Inclusive Business Models in Agri-food Value Chains: What Safeguards for Whom?

ABSTRACT

Inclusive business models are promoted as unique opportunities to combine profitability for firms needing reliable supply from small-scale farmers with market inclusion for those farmers. In environments with weak public institutions, such agreements may be conducive to sustainable income, yet costly or even impossible to enforce. They rely on firms willing to provide investment while being exposed to high appropriability hazards. This paper explores the relationship between investments, appropriability hazards, and safeguards based on ten African case studies. Results suggest that in environments in which commitments are hard to secure, the business model chosen is largely determined by safeguarding against side-selling.

KEYWORDS:

• Inclusive business models
• value chains
• organization
• governance
• hybrids
• welfare

JEL:

• D2
• D23
• D4
• L1
• L23
• Q1
• Q13

Acknowledgements

Previous versions of this paper were presented at workshops in Brussels (BAAE), Rome (EAAE), Crete (EAAE), at the annual EAAE conference (Lubjana), and at seminars at the Universities of Ghent; Paris (Pantheon-Sorbonne); Perugia; Pretoria; and Sao Paulo. We are grateful to all participants, particularly to Jean-Marie Codron, Liesbeth Dries, Kostas Karantininis, Gaetano Martino, Stefano Pascucci, and Ward Anseeuw as well as to reviewers from this journal for insightful comments and suggestions. Special thanks to Marijke D’Haese for her contribution to the initial phase of this research. The usual disclaimer fully applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ For a nice discussion on the building of case studies and how they can enrich theory, see Eisenhardt and Graebner (2007). For the methodology of case studies that inspired our approach, see Yin (1994).

² In selecting the cases we mostly relied on the dozens of companies, governmental and non-governmental organizations linked to the Seas of Change Initiative and their affiliates and partners. See: http://seasofchange.net/.

³ All of them are non-profit organizations. Sustainable Food Lab is based in the USA (https://sustainablefoodlab.org/the-food-lab/), CIAT in Colombia (https://ciat.cgiar.org/), IIED in the UK (https://www.iied.org/), and Rainforest Alliance in the USA (https://www.rainforest-alliance.org/).

⁴ Details of the methodology can be found in LINK Methodology, 2014; available at: https://ciat.cgiar.org/.

⁵ LINK initiative is a long-term applied research, innovation and exchange program helping businesses, governments, and NGOs share best practices (www.seasofchange.net).

⁶ The full questionnaire and a detailed lists of respondents are available from the corresponding author.

⁷ Yeray Saavedra and Henric Verjans from the Center for Development Innovation (the Netherlands) and Yared Sertse from the African Agribusiness Academy.

Additional information

Funding

This work was supported by the The Technical Center for Agricultural and Rural Cooperation (CTA).