Social capital in transactions: The role of economic and social trust in the specialty beef production system in Brazil

Abstract

This study aims to understand the social capital inherent in agents and the role of social and economic trust in transactions between beef cattle producers and slaughtering cooperatives in the specialty beef production system in Paraná state, Brazil. This qualitative research involved 31 semi-structured interviews with beef cattle producers, cooperatives, and key agents. Results revealed that social capital, comprising networks and informal norms, favors the condition of trust, enabling the construction of a hybrid governance structure under a complex institutional environment. Social and economic trust between agents facilitates transactions, reduces behavioral and market uncertainties, enables ex-post adaptations, and consequently, reduces monitoring costs and transaction costs. Trust based on social aspects, i.e., social trust, was more relevant for the construction of arrangements, while trust based on economic aspects, i.e., economic trust, had a greater impact on the continuity of arrangements. This reveals that looking at only one of them is not enough to understand contractual arrangements. Thus, this study highlights that unfolding the concept of trust and investigating whether it comes from an economic or social basis is important to understand the complexity of such arrangements, which may influence specialty beef production system design and coordination efficiency.