Organizational Restrictions for the Sustainable Development of the Artsianal Cheese Business in Argentina : The Case of Sheep Cheese

The stagnation and presumable setback of the sheep's milk activity in Argentina has usually been explained in terms of productive and reproductive aspects and, only recently, of organizational aspects. The organizational design of this business (actors and their relations), a possible cause of the low sustainability of artisan-type businesses, has not been properly explored in Argentina or worldwide. The object of this study is to identify and describe the organizational aspects that might be restricting the sustained development of the sheep cheese business in Argentina, in spite of the opportunities offered by the market. The methodology used was phenomenological epistemology, combining qualitative and quantitative research. A survey was conducted of 19 ovine dairy farms in the province of Buenos Aires, selected on the basis of a random sample stratified by production scale. The survey was analyzed with PC-ORD software (McCune and Meford, 1999) with multivariate analysis techniques – Principal Component Analysis (PCA). Based on the PCA, the first two eigenvalues were retained as they accumulated 59.6% of the total variance. Two principal components were identified: F1 (36.4%), interpreted as “Governance Structures” and F2 (26.14%), interpreted as “Specialization Level”. In T2 (Producer – Industry Transaction), the points of conflict revolved around the quality of the raw material, its price, the payment terms and the difficulty to change buyers for the milk, while in T3 (Industry – Distribution Transaction), these revolved around the quality of the raw material, the marketed volume and the product's supply regularity. Vertical integration (in T2 and T3) prevails as the governance structure selected to solve transactions independently from production scale. In T3, the interests of industry and distribution were asymmetrical in relation to asset specificity. Elevated transaction costs, derived from opportunism and the bounded rationality of the actors and enhanced by asymmetrical information and isolated efforts, raised the levels of conflict. This had a negative effect on specialization, competitiveness and, therefore, on the sustainability of the businesses