Culture and relational contracts in Brazil´s agribusiness cooperatives

Brazil’s collectivistic cultural orientation influences the contractual design of producer-owned and controlled organizations in agribusiness. The institutional environment consisting of an inflexible legal system, bureaucracy, and hierarchy path dependence also creates a particular contractual design in cooperatives. It is possible to observe more informal and relational behavior in cooperative organizations in Brazil than in cooperatives in others countries, like those in North America, that exhibit more formal contractual relations. This paper tries to explain why informal and relational contracts occur and searches for logic on informal contracts in producer-owned and controlled organizations in Brazil’s collectivist society, using a survey analysis to explain the importance of social relations and participation in cooperatives. The work concludes that informal and relational contracts can minimize transactions costs and, in spite of organizational costs of influence behavior, influence rights for using residual control rights can be an important tool for informal and relational contracts logic in organizations with “rights of cooperation” in collectivist societies.