Abstract
Inclusive business as a model at the base of the pyramid is a relatively recent unit of study in academic literature. From the institutional perspective, businesses are affected by norms, processes, rules of moral and ethical behaviour, which have not been studied for the base of the pyramid in inclusive businesses, much less in agricultural cooperatives. The objective of this research is to identify institutional factors that can affect agribusiness inclusive models. In this research, agricultural cooperatives of banana production in the province of Magdalena, Colombia, are the unit of analysis to identify institutional factors. The method of review of institutional factors is the multiple cases (six banana cooperatives) with a simple unit using inductive analysis. The results show that institutional factors—both formal (certifications, quality standards, social responsibility policies and economic incentives) and informal (cooperation, improvement of quality of life, generation of social capital)—promote the development of inclusive businesses in cooperatives of the base of the pyramid. The research is a first step to show its potential replication in other agricultural industries and even in other economic sectors.
Introduction
Business models are affected by regulations, procedures, moral rules and ethics behaviour. According to North (1991), these elements are called institutions and are classified into formal (constitutions, laws, property rights, among others) and informal institutions (customs, traditions, sanctions, taboos and codes of the conduct).
Some authors have analysed the effect of institutions in entrepreneurship, cooperatives and agribusiness (Baumol 1996; Boettke and Coyne 2003; Sobel 2008). The literature review about institutions in inclusive business shows a gap about institutional factors that determine the creation and operation of inclusive agribusiness models. The main studies are concentrated in social enterprise (De Beule, Klein, and Verwaal 2020), supply chain (Zomorrodi et al. 2019), informal economy sector (Webb, Ireland, and Ketchen 2014) and subsistence market (Rivera-Santos, Rufin, and Kolk 2012) with base of the pyramid (BoP). Therefore, filling this gap, this research explains how the institutional factors (formal and informal) affect the development of inclusive business in agricultural cooperatives, whose members include farmers as the BoP.
After this introduction, the article is divided into four main parts. The first is a review of the institutional theoretical framework that evolves until North (1991) as the main basis taken for this research division of formal and informal institutions. Then, there is the conceptual analysis of inclusive businesses at the BoP to finish making the link between institutional theory and inclusive businesses. This section closes with a description of the unit of analysis in the banana cooperatives of the Magdalena province (Colombia).
The second part corresponds to the methodology that uses the case method, following Yin (1989) and taking the banana cooperatives of Magdalena as the unit of analysis. The third part is the results and the discussion that contrast the theoretical elements with the findings of the case for formal and informal institutions. The article closes with the conclusions.
Literature Review
Institutional Theory
From the German Historical Economist (GHE), the institutionalism proposes a less deductive and more empirical version of political economy than the classical framework, to create a holistic perspective. The most notorious exponent of the German current Max Weber (1922 re-edited 1968) with his theory of authority is becoming a more traditional, routinised and legal-oriented form of authority, being also more predictable and impersonal. With this form of institutionalisation, Veblen’s (1899, 1909) American perspective, formalises an evolutionary version, which includes the effects of change and exogenous aspects of the institutions. Commons (1934) emphasises that economic transactions should be supported by organisations, through institutions as the rules of collective action of them, to give the foundations of what is known as Neo-Institutionalism.
One of the most accepted definition is mentioned by North (1991), who indicates that institutions are norms, processes, rules of moral and ethical behaviour, designed to restrict the behaviour of individuals. Accordingly, they can be divided into informal restrictions (customs, traditions, sanctions, taboos and codes of the conduct) and formal restrictions (constitutions, laws, property rights, among others). As a result of tradition, informal restrictions can become formal. This results in the great difference of both, in time and complexity.
Precisely on the similar research topic of this paper, for example, entrepreneurship in agricultural, cooperatives and agribusiness, some authors state that institutions can determine the type of entrepreneurship (Baumol 1996; Boettke and Coyne 2003; Sobel 2008) while some others perceive them as restrictions on entrepreneurial activity (Baumol 1996; Hall and Sobel 2008).
It has also been found that institutions tend to be stronger and more complex in transition economies than in free-market economies (Peng and Heath 1996). In this context, Mair, Martí and Ventresca (2012) claim that in countries where formal institutions are not sufficiently strong, they are replaced by informal institutions as a compensatory system that creates a stable institutional environment to promote and sustain entrepreneurship. Also, Urbano, Casero and Mogollón (2007) stated that formal institutions have a greater impact on high-income countries, while informal ones are more relevant in low- and middle-income ones.
Similarly, previous studies carried out in countries with similar public policies but with different ways of functioning in terms of business creation (Jackson and Deeg 2008; Schott and Wickstrom 2008) have highlighted that informal institutions are immersed in the culture of the society (Ostapenko 2016). This has led to the implementation of new research focusing on the direct influence of culture on the entrepreneurial activity (Autio, Pathak, and Wennberg 2013; Estrin and Mickiewicz 2011; Zhao, Li, and Rauch 2012).
Evolution to the BoP Concept
The concept of the BoP is a term originating from the studies carried out by Prahalad and Hart (2002) and refers to those people located at the BoP, with low-income power, who are often disregarded as potential customers.
Different authors such as Karnani (2007) and London and Hart (2004) agreed with Prahalad’s new vision on the responsibility of the private sector in helping the poorest. However, they criticised the concept because, in practice, it highlighted—more than support for those on the BoP—an opportunity for large multinationals to enter new markets (London, Anupindi, and Sheth 2010).
Other authors relate the concept of BoP with innovation, because the necessity of the BoP help to produce products that make it easier to enter markets and thus be able to take full advantage of all possible business opportunities (Halme, Lindeman, and Linna 2012; Hart and Christensen 2002; Rocco et al. 2003; Simanis and Hart 2008).
BoP Literature Review.
Source: The authors (based on literature review).
The differences between BoP initiatives and traditional business initiatives are the position of the poor in the value network (Karnani 2009). The aim is to attract the poor not only as consumers of products generated by BoP initiatives (Simanis and Hart 2008) but also as producers in the chain, focused on creating new business models and capacities to supply new markets (London, Anupindi, and Sheth 2010).
Thus, criticisms arise regarding the view of BoP as a consumer, since the real basis of BoP is to seek strategies that increase the income of the poor and not only to buy and sell the product (Kandachar and Halme 2008; Karnani 2007; London, Anupindi, and Sheth 2010; Simanis and Hart 2008). Simanis and Hart (2008) are critical of what they call first-generation BoP (BoP 1.0), which showed commercial exploitation of the BoP and proposed second-generation strategies (BoP 2.0) that include building new business opportunities with local people, leading to the development of what are now known as inclusive businesses.
The Inclusive business concept has been mainly developed by different international and national organisations (ENDEVA 2010; AVINA 2007; SNV and WBCSD 2010; SNV and WBCSD 2008) and has been used in several studies related to the topic (Arora, Kazmi and Bahar 2012; Chamberlain and Anseeuw 2019; German and Parker 2019; Halme, Lindeman, and Linna 2012; London, Anupindi, and Sheth 2010).
Inclusive businesses have demonstrated positive impacts as an option for linking the low-income sectors, mainly in the agribusiness sector (German and Parker 2019; Ickis et al. 2009; Licandro 2013; Tampubolon and Manik 2018; Van Haeringen and de Jongh 2010). In Latin America, they have become a strategy to reduce poverty (Ickis et al. 2009), as reported by Márquez et al. (2010), where 30 cases of inclusive businesses (15 cases where the BoP are producers and 15 cases where the BoP are consumers) in different Spanish speaking countries (Venezuela, Chile, Peru, Mexico, Colombia, Argentina, Brazil and Central America), including Spain, are analysed.
When reviewing the literature on the concept of Inclusive Business in databases (period 2015–2019) a reduced number of papers was found, which is an indicator that the topic is still at an early stage and that much of the written literature is to be found in reports and non-reviewed journals. Likewise, with the exception of microfinance, there is little evidence available on the impact that these experiences have had and/or are having on the lives of the poor (Ghosh and Rajan 2019; Márquez et al. 2010; Portocarrero and Delgado 2010).
Some authors (Gebru et al. 2019; Licandro 2013; Márquez et al. 2010) has deepened and explained the concept of inclusive business, the benefits of its development, the barriers that have been overcome and the lessons learned; all of them under a practical analysis approach rather than a theoretical one. In addition, some other authors studied the development of inclusive businesses from the perspective of network theory (Hamann et al. 2008; Reficco and Márquez 2012; Zwass 2010), stakeholders (Corus and Ozanne 2012), resource-based theory (Chamberlain and Anseeuw 2019), agency theory and transaction cost theory (Ranjatoelina 2018) and leaving aside the analysis of inclusive businesses from the new institutional economic theory. These studies have allowed the analysis of entrepreneurship, cooperatives, business development and implementation of agribusiness sustainability standards.
Institutions in Inclusive Business Models
In the literature review in the Web of Science (WoS) about the specific topic (see Table 2) institutions with BoP, we found some articles who compare institutions in differences scenarios (international and local) in social enterprises (De Beule, Klein and Verwaal 2020) and how the context influences in the adaptation of the inclusive business models like micro franchising (Kistruck et al. 2011) and to develop business in the supply chain (Zomorrodi et al. 2019).
Institutions in Inclusive Business Models: Literature Review.
Source: Own authorship based on literature review.
The institutions help to demonstrate in a complex scenario, the social innovations are a fundamental factor to find opportunity in business (Köhler et al. 2019) and how the BoP develop strategies non-coherent to be competitive in differences markets (Angeli and Jaiswal 2015).
In this regard, the results of this work would contribute to the study of the institutional factors that influence the generation of inclusive agribusinesses, especially in cooperative, from the perspective of the new institutional economic theory, taking into account North’s (1991) distinction between institutions (formal and informal) and the restrictions established by society to structure human relations and organisations.
Research Context
According to the UN report (2018), Colombia is one of the three countries in Latin America with the greatest rural poverty problems and ranks 70th in countries with the highest extreme poverty out of 164 countries analysed by the World Bank (Databank 2018). The country is home to 2.2 million people living on less than US$2 a day, with the rural area concentrating the largest number of poor people.
On the other hand, the Colombian agricultural sector is ranked sixth out of 10 economic activities (DANE 2019) according to its contribution to GDP. It has a strong impact on the social development of the rural areas of the country, where the small farmer is considered the BoP in the agricultural sector. According to Agronet statistics (Agronet 2019), 58.5% of jobs generated in rural areas correspond to the agricultural sector, with bananas being the third most important export product of the country (Agronet 2019; ASBAMA 2017; only after coffee and flowers), which is mainly produced by clusters working in two areas of the country (Lombana 2006): Urabá (Antioquia) located in the northwest and the Magdalena in the northeast.
The Magdalena banana region was one of the first agricultural areas in Colombia to receive U.S. investment (Bucheli 1997; Viloria-de-la-Hoz 2014) and has overcome various crises such as the 1928 Banana Massacre (Brungardt 1990), the threat of drug trafficking (Espinal, Covaleda, and Marín 2005) and the influence of illegal armed groups in the area (Gonzalez-Perez 2010).
Currently, the average area cultivated with bananas for export in the Magdalena region has remained stable at around 11,605 ha, with an average production of 421,896 tons and an average yield of 36.35 tons/ha, according to data from the Ministry of Agriculture and Rural Development (Agronet 2019).
According to the Chamber of Commerce of Santa Marta (CCSM 2014), Magdalena’s small banana growers are associated in banana cooperatives, which comply with the characteristics of inclusive business while at the same time being part of the banana value chain.
This initiative, where the small farmer becomes entrepreneur (Ickis et al. 2009), is an example of new entrepreneurship models for social inclusion of the most disadvantaged people (see the section ‘literature review evolution to the BoP concept’) and to show agriculture cooperative as an appropriate enterprise to develop this type of business model.
Material and Methods
Data Collection
This research is following the methodology of case study with inductive logic, bearing in mind that it is a new phenomenon which should be analysed in its real environment (Yin 1989). The case study method also allows to describe situations and to find the reasons why they occur (Chetty 1996). This research aims to examine inclusive businesses through the analysis of multiple cases. According to (Eisenhardt 1989),, the adequate number of cases to generate theoretical propositions should not be less than four. Otherwise, some empirical problems may arise, and it would be difficult to generate results.
This study has the objective to analyse 100% of the population of banana cooperatives (six cooperatives). The analysed cooperatives include 335 members covering all small banana growers in the Magdalena region, who are characterised by having a low level of education (69% of them do not have formal education, 17% have completed primary education, 12% with high school and only 1% have completed vocational education or other studies). All of these members are characterised by exporting through domestic/local traders. Since, banana is
Preliminary research about the origin of each co-operative (Maestre-Matos et al. 2019), showed that the agricultural cooperatives in the study had been created for three reasons: to comply with Fairtrade requirements, as a result of their founders’ own initiative or to comply with the requirements of the traders. Throughout their lifespan, they have increased the number of their members, taking into account the viability of the business.
General Description of Cooperatives as Case Studies.
Source: The authors.
In addition, web pages, newspapers, documents, records and reports of cooperatives have been used as secondary sources of data. The direct observation, the interview and the secondary sources of data allowed the triangulation of information.
Data Analysis
The stages of the data analysis process are shown in Figure 1 and they are explained below.
Each interview was transcribed in text format. Also, an adaptation of the secondary information was prepared in a compatible format for its use in the specific data qualitative research software, Atlas.ti v 7.0.
In the first stage of data analysis, the Atlas.ti’s WordCruncher has been used to identify words with a high frequency of mentions in the documents.
These words were associated with each other according to the relationship shown between them and to the meaning according to the text (context), creating ‘groups of words’. These groups of words are technically known in Atlas.ti as codes and represent the first step for the development of the encoding of information, which is the basis of the analysis of interviews
The encoding process was done through the open, axial and selective strategy (Corbin and Strauss 1990). In the open coding, general reading of interviews has been done to understand the context and then to establish citations related to the initial categories defined by WordCruncher. These citations (sentences mentioned by the interviewees) support the identified codes (categories), as shown in the tables in the ‘Results and Discussion’ section.
Axial coding consisted of creating connections between the codes/citations (categories), previously defined in open coding. The relationships between these codes were taken into account and initial networks of categories were established and designated as ‘families’ or ‘groups of codes’, as shown in Table 5.
Finally, within the selective coding, a second general reading of the interviews was carried out, reviewing the codes established in the open coding and then recoding them according to the defined ‘families’ or ‘groups of codes’. This allowed defining the final categories, which are shown in the next section together with their supporting citations. These final categories are the institutions that determine the emergence and development of inclusive businesses.
Results of data analysis, reflected in the next section, show the categories of institutions that determine the emergence and development of inclusive businesses.
Results and Discussion
Literature review shows an opportunity to identify the institutional factors affecting inclusive agribusiness models and especially cooperatives.
This type of business takes farmers at the BoP into the supply chain, according to some authors: Simanis and Hart (2008), London, Anupindi, and Sheth (2010). Some of them criticised the business models in which BoP is only a consumer of the products generated by a multinational firm (Kandachar and Halme 2008; Karnani 2007; London and Hart 2010; Simanis and Hart 2008).
Results from the methodology implementation show the final categories that were identified as institutions (Figure 2).
Results of the WordCrouncher (Words with High Frequency).
Source: The authors.
Category Networks and the Category Families (Final Categories).
Source: The authors.
Formal Institutions
Some rules, regulations and economic incentives that promote inclusive agribusiness were identified as formal institutions. They are described with more detail below.
Standards and Certifications Required by the International Market
According to a Colombian guild of banana growers, Magdalena is positioned as the second region regarding banana exports with a production of 12,975 ha through the four main international distributors of this product: C.I. Tecbaco S.A, C.I. Banasan S.A., C.I. Uniban S.A., C.I. Banarica which export the 93% of the total banana production from the region (ASBAMA 2016).
It has been found that these distributors are the link between customers and the small banana growers, as they sell the banana production that meets the demands of international markets. Thus, distributors—through formal contracts—request from the small producers a certain number of banana boxes to fulfil the export orders of European wholesalers and retailers. This commercial relationship between distributor, cooperative and small producer, apart from generating an economic value for each of the actors in the chain, helps to create social value and enhance the development of inclusive businesses through the application of standards, certifications and corporate social responsibility policies.
Bananas for export must have a Global Gap certification as the minimum requirement to guarantee the technical quality of the exported fruit. The Global Gap is an initiative that began in 1997 as Euro Retailer Produce Good Agricultural Practices (EUREPGAP), where a group of retailers were gathered under Euro Retailer Produce Working Group (EUREP) became aware of the growing concerns about food safety, health, environmental impact and the welfare of workers and animals. Global Gap became a pre-requirement to sell in the European market, thus controlling the development of the banana exports business and turning out to be a de facto requirement governing the whole banana business.
Comments Related to Small Farmer’s Knowledge of Markets’ Requirements.
Source: The authors.
The same results have been obtained by Henson, Masakure and Cranfield (2011), as according to their findings Global Gap is a private standard required for anyone wishing to export fruits, vegetables and a range of animal and plant products. Also, Asfaw et al. (2010a) have shown that small producers get certified once they start to generate significant profits. However, other research (Dolan and Humphrey 2000) claims that those standards were designed to exclude small producers without the technical and economic capacity to meet them.
Finally, the study of Bray (2019) concluded that voluntary sustainability certifications are an institutional factor that helps shape both livelihood and regional development strategies, generating collaborative work among producers.
On the other hand, Fairtrade certification is required in order to get a premium price of one dollar ($)/exported box. This Fairtrade certification has emerged with the objective to generate greater equity in international trade. It, therefore, gives particular attention to social and environmental criteria that contribute to sustainable development and to assure the rights of disadvantaged producers and workers (Coscione and Mulder 2017)
Magdalenas’ banana cooperatives are currently certified with Fairtrade seal. This implies not only that banana producers receive a more decent and stable salary, but also that they use agricultural practices more beneficial for the environment (promotion of organic farming, use of techniques protecting soil, water and biodiversity and so on) and that the local community gets additional benefits (application of democratic, participative and transparent models, use of price premiums to develop educational, health, social and infrastructure projects and so on).
Comments About Fairtrade Role in the Cooperatives.
Source: The authors.
Therefore, it is concluded that small producers are concerned about maintaining and improving their sales and understanding that certifications are an institutional factor that regulates the international market. Their analysis is therefore important within the institutional environment of exporting cooperatives.
Economic Incentive: Premium Price Provided by Fairtrade
Comments About Fairtrade and Its Premium.
Source: The authors.
Support Obtained by Additional Payment (Premium) from Fairtrade.
Source: The authors.
Although many authors have shown the relation between Fairtrade and the profits generated by the interactions established by the two actors (producers and consumers) (Asfaw et al. 2010b), there is no consensus that certification leads to economic sustainability (Ibanez and Blackman 2016; Snider et al. 2017). However, there is evidence that it does ensure non-financial benefits such as better management, development of social projects (Lyall and Havice 2019) and better involvement of small producers in the distribution of the value that is paid for each fruit consumed (Maestre-Matos et al. 2019).
Other studies have a more specific focus towards consumers’ ethical behaviour generated by Fairtrade, considering that the person who acquires a sealed Fairtrade product, feels responsible towards society and expresses his/her feelings through the purchase behaviour (De Pelsmacker, Driesen, and Rayp 2005).
In conclusion, the economic incentive has prompted the creation of cooperatives with social inclusion to develop export businesses. This has also influenced the behaviour of small producers and has therefore been considered a formal institution for these inclusive businesses.
Social Responsibility Policy of the Trading Company
Corporate social responsibility (CSR) is one of the main topics of interest of entrepreneurs in the world. It was first mentioned in the literature by Bowen (1953) who questioned the responsibility that businessmen must assume with society and opening the social conscience of the business management. Currently, the CSR is oriented to the creation of values shared by the stakeholders involved in the business (Breliastiti and Josephine 2017; Moon and Parc 2019; Nguyen, Bensemann, and Kelly 2018).
In the studied cooperatives, banana trading companies play an important role for inclusive business, with the policy of corporate social responsibility having become a formal institution for its development as it influences the positive relationship between distributor-cooperative-small producers. These companies have a commitment to improve the quality of life of small producers and include the integration of the economic and social value within their policies that align the generation of value with innovation processes (Michelini and Fiorentino 2012), which has been named ‘creation of shared value among stakeholders’ (Moon and Parc 2019).
This indicates that banana traders are reconsidering their role as a company, leaving aside the donation practised by other organisations such as foundations and turning out to be generators of a strategy of shared value with the society, without neglecting its generation of economic value. A role that goes in accordance with studies carried out by authors such as Austin, Herrero and Reficco (2004) where companies moved from philanthropy and transactional to comprehensive social responsibility (bi-directional relationship between the company and the social group, creating an environment to the joint production or service).
According to the number of banana boxes sold, the most important banana distributors in the analysed cases are C.I. Banasan, C.I. Tecbaco and Uniban (CCSM 2012), which sometimes use foundations such as Fundation Banasán, Fundeban and Fundauniban respectively, as the operating entity for corporate social responsibility policies.
Activities Carried out by Trading Companies as Anchor Company.
Source: The authors.
The traders comply with the roles of supporting the improvement of the cooperative after its creation and also support the establishment of joint marketing relationships. According to the literature (De Jongh et al. 2011; Portocarrero and Delgado 2010) this type of inclusive business company is defined as ‘anchor company’.
Although some authors expressed that the role of the anchor company is only supporting inclusive business (Moreno and Muñoz 2017), there are others who conclude that the anchor company can be the driver of inclusive business through financial and technical contribution in the creation of entrepreneurship (Licandro 2013).
In short, CSR policy influences the relationships between chain actors involved in inclusive business. So it is considered a formal institution, which is relevant for cooperatives with products for export.
Informal Institutions
Apart from formal institutions, informal institutions such as values, beliefs and habits, among others are immersed in the culture of people and affect their interactions. In the case of inclusive businesses informal institutions are described below.
Cooperation as a Fundamental Value of Inclusive Business
The fulfilment of a social character—regulated by law—the management of shared values, mutual trust and collective learning are the most highlighted characteristics in banana cooperatives. This result goes in line with other studies related to cooperatives (Caldentey 2002). Cooperation is considered a fundamental aspect of all systems (Hamilton 1964) and is closely related to the creation of social capital (Thompson 2018).
Strong cooperation and development of joint efforts between partners have been found in this study, whose explanation may lie on the principles and values of the cooperative movement.
Comments About the Cooperation.
Source: The authors.
Table 9 shows that mutual assistance among partners is essential for the growth and development of the cooperative, allowing to remove the concept that cooperatives are synonyms of theft and individual profit.
These results are related to the concept of cooperative, given by the international co-operative Alliance (ACI 1995), whose objective is to develop the common good of the population, rather than the particular benefits of a few people. Likewise, Coque-Martínez (2002) concluded that in cooperatives both economic and social value are generated, with the union and collective work being basic guides for their actions (Gutiérrez 2014). In the agricultural sector, it was found that the lower the level of land productivity, the greater the cooperation and the greater the development of social capital (Litina 2016).
In conclusion, the principles of cooperation promote the joint behaviour of small producers, becoming for this reason an informal institution in cooperatives with products for export.
Philosophy of the Improvement of Quality of Life
This philosophy was originated with Prahalad and Hammond (2002) with the concept of the BoP and the opportunity that companies had to open new markets with the poor. Its objective is to improve the quality of life of the underprivileged, so all the links in the chain are required to adopt this philosophy in their actions and culture.
Comments About Improving the Quality of Life.
Source: The authors.
These results are a confirmation of the concept and purpose of inclusive business given by authors and/or organisations such as AVINA Foundation (2007) that consider these businesses as ‘an economically profitable initiative and environmental/socially responsible that use market mechanisms to improve the quality of life of low income people’, which the government has failed to achieve (Tampubolon and Manik 2018).
Social Capital Generation
Comments That Show Strong Ties Between Small Producers.
Source: The authors.
Due to the development of such relations small producers have been working together to confront their difficulties and improve their quality of life. This finding is consistent with the relationship between social capital and the poor expressed by authors such as Torrado (1981) and Gutiérrez (2005).
On the other hand, it is through the banana cooperatives of the Magdalena where small growers have been able to generate social capital. In accordance with Gutierrez (2014), agricultural cooperatives are an instrument of rural development for small producers. This represents an opportunity to become part of an organisation that has economic advantages due to its horizontal or vertical integration; This result is consistent with some studies which state that the greater the social cohesion found in a community, the greater the social capital generated and the greater the economic and community development (Aldrich and Meyer 2015; Redding and Rowley 2017; Woolcock 2010).
Bearing in mind the abovementioned, it is therefore concluded that this social capital that has been generated positively modifies the group behaviour of small producers associated to cooperatives, which in turn has a positive impact on their quality of life.
Conclusions
Inclusive businesses have helped certain low-income communities to improve their quality of life, where small producers included in the value chain become an entrepreneur in a new business.
In order to develop this inclusive agribusiness, it is required to take into account the formal and informal institutions that condition its operation and development. In this research, the formal institutions identified were standards and certifications required by the international market, the economic incentive that is given by Fairtrade premium and the policy of social responsibility (anchor company). In addition, the informal institutions identified were: the cooperation as a fundamental value for inclusive business, the philosophy of improving quality of life and the generation of social capital, all of them are immersed in the culture of the small producers, turning it into a permanent practice among them and not simply a written theory.
In this sense, the development of inclusive business in the banana cooperatives of Magdalena has been analysed and it was found that small producers are aware of the standards and certifications that determine their export process and comply with each of them, mainly with the Global Gap and Fairtrade.
However, they know clearly that Fairtrade is not a compulsory certification of the market, but its implementation has provided them with extensive economic benefits, as good working conditions, fair price, financial stability and so on; assuming its compliance as an incentive to improve their living conditions, through the creation and development of cooperatives.
The corporate social responsibility policies of traders were other identified formal institutions, where the private sector is the support that has helped to develop the growers through training, advice, financing, joint projects, among others.
The results of this research might have potential implications for various stakeholders. For small producers, the institutional factors identified could become a general framework for cooperatives in Colombia and even in other countries to adopt this inclusive business model, enabling them to tackle poverty and increase profitability for their owner-members. This research also shows a context that helps to motivate the creation of businesses with social inclusion, showing the relevance of export and marketing regulations. For policymakers, this model of socially inclusive business shows that exporting agribusinesses are suitable scenarios that can be supported by governmental regulations. Finally, for academics, the results of this study could represent a contribution of the gap identified about institutions that affect agribusiness inclusive models.
As future research lines, it is suggested to empirically validate the impact of some institutional factors on inclusive agribusiness. These factors can be identified in the entrepreneurship literature review, taking into account that the small producer becomes an entrepreneur in this new business model.
Footnotes
Declaration of Conflicting Interests
Funding
The authors would like to thank the Department of Magdalena, COLCIENCIAS and COLFUTURO for their funding on the training process of one of the article authors. Likewise, the thanks go for banana cooperatives of the Magdalena for their full availability and attention in the development of each of the interviews and the provision of information required for the research.
