Summary of JOIE Article by Gaetano Martino and Bianca Polenzani, Department of Agricultural, Food and Environmental Sciences, University of Perugia, Perugia, Italy . The full article is available on the JOIE website.
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, 2014). There is a lack of research on how meso-institutions contribute to solving coordination issues in supply chains. We consider Interbranch organizations (IBOs) as the empirical object of study because how they effectively facilitate coordination within agri-food chains remain insufficiently understood. This study seeks then to answer the following question: How do IBOs facilitate the coordination of the parties to Agri-food transactions? We conjecture that IBOs establish coordination among agents in the supply chain under consideration by performing meso-institutional tasks and functions. The empirical analysis provides evidences supporting this conjecture.
Research topic: the coordination problem
The empirical analysis is based on a case study of the tomato industry in Italy, where significant coordination challenges arise due to uncertainty and relation-specific investments. Uncertainty is determined by variable quality, market fluctuations, technological changes, and performance risks, often leading to opportunistic behavior and high monitoring costs. Agents make relation-specific investments, such as time-sensitive crop commitments and site-specific processing facilities, which increase negotiation complexity. These factors generate high transaction costs for search, contracting, and enforcement. Supply chain agents need to address these issues by improving coordination and mitigating related risks.
Analytical framework
Conceptualizing the coordination problem: Substantive and auxiliary theory
We address the research problem by adopting the research strategy proposed by Ménard and Martino (2025), which combines substantive and auxiliary theories to study institutional coordination. Substantive theory examines rules, norms, mechanisms, and their interaction with states of nature, while auxiliary theory connects these concepts to empirical observations through specific constructs. These constructs, whether qualitative or quantitative, link evidence to theoretical questions and guide data collection. The approach involves continuous interaction between empirical analysis, hypothetical constructs, and theory, enabling a deeper understanding of the social phenomenon.
Meso-institution theory as auxiliary theory
We refer to meso-institutions theory as an auxiliary theory. Meso-institutions perform three key functions: translating general rules into context-specific norms, monitoring their implementation by micro-institutions managing production and distribution, and enforcing compliance with regulatory constraints. They also provide feedback to policymakers on obstacles or irrelevance of certain rules, ensuring effective governance and coordination within institutional frameworks.
Conjecturing a coordination relationship
The issues of uncertainty and relation-specific investments that characterize the transaction between farmers and processors (T1) might make the cost of its organization prohibitive, inducing agents to exit from the contracting process.We conjecture that by performing the meso-institutional functions identified above, IBOs help reduce these costs and facilitate coordination through contractual agreements with lower transaction costs. In particular, an IBO would facilitate coordination and reduce its cost by:
- designing contractual models that translate the macro-rules into specific ones (Translating);
- designing and implementing instruments to monitor parties in way that makes the rules operational (Monitoring);
- designing and implementing specific enforcing instruments to make the parties to the transaction complying with the rules and to help the alignment between micro-decisions and macro-rules (Enforcing).
The institutional setting
The empirical analysis allows us to recognize how IBO set up a contractual system consisting of the Territorial General Agreement (TGA), the Area Contract (AC) and the Supply contract (SC). The TGA represents the general agreement that establish 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). The contractual system operates across two distinct institutional levels. On the one hand, the design and conceptualization 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 to the actual negotiation process so that it does not relate to the creation of economic value arising from 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 organize T1
Results
Our empirical analysis then confirms that IBOs perform key meso-institutional functions: through the Translation function, the TGA converts European and Italian laws into operational rules, defining shared strategies, contractual models, production guidelines, and quality standards. Monitoring is achieved through the AC, which defines obligations, quality criteria, payment terms, and sanctions, while enabling information sharing and ensuring compliance with legal and technological requirements. Enforcement extends beyond monitoring by imposing penalties or rewards, supported by standardized SCs aligned with macro-level rules. These contracts ensure compliance, specify rights and duties, and include sanctions for violations. Together, these mechanisms reduce transaction costs, discipline activities across the chain, and align micro-level decisions with macro-level regulations, confirming the IBO’s role as a coordination instrument in managing uncertainty and relation-specific investments.
Conclusions
Our study meets the falsification criterion: data collected and codified does 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 task and functions, thereby establishing a coordination relationship that gives rise to a contracts system which in turn becomes integral component of micro-institutional arrangements. Building on Ménard and Martino (2025) our study then demonstrates that meso-institutions define interaction frameworks, linking macro-level regulations with micro-level contracts (Area and Supply contracts). The research introduces a replicable approach for analyzing meso-institutional tasks using hypothetical constructs, offering insights into targeted actions for coordination. Findings confirm the central role of IBOs in embedding regulatory principles into practice and facilitating vertical coordination. Future research should explore generalizability across sectors, compare meso-institutions like Marketing Boards, and assess their impact on transaction costs and market power. These results suggest revisiting policy models to strengthen meso-institutional functions in agri-food governance.