The coordination problem after the constitution of IBO-SC
The crucial shift brought about by the change in beliefs was not merely to become a member of IBO-SC, but more significantly, the acceptance of the agreements and contracts outlined by the IBO-SC. These arrangements were adopted by parties to the transaction T 1 as a way to define its organisation, marking a clear evolution from the past. All interviewees made it clear that the general agreement and the contractual models of the IBO-SC were progressively recognised and effectively provided the main instruments to address coordination challenges. As stated by the Director of Anicav:
…there is a framework agreement for the area that sets the general objectives with a series of specific attachments. Then there is the standard contract (…).
A key element (more extensively discussed 4.3.1 and 4.3.2) in that perspective is the definition of a reference price which is negotiated between POs and Processing companies as members of IBO-SC, although this entity neither participates in the negotiation process nor in the price definition. In this context, the contractual system operates as follows:
The agricultural producer signs a pre-campaign contract with the processing company. The contract typically outlines the production targets. During this phase (corresponding to March/April), the “campaign price” is also defined. Subsequently, based on the actual yield, it becomes clear whether the targets are met or not. (…) Each contract includes specific conditions and methods for product evaluation: compared to the initial price, the final price can undergo significant deductions, also depending on the negotiating power of the agricultural party (Responsible coordinator, FLAI, Workers Union)
It means that asymmetry in market power is not entirely eliminated by the system of contracts:
At the time of product delivery, the waste percentage is evaluated based on the quantity produced, and it can range from 5% to 30%. The waste percentage is generally linked to market conditions: in years of overproduction, processing companies tend to impose a higher waste percentage (and consequently, a larger quantity of the product is sent to waste). When the campaign does not produce the expected quantity, the waste percentage decreases and can even drop to around 5%, as there is a shortage of product and efforts are made to utilize as much of the product as possible. (Responsible coordinator, FLAI, Workers Union)
However, parties acknowledge that the existence of a well-established contracting system protects transactions from unfair practices:
In practice, an operational difficulty also emerges due to the fact that, although there is significant participation from the processing industries, an important part on the producers’ side is outside the POs (…) To overcome this gap, it would be sufficient for the subsequent link in the chain (the processing industries) to operate only with producers in organizations, thus avoiding the proliferation of a “parallel” market driven by the industry’s need to secure the product (…) (Director, Anicav)
In particular, the IBO-SC
(…) plays a key role in annual production planning, in defining framework contracts, and also in establishing quality standards. (…) In the Northern regions, there is a long-standing experience that has achieved positive results; whereas, for the Central-Southern district, the experience is more recent and characterized by a more varied and fragmented framework, often leading to tensions between the parties (Manager, Conserve Italia, Processing company).
One interviewee, the Director of Anicav, illustrated with this comment:
(In the) Central-southern area, (…) a mechanism has been created in which participation is also linked to the dynamic whereby being part of an organization that must self-regulate leads to a tendency to want to “loosen the strings” in order to find ever greater areas of protection and personal convenience, especially in the Foggia (Puglia) area.
These comments support the hypothesis that the contractual models and the set of practices implemented by IBO-SC (see below) tend to establish an innovative and efficient structure for the organisation of exchanges in T1. However, there are also observable tendencies – perhaps localised – to alter the established rules in order to obtain additional, specific advantages.
The institutional setting
We now turn the attention to the complex institutional setting associated with the role of IBO-SC, which has only been mentioned so far.
Setting shared rules: territorial general agreement
The central role played by the IBO-SC in structuring exchanges in T1 comes out of the Territorial General Agreement (TGA), which integrates micro-level decisions into a coordinated macro-institutional framework. The TGA establishes shared rules to enhance strategic alignment, coordination, and joint planning across the supply chain. It facilitates the systematic collection and dissemination of market information, enabling actors to match supply with demand, and supports producers’ planning efforts. Furthermore, the TGA ensures supply security by formalising commitments through binding contracts and promotes harmonisation of supply protocols via technical guidelines, particularly regarding product quality. This regulatory framework also addresses key contractual elements, including quality evaluation systems, delivery certification, payment procedures, sanctions, and information-sharing obligations. These mechanisms strengthen the organisation of T1, allowing more effective responses to market and supply uncertainties, and contributing to overall efficiency and reliability within the supply chain.
TGA introduces two contracts to be adopted by agents for organising T1: Area contract (AC) and Supply contract (SC).
AC is signed by all the POs, their Associations, Anicav and the farmers’ Associations. It focuses on T1, providing the framework to which parties engaged in a specific exchange in T1 refers to define their contract. The core of AC specifies:
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a) the duration and respective duties of parties to the contract;
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b) rules to promote and valorise products coming out of this contractual relationship;
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c) criteria defining standards of quality;
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d) modalities of payment to be implemented;
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e) sanctions to be imposed in case of non-respect of the contract;
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f) the key characteristics of the SC
The SC differs in that for each specific exchange in T1, it is signed by the parties (e.g., a PO and a processing company) directly engaged in this transaction. The parties must adopt the SC in the format proposed in AC on the basis of TGA statements. The parties then make decisions in accordance with these contents, potentially adapting aspects as required by specific circumstances.
Both AC and SC pertain to the contractual dimension of the organisation of T1 Footnote 9 . The rules established by TGA concern the whole chain as well as T1 more specifically, through the guidelines provided for AC and SC. To better understand this institutional setting, we need to investigate more specifically the relationship among all three components.
The system of contracts
Indeed, TGA, AC, and SC form components of a contractual system that intend to facilitate the organisation of T1. The TGA represents the general agreement that establishes the general rules shared by the members of IBO-SC, particularly the rules regarding the contractual framework (AC) and the specific form of the exchange contract (SC). Hence, TGA, AC, and SC are components of a contractual system, which nonetheless operates across two distinct institutional levels. On the one hand, the design and conceptualisation of the system come from the IBO-SC’s initiative with respect to the supply chain. On the other hand, a closer look at the actual implementation of the elements of that system shows that the TGA is not participating in the actual negotiation process, so that it does not relate to the creation of economic value that comes out of the actual transaction. In that respect, TGA belongs to the meso-institutional level. By contrast, the AC and SC represent the contractual dimension of the micro-institutions selected by agents to organise T1 (Figure 2).
Figure 2. IBO-SC contractual systems. Source: the authors.
As we will show, the tasks associated with the fulfilment of the objectives listed above explicitly connect the rules established in the AC and SCs with the macro-rules defined by the laws. This means that the TGA and its implementation through IBOs embed micro-institutions into the macro-institutional rules and norms, confirming the status of IBOs as meso-institutions. However, before addressing this issue, it is important to take note that the contractual system implemented by IBO-SC enables a more efficient organisation of transactions than what would be possible (and has been observed) in its absence.
Indeed, the constitution of IBO-SC has allowed significant reductions in the transaction costs arising from the problems of uncertainty and relation-specific investments discussed in 2.1.2. Search and information costs have decreased because the membership in IBO-SC facilitates finding the right partner. Negotiation costs have also decreased because of the adoption of the standardised system of contracts. Moreover, IBO-SC reduces the cost of renegotiating contracts to cope with unforeseen contingencies. We now turn to the analysis of the way IBO-SC performs the meso-institutional functions.
Fulfilling meso-institutional functions
Indeed, our empirical analysis of the tasks through the Process-tracing approach substantiates the role of IBOs in fulfilling meso-institutional functions. The IBO-SC does so by: a) establishing the system of contracts to organise transactions, thus interfering with the choice by agents of micro-institutional arrangements; b) designing specific procedures and sanctions to monitor compliance with the rules established by the TGA; and c) promoting social values among agents that facilitate enforcement.
Translating and interpreting
The TGA provides formal support to IBOs as an instrument of coordination within the supply chain through the fulfilment of the translation function. All the rules mentioned in TGA and the two other contracts result from translating the general rules established at the macro-level by European Reg EU 1308/2013 and endorsed by Italian laws. In particular, the TGA operates as a translator of these rules by:
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a) promoting coordination among the supply chain agents through the definition of shared strategies and support for cooperation (Reg EU 1308/2013, Recital 132; and art. 157, par. c), vi.);
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b) defining the contracts to be adopted by the IBO-SC members, namely an AC and a SC between POs (whose members are farmers) and processing companies (Reg. EU 1308/2013 art. 157, par. c), v.);
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c) committing members of the IBOS-SC to sign these contracts. Specifically, POs and processors cannot contract with members who have been excluded for rules violation (Reg. EU 1308/2013 art. 157, par. c), v; and Reg. EU 1308/2013 art. 157, par. c), iii.);
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d) mandating that contract define planning (areas and expected yields), production processes, certifications categorised as mandatory or optional, and all elements that intend to address the quality and safety of products delivered while motivating agents through appropriate incentives;
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e) specifying rules for a production of quality; technical guidelines for managing the harvesting, transportation, and delivery of fresh products; and quality parameters to evaluate the product (Reg. EU 1308/2013 art. 157, par. c), ix.);
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f) specifying rules for the so-called Integrated Production Discipline (Reg. EU 1308/2013 art. 157, par. c), xi.), rules that are particularly stringent for organic tomatoes (including the specification of cropping technology and harvesting tasks (Reg. EU 1308/2013 art. 157, par. c), x.)
Monitoring
Based on the rules thus translated and interpreted by the TGA, the AC established by the IBO-SC intends to coordinate farmers and/or producers’ organisations and processors and to monitor their relationship. In that perspective, the core of the AC specifies:
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a) the duration and respective duties of parties to the contract;
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b) rules to promote and valorise products coming out of this contractual relationship;
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c) criteria defining standards of quality;
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d) modalities of payment to be implemented;
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e) sanctions to be imposed in case of non-respect of the contract;
Through these mechanisms and clauses, the monitoring function has an impact on micro-institutional entities. Indeed, the IBO-SC supports and orients the choices and actions of those entities by: a) setting the context of coordination by gathering and reporting information that agents need to know (e.g., the amount of tomatoes to be produced owing to the IBO-SC’s contractual system); b) implementing actions based on procedures set by the translation and interpretation of rules and norms by the TGA; and c) supporting agents in complying with the EU and Italian legal expectations, including recommendations on supply and demand and the conditions of implementation of technological changes.
The AC is therefore a key instrument of the monitoring function. Endorsed by all agents involved, it contributes to discipline activities along the whole tomato chain. It frames the negotiations among agents by setting the main content of SCs regarding T1, and it delineates the convergence of contracting towards the social expectations promoted by the EU and Italian regulations and laws.
The analysis of the codified ‘observations’ gathered through the Process-tracing approach confirms that the IBO-SC fulfils key elements of the monitoring function. The AC actually states that the parties commit to defining the quantities and the modalities of deliverables, specifying the agenda, timing, and frequency of the deliveries. The SCs, which include these commitments, are transmitted by the parties to the IBO within a week from their signature, allowing the IBO to verify the compliance of the SC with the AC.
Enforcing
Enforcement goes beyond monitoring: it implies the power to penalise or even ban non-complying agents or, symmetrically, the capability to reward operators implementing more stringent rules than those required by the general rules. IBOs develop their enforcement capabilities by designing standard forms of SCs, as allowed by Annex 5 of the AC, which itself relies on principles delineated in the TGA, drawing from Decreto Legislativo 102/2005 and EU Reg 1308/2013. The main attributes of the SCs in that respect, including those concerning the rights and duties of POs and processors, are specified in a standardised form by the AC. The SC therefore provide tools for ensuring compliance with the translated rules because: a) it is designed in accordance with the AC and the underlying rules established at the macro-level; b) the contracting parties must sign the SC if they want to be part of the tomato supply chain within the framework of IBO-SC; c) it includes all possible sanctions outlined in the Sanctions Regulation; and d) it must be submitted to the IBO-SC under the same terms as those established for the AC. In the event a party reneges on the contract, two consequences may follow. First, the party may be subject to a sanction (see above). Second, it may face the risk of encountering difficulties in either procuring raw material (in the case of a processor) or marketing the final product (in the case of a farmer, Pos, or cooperative).
The analysis of the codified ‘observations’ gathered, especially about SCs, therefore confirms that the IBO-SC fulfils the enforcement function expected from a meso-institution and shows how it does so.
Testing the conjecture
Based on these converging observations, we consider that they are providing valid evidence (in the vocabulary of Process-tracing) because:
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a) the sources of these observations are directly connected to the activities and events under investigation. The interviewed managers hold formal responsibilities within the IBO-SC, and the documents analysed were produced by the organisation itself;
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b) our confidence in the accuracy of the observations was enhanced through triangulation – cross-verifying data from interviews, document analysis, and expert consultations with stakeholders who had no vested interest;
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c) the continuity over time of the identified mechanisms further confirm their acceptance by the involved parties and their relevance in addressing coordination challenges.
Taken together, these elements support the conclusion that the IBO-SC performs meso-institutional functions. The evidence highlights a clear relationship between these functions and the contractual system that underpins the organisation of T1. Accordingly, our case study meets the falsification criterion: data collected and codified do not provide grounds to falsify our conjecture regarding the central coordination role of the IBO-SC. All observations concur in supporting the assertion that IBOs perform meso-institutional tasks and functions, thereby establishing a coordination relationship that gives rise to a contract system which in turn becomes an integral component of micro-institutional arrangements.
Discussion
Our study demonstrates that the coordination in transaction T1 is facilitated by the role of IBO-SC in translating, monitoring, and enforcing the general rules. In what follows, we suggest lessons that can be drawn from the analysis, and we discuss the results in relation to alternative interpretations of the activities of IBOs, emphasising the explanatory power of a global theory of institutions making room for meso-institutions.
Empirical analysis of the meso-institutional layer
Ménard and Martino (Reference Ménard and Martino2025) have shown that disentangling the various institutional layers enables a more rigorous analysis of the complex systems shaped by institutions. In line with this perspective, our study provides an empirical analysis ruling out the possibility of rejecting upfront the proposed conjecture about the key role played by meso-institutions. Moreover, our analysis has clarified through the Process-tracing approach that showing their role in coordination enables to uncover how a meso-institution can define the framework of interaction among agents seeking coordination. It also supports the conceptualisation of the contract system as a case of ‘institution as outcome’ and illustrates how the meso level (TGA) and the micro level (AC and SC) connect through the contract system.
IBO-SC operates in the context of Reg (EU) 1308/2013, which was primarily intended to promote a better organisation of agri-food transactions, a turning point in European agricultural policy with the central role it devolved to contracts. The adoption of a contractual system by IBO-SC constitutes in itself an enactment of this Regulation. In other sectors of European agriculture, e.g., cereals, this Regulation similarly encourages the use of contracts, although farmers in the sector tend to favour spot-market exchanges. In the tomato sector, the high degree of uncertainty and specific investments led to the adoption of hybrid micro-institutions and the definition of shared rules, as formalised in the TGA, that have expanded the domain of transactions, as predicted by the theory of meso-institutional.
This study also indicated the possibility of adopting a systematically controlled and replicable approach to the empirical analysis of the meso-institutional layer. Our findings suggest that the notion of a hypothetical construct provides a useful framework for identifying the tasks performed by meso-institutions, which may in turn guide agents in designing targeted actions to achieve specific outcomes. Different problems may require the execution of distinct tasks – an issue that warrants further investigation.
Can IBO-SC be viewed as micro-institutions?
IBOs and similar arrangements have been examined through various institutional lenses. Dervillé and Allaire (Reference Dervillé and Allaire2014), building on Fligstein (Reference Fligstein and Biggart1996), Commons (Reference Commons2003), and Ostrom (Reference Ostrom2005), interpreted IBOs with an emphasis on intangible property rights (Commons, Reference Commons1974) and the role of sectoral ‘meso-orders’, including regulation, governance structures, and modalities of conceptions of control in a competitive environment. Farms, producer organisations, and IBOs are seen as part of sectoral communities (Dervillé, Reference Dervillé2023). According to Fligstein (Reference Fligstein and Biggart1996), which inspired them, market governance structures ensure segmentation through quality standards, coordination via information systems, and market identity through product narratives (Dervillé and Allaire, Reference Dervillé and Allaire2014). While this approach highlights coherence between a sector and a community, it lacks a clear articulation of rules, structures, and decision-making rights. IBOs are assumed to represent collective economic interests, but their operational role remains underdefined.
Differently, Mazé and Ménard (Reference Mazé and Ménard2010) conceptualised IBOs as hybrid micro-institutions that extend the self-enforcing range of contracts. Unlike Derville’s distinction between collective entities and individuals, Mazé and Ménard view IBOs as devices for collectively governing transactions. However, this interpretation faces criticism based on the analysis of marketing boards in a meso-institutional perspective (Reference Royer, Ménard and GouinRoyer, Ménard and Gouin, 2017; Ménard et al., Reference Ménard, Martino, de Oliveira, Royer, Saes and Schnaider2022). They argued that meso-institutions help agents economise on transaction costs but do not transact themselves; for instance, our case study shows that IBOs do not participate in price negotiations. This contrasts with Bijman (Reference Bijman2008) and Cafaggi and Iamiceli (Reference Cafaggi and Iamiceli2015), who view IBOs as contractual arrangements contributing to value creation through managerial and legal services.
In our analysis, we argue that IBOs provide a framework for coordination, not transactional services. IBOs act as facilitators, reducing ex-ante and ex-post contracting costs of actual transactionsFootnote 10 between buyers and sellers, thus expanding the domain of possible transactions. Even when offering services or resources, IBO membership involves no transactional exchange or compensation, reinforcing their meso-institutional nature (Spiller & Zelner, Reference Spiller and Zelner1997).
A ‘private legal ordering’ perspective
The IBO-SC may also be analysed from other theoretical perspectives, e.g., by emphasising its role as defining private ordering (Williamson, Reference Williamson2002) on the basis of public rules, although our model points out that rules need to be translated, monitored, and enforced. There are also other notable points of contact between our interpretation and other theoretical frameworks. Dixit (2003) identifies both minimum and maximum thresholds for the effectiveness of self-governance mechanisms within economic communities, beyond which external mechanisms become necessary. In the context of the IBO-SC, the TGA and AC define a socio-economic proximity among agents, facilitating the adoption of SCs. The restriction prohibiting marketing of more than 10% of the product outside the IBO-SC system not only limits alternative exchanges but also reinforces socio-economic cohesion, thereby promoting cooperation (Dixit, 2003). Prüfer (2015) further demonstrates that incentives for cooperation are stronger among closely connected partners, a dynamic evident in the IBO-SC’s pursuit of ‘honest interaction’ and effective coordination. The IBO-SC’s regulatory framework mirrors the private legal systems described by Bernstein (2001), who acknowledged the role of public regulation complementing private legal systems in contributing to reducing transaction costs.
Beyond these points of contact, however, the theory of meso-institutions provides a more insightful perspective. It does not simply contrast the ‘public’ and ‘private’ dimensions, but clarifies the path through which macro-level rules are transmitted to micro-level agents, while distinctly identifying economic value creation as a characteristic feature of the micro-level.
Conclusion
This paper explored the coordination challenge in complex supply chains through the study of the Italian tomato industry, focusing on the role of IBO-SC as a meso-institution. The study addresses two key dimensions of the coordination challenge posed by the multiplicity of agents and institutional layers. First, it distinguishes IBOs from micro-institutions, which facilitate horizontal coordination via SCs, and macro-institutions, which define overarching regulatory frameworks (e.g., EU and national legislation). Positioned between these levels, IBOs translate, monitor, and enforce general rules that frame the activities at the micro level.
Second, drawing on recent theoretical developments, it shows how the IBO under review fulfils the meso-institutional functions and tasks through a system of contracts enabling vertical coordination among supply chain actors and embedding regulatory principles into the practice of actors.
Our Process-tracing approach provides an example of how the modalities by which a meso-institution frames a coordination relationship can be analysed. It also shows in detail the mechanisms through which IBO-SC operates. The empirical findings confirm the central role of IBOs in facilitating coordination and validate the expected links between the theory of meso-institutions and observed practices.
This article opens up further avenues for research developments. First and foremost, it highlights the opportunity to extend the analysis to other IBOs, thereby progressively substantiating the generalisability of the findings. A comparative investigation between IBOs and other meso-institutions involved in vertical coordination – such as Marketing Boards – also appears to be relevant, and should enrich the theory of meso-institutions. Another area worth exploring concerns the potential relationships between the modalities through which meso-institutional functions are carried out and the characteristics of micro-institutions. This could also lead to analyses regarding the extent of associated variations in transaction costs. Our study also suggests exploring the possibility that meso-institutional functions may have the capacity to rebalance market power among agents in favour of farmers. Finally, the classification of IBOs as meso-institutions suggests possible research paths aimed at revising models for the formulation of sectoral policies.
Acknowledgements
The authors wish to thank Claude Ménard, who kindly read and criticised previous versions of the study. The paper also strongly benefited from the criticisms and remarks made by Annie Royer, Liesbeth Dries, Stefano Pascucci, and Kostas Karantininis in a series of meetings held together. The authors are also in debt to Maria Sylvia Saes, Gustavo de Oliveira, Paula Schnaider and Jo Bijman (Sao Paulo, October 2021); Stefanella Stranieri, Carlo Russo, and Erik Mathijs (EAAE Conference in Rennes, August 2023); and Nadia von Jacobi and Ian Falkowski (Conference, Catania, September 2023). The authors alone are responsible for any errors and the lack of clarity still affecting the current version.
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