Quality Management as a Resource of Transaction Costs Reduction: Empirical Inputs from the Fruit International Trade

Abstract

Fruit is a highly perishable product, suitable to biological, physical and chemical hazards. All these risks are higher when fruit are transacted in international trade. In this case fruit suppliers and fruit buyers are exposed to elevated transaction costs, since both sides need to deal with questions like product specifications, post-harvest processing and logistics. Quality management can be employed in order to organize all production, processing and logistics operations. In this paper the aim was to verify if producers, exporters and importers of fruit are making use of quality management concepts in order to reduce risks and transaction costs. As investigation method, semi-structured interviews were conducted in Brazil and UK. The content of the semi-structured interview questions was determined based on the literature review of TCE, the international fruit trade and quality management. The questions were carefully chosen to reveal the factors which are determinant for the configuration of transaction arrangements in the fruit trade. The topics investigated were: The technical activities performed by the organisations operating in the fruit commerce; The main types of commercial clients (partners) of the firm; The nature of the market type relations maintained by the firm; The level of quality problems perceived by the firm; and The quality management strategies adopted by the firm. These topics served as the foundation for the elaboration of the main questions and the probe questions. They also gave the direction, for possible follow-up questions. The results of the interviews support the idea that quality consciousness is fundamental in the fruit trade. The majority of companies approached in the research were shown not to perceive as a problem, the several parameters that affect the quality of the final product. In other words, the results suggest that firms that are incapable of handling quality issues satisfactorily find little place in the fruit trade. Quality management concepts are commonly employed in order to guarantee product specifications and rationality in the operation processes and by doing so, it contributes to reduce transactions costs between the trading parties.