Milone, Pie luigi
A icle
The ole o a me s: Go e ning he a m en e p ise,
ma ke s, and ne wo ks
I alian Re iew o Ag icul u al Economics (REA)
P o ided in Coope a ion wi h:
Fi enze Uni e si y P ess
Sugges ed Ci a ion: Milone, Pie luigi (2024) : The ole o a me s: Go e ning he a m en e p ise,
ma ke s, and ne wo ks, I alian Re iew o Ag icul u al Economics (REA), ISSN 2281-1559, Fi enze
Uni e si y P ess, Flo ence, Vol. 79, Iss. 3, pp. 31-42,
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I alian Re iew o Ag icul u al Economics Vol. 79, n. 3: 31-42, 2024
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ISSN 0035-6190 (p in ) | ISSN 2281-1559 (online) | DOI: 10.36253/ ea-15354
REA ITALIAN REVIEW
OF AGRICULTURAL
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ITALIAN REVIEW
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Ci a ion: Milone, P. (2024). The ole o
a me s: go e ning he a m en e -
p ise, ma ke s, and ne wo ks. I alian
Re iew o Ag icul u al Economics 79(3):
31-42. DOI: 10.36253/ ea-15354
Recei ed: May 31, 2024
Re ised: July 12, 2024
Accep ed: No embe 22, 2024
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The Mul idisciplina y App oach o Ru al S udies - Resea ch a icle
The ole o a me s: go e ning he a m
en e p ise, ma ke s, and ne wo ks
Pie luigi Milone
Dipa imen o di Ingegne ia Ci ile e Ambien ale, Uni e si à di Pe ugia, Pe ugia, I aly
E-mail: pie luigi.milon[email p o ec ed]
Abs ac . Being a a me is a mo e complex han we o en conside . The job includes
he capaci y o o ganise and combine ac o s o p oduc ion (land, capi al and especially
labou ) and simul aneously mee he needs o consume s and many o he hings. To
do so, he a me has o ace, ime and again, s a egic choices ela ed o he “make o
buy” decision ha conce n, and ma e ially a ec , he bounda ies o he a m’s ope a-
ions. This a icle a gues ha agency and ne wo king a e c ucial concep s in he analy-
sis o such choices. These wo concep s a e also a he hea o u al s udies. He e he
ocus will be on agency as s a egic in he ac i e o ganisa ion, combina ion and de el-
opmen o ac o s o p oduc ion. In u n ne wo king is cen al in he cons uc ion o
(new) ma ke s and o he solu ions o day o day o s a egic p oblems. This a icle will
use he expe ience o nes ed ma ke s, as seen h ough he neo-ins i u ional app oach
wi h a ocus on ansac ion cos s, o highligh ha s a egically o ganising p oduc-
ion ac o s is cen al o being a a me . I is a capaci y ha needs o be de eloped and
s eng hened a he han eplaced and/o ex e nalized. This applies especially when
a me s seek o ealign hemsel es wi h he needs o he en i onmen and socie y.
Keywo ds: agency, ne wo king, neo-ins i u ional economics, ma ke , sus ainabili y.
JEL codes: Q12, Q13.
HIGHLIGHTS
– I alian a me s a e inc easingly mo ing owa ds mul i unc ionali y in
o de o de end hei asse s. This p ocess includes de eloping new ma -
ke ela ionships wi h consume s.
– The neo-ins i u ional app oach allows o an economic in e p e a ion o
he impo ance o en ep eneu ial capaci ies in cons uc ing new ela-
ionships, bo h ma ke and poli ical-ins i u ional, ha guide p oduc ion
p ac ices and p ocesses.
– The bounda ies o a ms a e dynamic and mo e in cohe ence wi h he
en ep eneu ial ac i i ies o de ending he a m’s asse s, which ansla es
in o a s a egic choice o wha , how and when o p oduce.
32 Pie luigi Milone
1. INTRODUCTION
A he end o he 1990s bo h poli ical and schol-
a ly deba es inc easingly cen ed on e-concep ualizing
ag icul u e1. In an o e iew o hese deba es, Flaminia
Ven u a and mysel iden i ied h ee key poin s con-
ce ning he in e ela ions be ween a ms and ma ke s
(Milone and Ven u a, 2000).
1. Ma ke ansac ions gene a e ansac ion cos s ha
o ce a ms o con inuously e hink hei choices.
To success ully ca y ou a ma ke ansac ion one
needs o know wi h whom o deal, he quali y and
quan i y ha is expec ed, alo ising his quali y,
how o o mula e he con ac , wha ules need o be
obse ed, and so on. Co ec ly managing all his is
usually complex and cos ly.
2. Fa m en e p ises a e dynamic sys ems whose
bounda ies may expand o sh ink, depending on
e en s (ex e nal o in e nal o he a m) and he
ansac ion cos s associa ed wi h hem. Mo ing he
a m bounda ies can be ealised in ei he a co-ope -
a i e o au onomous way (Williamson, 1998).
3. P o ec ing con ol o e he ac o s o p oduc ion
(land, amily labou , capi al in es ed, know-how,
ne wo ks and s uc u es) is always cen al in he
en ep eneu ial ac i i y o a me s. Main aining
his con ol o e one’s asse s allows o economies
o scope ha gi e he a m en e p ise he lexibili y
needed o o e come momen s o c isis.
We a gued ha hese h ee poin s we e essen ial in
o de o p ope ly unde s and he mul i-dimensional di e -
si y in ag icul u e. While neo-classical ag a ian economis s
ega ded hese phenomena as being o seconda y impo -
ance, se e al new app oaches eme ged in he 1990s, which
pu he di e si y o he o ganiza ional o ms o a ms cen-
e s age. These included he a ming s yles app oach, ini-
ially de eloped in Wageningen, and he neo-ins i u ional
app oach, de eloped in Pe ugia, ha cen ed on he poly-
mo phism o ag icul u al p oduc ion and ma ke ing.
In he i s app oach, i was shown ha wi hin
homogeneous en i onmen s (cha ac e ized by he same
1 This econcep ualiza ion was s ongly associa ed wi h, and ed in o,
he eme gence o he new pa adigm o u al de elopmen ha ga e ise
o he new policy amewo k o Eu opean ag icul u e wi h he es ab-
lishmen o Pilla II, which was p ecisely aimed a suppo ing speci ic
policies o u al de elopmen and a new model o mul i unc ional ag i-
cul u e. A highe deg ee o lexibili y (in compa ison wi h he Fi s Pil-
la ) enables na ional, egional and local au ho i ies o o mula e indi id-
ual mul iannual u al de elopmen p og ammes based on a Eu opean
‘menu o measu es’. The Eu opean Union’s Ru al De elopmen Policy
was in oduced unde he ‘Agenda 2000’ e o m. I is co- inanced by
he Eu opean Ag icul u al Fund o Ru al De elopmen (EAFRD) and
egional o na ional unds.
se o economic, echnological and ins i u ional pa am-
e e s) di e en en ep eneu ial s a egies esul ed in he
cons uc ion o con as ing a ming s yles2. The sec-
ond app oach, in u n, made i possible o explain his
di e si y by pu ing i in he speci ici y o bo h e i o ial
con ex s and esou ces and he p esence o ansac ion
cos s. The di e si y o a ming was obse ed, analysed
and explained by Saccomandi (1991) in e ms o ans-
ac ional economics (Coase, 1937; Williamson, 1985) and
o ganiza ion heo y (Chandle , 1982; Ti ole, 1991).
Thus, he pe ec ma ke hypo hesis, which a gues
ha he ma ke is capable o pe o ming he unc ion
o he mos e icien esou ce alloca o wi h ze o ans-
ac ion cos s, was challenged by he impe ec ma ke
hypo hesis and he possibili y o choose o he o ganiza-
ional o ms as subs i u es o he ma ke . These o ms
a e igh ly in e wo en wi h he go e nance s uc u es o
ansac ions, in e nal and ex e nal o he i m, and hei
implied cos .
In his way, he uni o analysis changes om he
neoclassical i m, an en i y ha maximises p o i in a
pe ec ma ke , o a i m seen as he ins i u ion ha
in e nalises he p ocesses o p oduc ion whene e he
cos o hei acquisi ion o hei ou pu on he ma ke
en ails ansac ion cos s exceeds he cos s ‘doing i one-
sel ’: i.e. whene e he ma ke is ine icien . A dynam-
ic ins i u ion can change i s bounda ies o e ime in
esponse o changing ansac ion cos s. Such changes
a e o en linked o de elopmen s in he echnical-sci-
en i ic sys em, he ins i u ional con ex o he na u e o
esou ces (such as c a smanship). This new in e p e a-
ion o he a m en e p ise helps o explain he cu en
o ms o mul i unc ional a ms, ne wo ks o coope a ing
a ms and he p esence o economies o scope. T ansac-
ion cos s e e o he use o he ma ke , whils o gani-
sa ional cos s a e in e nal o he a m en e p ise. I is
p ecisely a he in e sec ion o hese di e en cos s whe e
Williamson loca ed his make-o -buy “decision” (1975;
1981). When he ansac ion cos s o using he ma ke
a e highe han he o ganisa ional cos s o he en e p ise
hen he en e p ise will ha e an incen i e o in e nalise
he p oduc ion p ocess a he han pu chasing he ou -
pu o ha p ocess in he ma ke .
In he mean ime, empi ical esea ch p o ided
e idence ha he g owing dependency o a ms on
ups eam ma ke s (also s udied as ‘inco po a ion’) as
well as he p og essi ely ex e nal p esc ip ion o en e-
p eneu ial decisions (i.e ‘ins i u ionaliza ion’) had
2 Ploeg de ines a ming s yles no on he basis o he capi al/labou a io,
bu in ela ion o he weigh o ex e nal a iables o an economic and
ins i u ional na u e ha de e mine he choice o echnologies and o ms
o go e nance o ma ke ansac ions (Ploeg, 1990, 1994, 2000).
33
The ole o a me s: go e ning he a m en e p ise, ma ke s, and ne wo ks
s ongly a ec ed a me s’ choices ha ega d he make-
o -buy decision.
O e ime he dynamics o inco po a ion and ins i-
u ionalisa ion (mos ly unde s ood as in eg al aspec s o
mode niza ion) esul ed in p ocesses o disin eg a ion
and deac i a ion o a m en e p ises and he loss o s a-
egic capaci y on he pa o ag icul u al en ep eneu s.
A he same ime, howe e , i has been shown ha
al e na i e solu ions a e possible. These solu ions ( ha
will be illus a ed and discussed u he in his pape )
a e based on en ep eneu ial beha iou ha depa s
om he pa h o mode niza ion. This can occu h ough
a combina ion o h ee elemen s:
1. ‘non- a ionali y’, linked o he p esence o p ope y
igh s o e esou ces, he s ubbo nness in de ending
hese esou ces, and he p esence o con inui y in
e ms o amily wo k;
2. he possibili y o de eloping economies o scope ha
allow o he di e si ica ion o p oduc ion;
3. he possibili y o enla ge he economic size o he
a m h ough he c ea ion o ne wo ks ha can
esul in new ma ke s a he han h ough p ocesses
o e ical in eg a ion o inc eased scale.
Thus, alongside he specialized, single-p oduc a m
ha supplies aw ma e ials o ag o-indus ies a new
model eme ged (bo h ma e ially and heo e ically): he
mixed, mul i-p oduc a m ha is di ec ly linked o con-
sume s, o en h ough new ma ke s embedded in ne -
wo ks ha di ec ly link p oduc ion and consump ion.
The shi om he ocus on p oduc ion e iciency
owa ds o ganisa ional e iciency (Ven u a, 2001) makes
i possible o explain links and ansac ions be ween
en e p ises ha a e no egula ed by he ma ke and
allow he ag icul u al en e p ise o ind o iginal solu-
ions in esponse o ex e nal changes while sa egua d-
ing i s asse s. The objec i e o he wo k is p ecisely o
unde s and hese links o ansac ions, he elemen s ha
de e mine and cha ac e ize hem. In his, agency and
ne wo king a e c ucial concep s.
The in e p e a ion o his new phenomenon, howe e ,
equi es a new, mul idisciplina y app oach (as de eloped
in u al s udies; see Ploeg in his special issue). Neo-ins i-
u ional heo y plays a key ole in his new app oach.
2. THE GOVERNANCE OF TRANSACTIONS
WITHIN A FARM ENTERPRISE
The ag icul u al en e p ise is an ins i u ion loca ed
a he in e sec ion o di e en ne wo ks o economic and
social ela ions ha in luence i s o ganisa ional choices
o e ime. The e a e h ee majo p ac ical and heo e i-
cal implica ions o his. Fi s : i and when he condi ions
o a pe ec ma ke a e lacking he en e p ise en e s he
analysis as he ins i u ion able o o ganize, combine and
de elop ac o s o p oduc ion3. Second (and acco ding o
Coase (1937: 390), his ins i u ion (in ou case he a m
en e p ise) can seek o d aw on i s capaci y o educe
he cos s o using he ma ke (i.e. i s ansac ion cos s).
Theo e ically his educ ion can be g ounded on se e al
mechanisms. The de elopmen o mul i unc ionali y is
one o hese. Thi d: he ole o coo dina ion is played by
he en ep eneu .
The go e nance o ansac ions can ake di e en
o ms. These a e e alua ed in e ms o hei abili y o
educe ansac ion cos s. Fo ms o go e nance can ake
wo ex emes, ep esen ed by he ma ke and hie a -
chy (en e p ise) and include hyb id, in e media e, o ms
o quasi-o ganisa ion and quasi-ma ke (Saccomandi,
1998; Ven u a, 2001). Williamson w o e ha “…[ }his
le el o analysis can be hough o as de eloping he c i e-
ia o and de ining he ‘e icien bounda ies’ o an ope -
a ing uni ” (Williamson, 1981: 549). Changes in ag icul-
u e and he u al con ex o ce he a m in o dynamic
app oaches o adap a ion ha widen o na ow hese ‘e i-
cien bounda ies’: inc easing i s eliance on he ma ke o
e-app op ia ing unc ions ha we e o me ly ex e nally
delega ed. This is he key poin o mul i- unc ionali y.
Indus ial economics heo y (o indus ial o ganiza-
ion as used in US) o e s se e al insigh s in o how a m
en e p ises may seek o educe ansac ion cos s (S igle ,
1968; Ti ole, 1991; Saccomandi, 1998; Pasini, 2013).
2.1. T ansac ion cos s and he make-o -buy ule
As a gued, neo-ins i u ional economics ocuses on
he a ia ions, o e ime and space, in he o ms o ma -
ke go e nance as a unc ion o he a ibu es/cha ac e -
is ics o ansac ions and hei cos s. T ansac ion cos s
can be de ined as “ he cos s incu ed by pa icipan s in
an exchange, in o de o ini ia e and comple e he ans-
ac ion. Such cos s occu o some deg ee in all eal-wo ld
ansac ions, and hus a ec all eal ma ke s. All pa ici-
pan s may incu ansac ion cos s, including bo h buye s
(in es o s) and selle s (hos s). T ansac ion cos s a e no
only he ou -o -pocke expendi u es necessi a ed, bu he
oppo uni y cos s – he los ime (delay) and esou ces
(e.g. money, manage ial a en ion) – ha could ha e been
3 In his sense i m o a m en e p ise eme ges o minimise ansac ion
cos s o o educe ma ke o exchange unce ain y (Knigh , 1921), i
me ges as a de ice o coo dina e o exploi he wo ke (Ma glin, 1974)
o i eme ges as an o ganisa ional equilib ium o a ba gaining p ocess
among co po a e ac o s (Aoki, 1984).
34 Pie luigi Milone
de o ed o he nex bes oppo uni y o ha pa icipan ”
(Dudek and Wiene , 1996: 15). T ansac ion cos s can
ake many o ms bu some o he main ypes a e include
sea ching, nego ia ing, app o ing, moni o ing, en o ce-
men , in o ma ion, unce ain y educ ion and insu ance.
They can e e o wo pe iods o ba gaining: he ex-an e
and he ex-pos , whe e in he o me he ocus in on
incen i e alignmen and e icien isk bea ing, in he la -
e o he go e nance o he con ac (Williamson, 2000).
Acco ding o Williamson (1985), he e a e h ee
main cha ac e is ics ha de e mine ansac ion cos s
and hei a ia ions: asse speci ici y; unce ain y, and;
he equency wi h which he exchange akes place.
Asse speci ici y is de ined as he alue o sunk in es -
men s. The unce ain y o a ansac ion can lead o e y
high cos s ha can jeopa dise he e y exis ence o he
ansac ion in he absence o ules and an o ganisa ion
o ensu e compliance. As a as equency is conce ned,
mo e equen ansac ions a e, he lowe he ansac-
ion cos pe ansac ion. Thus, ansac ion cos s can be
exp essed in he ollowing equa ion (Mena d, 2006):
TC = 〖 (AS,F,U)〗 (1)
TC: T ansac ion Cos s
AS: Speci ic Asse s: he highe he speci ici y, he highe
he ansac ion cos s
F: Exchange equency: he lowe he equency he
highe he ansac ion cos s
U: Unce ain y: highe le els o unce ain y ansla e in
highe ansac ion cos s
The possibili y o a ansac ion and i s o m o go -
e nance depend on he assessmen o he expec ed cos s,
which combine di e en ly o e ime, change a di e en
speeds and a e also dependen on o he ansac ions.
This gene a es a dynamic app oach o con inuous ead-
jus men o he o ms o go e nance and hei ecu si e
e olu ion o e ime gi es ise o he o ganisa ional inno-
a ion cycle o he en e p ise (Saccomandi, 1998). Figu e
1, below, shows how, depending on changes in he ma -
ke en i onmen , echnology and ansac ion cos s, he
en e p ise can adap by modi ying i s o ms o go e n-
ance, mo ing om he ma ke o he en e p ise and ice
e sa, passing h ough hyb id o ms.
The choice o one o m o e he o he is illus a -
ed by Williamson (1985) h ough an S- unc ion ha
depends on he deg ee o esou ce speci ici y k (o AS
– as men ioned abo e). The S- unc ion is ob ained as
he sum o he di e ences, be ween e ical in eg a ion
(hie a chy) and ma ke :
S(k) = ΔCT(k) + ΔCP(k) (2)
Time
Hie achy
Ma ke
Hib id
Fo m
Make
Buy
Fa m en e p ise
O ganisa ion
Fa m En e p ise
o ganisa ion
Fa m En e p ise
O ganisa ion
Fa m En e p ise
o ganisa ion
O ganiza ional
dinamics
coo dina ed by
en ep eneu
E ec o T ansac ion
cos di e ences
> 0
Ve sus ma ke
E ec o T ansac ion
cos di e ences
< 0
Ve sus Fa m
en e p ise
Space o "BUY" enla ging
equency ela ions wi h he
he ma ke
Space o "MAKE"
enla ging equency
ela ions in he i m
ela ional dynamics o
a m bounda ies linked
o he en ep eneu 's
capabili ies and eedom
in he use o a m
esou ces and ime
Timeline ha ma ks he o ganisa ional cycle o a m
en e p ise in ela ion o he ansac ion cos
A mosphe e o
go e nance
o ms o
ansac ions
Figu e 1. O ganisa ional Inno a ion cycle o i m.
35
The ole o a me s: go e ning he a m en e p ise, ma ke s, and ne wo ks
In his equa ion ΔCT(k) ep esen s he di e ence
be ween ansac ion cos s in he e ical in eg a ion con-
di ion (hie a chy) and hose in he ma ke condi ion4.
ΔCP(k) ep esen s he di e ence be ween p oduc ion
cos s in he e ical in eg a ion condi ion and hose in
he ma ke condi ion5. The p esen ed unc ion (2) de ines
he make-o -buy ule. The unc ion can ake on alues
highe han, less han o equal o ze o. Wi h alues o
S(k) > 0 he ma ke is mo e e icien han he en e p ise.
Con e sely, wi h S(k) <0 he en e p ise becomes he mo e
e icien solu ion (Nis icò, 2009: 362)6. In he i s case
we ha e he p e e ed buy condi ion, while in he sec-
ond case we ha e he p e e ed make condi ion. This ule
exp esses he dynamic na u e, o e ime, o he o ms o
go e nance o exchanges and he ela i e changes in ma -
ke condi ions and ansac ion cos s ha condi ion he
bounda ies o he i m and he use o he ma ke wi h
espec o he exchanges in ol ed.
The op imisa ion o he choice be ween make and
buy is subjec o a ious cons ain s. Some o hese a e
o an objec i e na u e, i.e. linked o he ins i u ional
con ex , public and p i a e, wi hin which he en e p ise
ope a es, and o he capaci y o hese ex e nal ac o s o
p o ide he a m wi h se ices. O he s a e o a mo e
subjec i e na u e and a e linked o he en ep eneu ’s
capaci ies and p opensi y o isk. The i s ype o con-
s ain esides mainly in he incomple eness o he
in o ma ion o which he en ep eneu has access (S i-
gle , 1961). The second ype o cons ain is ep esen ed
by he en ep eneu ’s inabili y o sc u inize all possible
al e na i es (Simon, 1947).
2.2. Agency and p ope y igh s
Following Emi baye and Mische (1998), I con-
side agency “as a empo ally embedded p ocess o social
engagemen , in o med by he pas (in i s habi ual aspec ),
bu also o ien ed owa ds he u u e (as a capaci y o
imagine al e na i e possibili ies) and owa ds he p esen
(as a capaci y o con ex ualise pas habi s and u u e p o-
jec s wi hin he con ingencies o he momen ) (p. 963).
The e o e, agency implies he capaci y o build on
he pas and o shape he u u e h ough he o ganiza-
ion and coo dina ion o he s a egic asse s o he en e -
p ise. This capaci y migh be embodied in he a me
who is con olling he a m’s asse s, pa icula ly hose
o e which he (o she) holds he owne ship o esidual
4 ΔCT(k) = TC in e ical in eg a ion – TC in he Ma ke .
5 ΔCP(k) = CP in e ical in eg a ion – CP in he ma ke .
6 Fo mo e de ails and a g aphic ep esen a ion o he model, see Wil-
liamson (1985: 182-188).
igh s. Howe e , his same capaci y migh be s ongly
condi ioned by, and e en shi owa ds ex e nal agencies
(Ploeg and Ma sden, 2008).
In his “ empo ally embedded p ocess” he p esen is
he ou come o p e ious choices, jus as i builds (pa ly
o comple ely) on he esou ces c ea ed in he pas . Pas
and p esen a e also linked h ough (collec i e) memo y,
expe ience, lea ning, c i ical judgemen s, he s eng h o
ou ine and, mos possibly, by pa h-dependency. A he
same ime, he p esen always con ains se e al possibili-
ies o de eloping di e en ajec o ies o cons uc he
u u e. He e, he choices ( he agency) o he a me a e,
again, s a egic. In sho : i is h ough agency ha pas ,
p esen and u u e a e in e connec ed and, in doing so,
agency i sel migh also ge s eng hened. This high-
ligh s he abili y and po en ial o i s ans e along gen-
e a ions o be ween di e en subjec s sa egua ding he
i m’s asse s.
Acco ding o Kabee (1999) “enhanced agency can
[also] be a mechanism o secu ing esou ces [….]. Fu -
he mo e, i is help ul o [conside ] ha agency can be
a icula ed h ough decision-making, ba gaining and
nego ia ion, decep ion and manipula ion, sub e sion and
esis ance. (In Fa nwo h e al., 2020: 275)”.
Agency clea ly un olds as a mul ile el ac i i y. I
shi s om he a m o he con ex in which i ope a es,
gi ing ise o u al ne wo ks in which di e en ac o s
c ea e empo al and ela ional ields: mul iple and o e -
lapping ways o o de ing ime and space. Thus, he di -
e en ac o s engage in, and ac i ely con ibu e o, se -
e al and p obably o e lapping ne wo ks.
Agency is s ongly linked o he concep o p op-
e y igh s o e esou ces, i.e. he exp ession o powe
o decide on he use o esou ces (o enego ia e esidu-
al igh s o e ime) o o exclude o he s om hei use
(Ha and Moo e, 1990; G ossman and Ha , 1986).
This ea u e is especially c ucial in ag icul u e
whe e he a me holds igh s o e a leas wo s a egic
esou ces: land and labou – his own labou as well as
he labou o amily membe s. These igh s can be lim-
i ed by ex e nal e ec s such as in es men s, policies,
egula ions, ins i u ions (ma ke , s a e, e c.). Fo exam-
ple, in he case o speci ic in es men s, ecou se o bank
c edi en ails a limi a ion o he igh o owne ship o e
he use o esou ces inso a as he choice o wha o do
is s ongly condi ioned by he need o epay he deb
c ea ed and by he speci ici y o he in es men s made,
he non-use o which would gene a e sunk cos s. In he
same way, adhe ence o ag o-en i onmen al policies7
7 Ag o-clima ic-en i onmen al policies ha e been es ablished wi hin he
amewo k o u al de elopmen inanced by he Eu opean S uc u al
Funds (Eu opean Ag icul u al Fund o Ru al De elopmen -EAFRD).
36 Pie luigi Milone
commi s en ep eneu s o speci ic ac i i ies and in es -
men s aimed a he policies’ objec i es gene a ing a lock-
in e ec in which he policy make in luences en ep e-
neu ial choices. Bo h sunk cos s and ex e nal p esc ip-
ion esul in incomple e con ac ual o ms ha gene -
a e high ansac ion cos s. The p esence o agency and
con ol o e esou ce p ope y igh s (o esidual igh s
in he case o incomple e con ac s), allow he en ep e-
neu o au onomously coo dina e and o ganise esou ce
use and minimise ansac ion cos s. The implemen a-
ion o economies o scope and/o ne wo k economies,
as well as he o ien a ion owa ds mul i unc ionali y and
mul i-p oduc en e p ises i well in his pa e n. I is
impo an o add ha making hese choices should in no
way be seen as an isola ed ac i i y o a omized indi idu-
als. Making such choices implies in ol ing o he ac o s,
sha ing expe iences, e c. In his espec Da é (1999;
2006) e e ed o G oupemen P o essionnel Local (GPLs).
Bu again: ex e nal condi ion and p esc ip ion is equally
possible. In his con ex he TATE8 concep de eloped by
Ben enu i (1975) s ill is mos ele an .
2.3. Ne wo king
The ac i i y o o ganizing, coo dina ing and de el-
oping he p oduc i e esou ces o a a m lead he en e-
p eneu o c ea e a se ies o ela ions and alliances ha
can be ho izon al and/o e ical: ho izon al when hey
conce n ela ions be ween a ms; e ical when hey
conce n ela ions be ween he a m and o he econom-
ic ac o s in he chain, including consume s (Ven u a,
2001). Bo h ho izon al and e ical ela ions exis wi hin
ins i u ional amewo ks (and hese migh s eng hen o
educe local speci ici y). Tha is, hey a e hemsel es pa
o he cons uc ion o he b oade social ela ions ha
egula e and cha ac e ise he e i o ial con ex in which
These policies p o ide o mul i-annual con ac s (up o a maximum
o 5 yea s) wi h ag o-clima ic-en i onmen al commi men s aimed a
s eng hening and sa egua ding he en i onmen and biodi e si y and
hei esilience o ongoing clima e change. Howe e , he con ac s a e,
by na u e, incomple e as i is ne e possible o o esee all he condi ions
and hey a e also subjec o con ols aimed a asce aining ha a m-
e s keep hei commi men s, hus limi ing hei igh o use hei own
esou ces. Moni o ing and en o cemen imply high ansac ion cos s,
while he incen i es lend hemsel es o oppo unis ic beha iou on he
pa o a me s.
8 TATE is an ac onym o he Technological Adminis a i e Task En i-
onmen . I e e s o he echnological and adminis a i e con ex o he
a m, which is cons i u ed by a se ies o en i ies. The TATE ep esen s
he p o essionally ele an en i onmen o he a me . Such en i on-
men p o ides he a me wi h a p e-de ined ole. The ole e e s o he
complex o beha iou s o unc ions ha a e conside ed socially and
echnically app op ia e o a pe son ha occupies a ce ain posi ion
wi hin a ce ain social con ex (Ben enu i, 1975).
he en e p ise ope a es. Acco ding o Ven u a (2001),
bo h ho izon al and e ical ela ions ha e wo dimen-
sions: he epe i i eness o ela ions and he exchange o
in o ma ion and knowledge ha akes place in o mally
and wi hou speci ic cos s.
The p ocess o ansmi ing in o ma ion and expe i-
ence allows he cons uc ion o common knowledge and
he epe i i eness o he ela ionships means ha oppo -
unis ic beha iou , ha would lead o hei e mina ion,
is p e en ed. Thus, epu a ion is buil and becomes a
key elemen o he con inui y o he ela ionship o e
ime. In his espec , one mus conside ha u al a eas
ha e become places o bo h p oduc ion and consump-
ion (Ma sden e al., 1993). Consequen ly, di e en ne -
wo ks eme ge9, he unc ions o which a e g adually
di e en ia ed and segmen ed, especially in ela ion o
lows o capi al, in o ma ion, people, and goods (Mu -
doch, 2006). As a gued be o e, each ne wo k consis -
en ly connec s pas , p esen and u u e in a pa icula
way ha o en con as s sha ply wi h ha o o he ne -
wo ks (Ploeg, 2003: 6). Taken oge he , hese di e en
ne wo ks compose a speci ic (socio-economic) cons el-
la ion ha migh be unde s ood as a hyb id pa e n
(Milone and Ven u a, 2010) capable o building cohe -
ence be ween he dimensions ha con ibu e o he sus-
ainable go e nance o complexi y in u al a eas. In he
li e a u e such a pa e n is mos ly e e ed o as he u al
web (Ploeg and Ma sden, 2008; Kanemasu e al., 2010;
Ho lings and Ma sden, 2010; Messely e al., 2013; Guin-
joan e al., 2016; Rashid e al., 2020; Adai e al., 2023).
A well- unc ioning u al web can esul in locally spe-
ci ic and p omising solu ions o he main enance and
de elopmen o u al a eas and hei economies and an
enhanced quali y o li e and a ac i eness o hese same
u al a eas.
Being pa o a u al web can become an impo an
mechanism o su i al. The web can become a space
whe e ma e ial and imma e ial esou ces a e exchanged
(Cook and Whi meye , 2003). Being pa o a u al web,
can help imp o e one’s posi ion in e ms o gaining
au onomy o educing dependence on o he s o access
o esou ces. Wi hin, and h ough, his u al web, he
ag icul u al en ep eneu builds and enla ges his o he
cogni i e capaci ies, skills and au onomy. Tha is, he o
she uses he web o build iden i y, space o manoeu e,
and speci ic alliances – and by doing so he o she con-
ibu es o changing he en i onmen . In sho : he ne -
wo k concep unde pins and highligh s ac o s’ capaci y
o coo dina e and o ganise a m esou ces, c ea e alli-
ances ou side he a m, and minimise ansac ion cos s.
9 Fo a mo e de ailed discussion o he di e en ypes o ne wo ks see
Ven u a and Milone, 2010.
37
The ole o a me s: go e ning he a m en e p ise, ma ke s, and ne wo ks
I will u he illus a e hese poin s h ough a case s udy
(below).
3. THE SHEPHERDS OF ABRUZZO
Mo e han 25 yea s ago, oge he wi h Flaminia
Ven u a, I s a ed o documen he de elopmen al a-
jec o y o an emblema ic expe ience in he Ab uzzo: he
a ms o G ego io and Nunzio which, had al eady been
es ablished o 25 yea s. The o e all 50 yea pe iod o e s
an amazing insigh in o he dynamics o in e linking
pas , p esen and u u e h ough agency and ne wo k
de elopmen . A he same ime hei pa icula expe i-
ence is somewha enigma ic: i shows how a p ospe ous
and sel -p opelling p ocess o de elopmen is possible
e en unde ha sh and ma ginal condi ions.
3.1. The pas
In 1975, when G ego io s a ed his a m, his only
ce ain y was ha he did no wan o ollow his a he ’s
decision o go o he semina y in o de o become a
p ies . His scan sa ings only allowed him o buy a small
lock o 200 sheep. Apa om ha he could coun on
he knowledge o ano he shephe d, Nunzio, on how o
o ganize he ding in communal pas u e lands. A ha
ime building a new a m in he moun ains o he Ab u-
zzo Na ional Pa k in Scanno seemed o be as impossible
as he oic. Ye his d eam o li ing in, and wo king wi h,
na u e d o e him o wa d. Rega dless o e e y hing, in
he i s 25 yea s G ego io succeeded in inc easing his
numbe o sheep, building he equi ed a m s uc u es
(s ables, shel e s, and small uni s o p ocessing mea
and milk) and buying some addi ional land. In 2000,
he a m had mo e han 1,500 dai y and mea sheep and
o e ed ull- ime employmen o 5 amily membe s and
o he ull- ime wo ke s. The a m was sel -p o isioning
in e ms o eed, odde and he ep oduc ion o he ani-
mals. S ep-by-s ep i s de elopmen had a oided aking
on la ge deb s, whils con ac s wi h small and medium
en e p ises o ag icul u al machine y assis ed in de el-
oping small-scale on- a m uni s o p ocessing cheese
and mea . Thus, ne wo king helped o cons uc addi-
ional au onomy. In u n, he on- a m p oduc ion o
cheese igge ed he ques ion on how o sell i in he bes
possible way.
The yea 2000 ep esen ed, in a way, an impo an
u ning poin . A e his g adua ion om seconda y
school, his 18-yea -old nephew Dino decided o ake he
en ep eneu ial ou e wi h his uncle G ego io. This, o e
ime, led o impo an changes in he a m’s o ganiza-
ional s uc u e and bounda ies. The op ion o associa -
ing wi h a coope a i e o la ge-scale cheese p oduc ion
was a oided – e en hough conside able public money
was a ailable. Ins ead, G ego io and Dino decided o
u he de elop hei own small-scale p ocessing uni s
and o ex end he baske o p oduc s. Bu i u ned ou
o be inc easingly di icul o sell hese p oduc s in he
local ma ke s.
Thus, hey aced a con ex cha ac e ized by:
1. low numbe o a ms combined wi h low numbe s o
consume s;
2. a high speci ici y o esou ces and p oduc s;
3. an o e ly wide ange o p oduc s and ma ke condi-
ions ha we e unsui able o alloca ing hese p od-
uc s co ec ly;
4. high cos s o o mally ce i ica e he p oduc s in
o de o assu e consume s o hei quali y, o igin
and genuine na u e.
As a consequence (and in line wi h Williamson’s he-
o y), he ansac ion cos s linked wi h using his (local)
ma ke we e a oo high and his spu ed G ego io o
explo e al e na i e solu ions aimed a minimizing he
ansac ion cos . In e es ingly, he solu ion was ound in
es ablishing link wi h o he local ma ke s cha ac e ized
by o he p e e ences and possibili ies. G ego io unde -
ook long jou neys o a ious I alian piazze in No he n
and Cen al I aly ( he piazza is he physical, and adi-
ional, squa e whe e p oduc s a e di ec ly exchanged
a leas once a week). In hese squa es, especially in he
No h, G ego io encoun e ed consume s seeking high
quali y and dis inc ion and, a he same ime, willing
o pay good p ices. G ego io inc easingly succeeded in
mee ing hese expec a ions and o ind new ma ke s o
his e e -expanding p oduc ange. Thus, he c ea ed ep-
u a ion and he e o e no longe needed o mal ce i ica-
ion. The cos s o eaching hese squa es we e minimized
h ough he use o amily labou and, especially, h ough
an alliance wi h Nunzio wi h whom anspo and ma -
ke ing cos s we e sha ed. O e ime, G ego io’s name
became synonymous wi h quali y, sus ainabili y, ai -
ness and c a manship. Thanks o his, he a m di e si-
ied u he owa ds se ices wi h he opening o ag o-
ou is ic acili ies and a a m shop. G ego io also c ea ed
a local ne wo k o shephe ds, which o e ime expanded
wi h he en y o young people who u he enla ged he
ange o p oduc s b ough o he ma ke .
E en by he yea 2000 he economic ele ance o he
chosen ajec o y u ned ou o be qui e p omising10:
10 Fo a comple e discussion and in-dep h analysis o alues, please
e e o he PhD book (2004) and publica ion Ag icul u e in T ansi ion
(Milone, 2009).
38 Pie luigi Milone
1. The quan i y o milk pe ewe was only 25% o he
milk yield ob ained in specialized, ma ke -o ien ed
a ms, while he numbe o amily labou hou s pe
ewe was highe .
2. On he o he hand, eeding cos s we e lowe due o
he use o eed and pas u es on he a m.
3. Taken oge he his esul ed in a e enue pe ewe
ha was 42% highe han he one ob ained in sheep
a ms specialized only in milk p oduc ion.
4. The inal p o i pe ewe was mo e han double ha
o specialized dai y and ma ke -o ien ed a ms ( u -
he de ails a e p esen ed in Milone, 2009).
3.2. The p esen
Today G ego io is no longe wi h us, bu his s o y
con inues – due o he cons uc ed speci ici y and he
many ne wo ks in which he a m is embedded. Dino
has con inued o ope a e acco ding o he sc ip build
in o he a m. In e ms o he numbe o animals he
a m emained i ually unchanged wi h 1,500 sheep.
Only he numbe o cows has been inc eased sligh ly:
he he d now numbe s 40 and hey a e well suppo ed
by he a m’s land and pas u es. I has become a heal hy
and well- unc ioning amily a m whe e he p inciples
o p oduc quali y, biodi e si y and c a ha e no only
emained in ac bu , ha e been ac i ely de eloped. O e
he yea s, in es men s ha e been made o imp o e p od-
uc quali y and animal wel a e. The s ables ha e been
enla ged o p o ide mo e space o he animals. A new
uni was buil o p ocessing milk (cheese and moz-
za ella) and mea (bo h esh and p ocessed). The am-
ily labou o ce used in he a ious a m ac i i ies now
numbe s six ull- ime equi alen s ( e) – ha is one
mo e han in 2000. In addi ion, 3 mo e amily uni s a e
in ol ed on pa - ime basis. The numbe o non- am-
ily wo ke s inc eased by e. A new b eed o sheep was
in oduced o e he yea s – his new b eed is e y ap
o pas u ing bu gi es a somewha highe yield pe ewe
(now a 35% o yield le els o he specialized and la ge-
scale sheep a ms ha s ongly push yields upwa ds by
using high doses o concen a es). Cheese p oduc ion
om cow’s milk inc eased due o he inc ease in he
numbe o ca le o he Pezza a Rossa b eed, a b eed ha
has a good milk yield wi h a high con en o a and p o-
ein. Bu he e as well he yield pe milking is a lowe
han in specialized dai y a ms. In spi e o his, howe e ,
e enues pe animal emain well abo e hose eco ded
o specialized a ms. The die emains almos exclu-
si ely based on pas u es and moun ain hay. The only
concen a es used a e p oduced on he a m i sel ( om
ce eals). The o ien a ion o a m p ac ices is o ganic.
The a m’s p oduc ange has inc eased: he e a e
now abou 40 ypes o p oduc s a ailable as well as se -
ices such as home-deli e ies, es au an and ag o- ou -
ism. The ma ke s ha e inc eased whils sa egua ding
he his o ical ones. The p oduc s a e all sold di ec ly by
he a m o (1) specialized shops in Rome and along he
Ad ia ic coas , (2) high quali y es au an s wi h dis in-
guished che s, (3) in he a m shop and (4) a ade ai s
(piazze) in se e al municipali ies in No he n, Cen al
and Sou he n I aly. In 2021, Dino decided o inc ease
p ices by 25 pe cen as a esul o s ong inc eases in
bo h aw ma e ials and ene gy p oduc s. This inc ease
did no educe sales a all. Consume s and cus ome s,
including his o ic ones, con inued o buy – hey unde -
s ood and ecognized Dino’s need in ace o inc eased
cos s, especially ene gy, and o sa egua d he con inui y
o he a m. The bond o us based on epu a ion hus
helped o main ain and e en s eng hen he ne wo ks
ha link p oduce s, clien s and consume s. This allowed
o an inc eased u no e and mo e liquidi y – hus ena-
bling he en ep eneu o main ain con ol o e o gani-
za ional choices.
The ollowing able compa es he p oduc i e and
economic esul s ealized in 2000 and 2023 – i syn he-
sizes he ajec o y ollowed by Dino who buil on he
ea lie wo k o G ego io:
1. Re enues pe head, in he case o bo h sheep and
cows, ha e been inc eased. The inc eases a e linked
o wo elemen s. Fi s , he sale p ices o p ocessed
p oduc s ha allow o a highe emune a ion pe
li e o milk (mo e han double he ma ke p ice o
non-p ocessed milk). Second, he slow bu pe sis en
inc ease in quan i ies o milk p oduced pe animal;
hese emain a below he le el o ealized in in en-
si e a ming, bu s ill o a highe milk quali y.
2. The a io o amily and non- amily labou emained
unchanged bu he o al amoun o employed labou
inc eased.
3. The o e all cos s pe animal inc eased by abou 25%.
This is especially due o he cos s o mea p ocessing
(which in ol es conside able ene gy use).
4. Despi e hese cos inc eases, he inal p o i
inc eased – bo h o sheep and cows.
I is in e es ing o no e ha in 2021 he a e age spe-
cialised dai y cow he d in he No h o I aly epo ed
a loss o EUR 6.96/100 kg o milk, despi e he ac ha
he yield pe head had inc eased o e he pas yea s by
5% (Menghi and Ru a o, 2021). This equals a loss pe
animal o 708 Eu o pe head. This is a ema kable di -
e ence compa ed o he p o i made pe cow on Dino’s
a m, which s ands a + 1,319 eu o. This di e ence con-
