Developments and Development Directions of Electronic Trade Platforms in US and European Agri-Food Markets: Impact on Sector Organization

M. Fritz, et al. / International Food and Agribusiness Management Review Volume 7, Issue 1, 2004

Consequences from Platform Cooperation Initiatives

Electronic trade platforms in the agri-food enter cooperation initiatives with other
agri-food platforms to

■ jointly develop standards and to

■ share trading features,

which are both prerequisites for platform interoperability (see section 4). In
principle, cooperation initiatives between platforms represent strategic alliances.
Strategic alliances generally serve for providing advantages and efficiency benefits
to participating organizations and focus, e.g., on joint research and development
activities or know-how transfer and result in cost and time advantages and
decreased competition between allied companies (e.g., Devlin, Bleakley, 1988).

Cooperation Initiatives for the Joint Development ofStandards

Cooperation initiatives between agri-food platforms for the joint development of
standards focus on

■ common product description standards and

■ transaction technology rules
and may be considered as strategic alliances between platforms contributing to
achieving an agreement on common standards.

Cooperations for the Joint Development of Product Description Standards

Cooperation initiatives for the development of product description standards are
strategic alliances among platforms belonging to the “Large consortia” model.
“Large consortia” platforms are backed by important and powerful agri-food
industry players and represent in themselves strategic alliances for the joint and
therefore more efficient development of e-commerce infrastructures. Cooperations
among “Large consortia” platforms for the development of product description
standards may be seen as “twofold strategic alliances” between agri-food players
with platforms as mediators, which put the development of sector-wide product
description standards on a broad basis. This broad basis allows for the acceptance
and implementation of product description standards in the agri-food sector. As a
consequence, the enforcement of product description standards may be anticipated
for the entire agri-food sector and may even be independent from the actual use of
electronic trade platforms. Product description standards reduce transaction costs
and therefore may impact the sector’s organization. In principle, this situation of
standard development and introduction, which is initiated and backed by important
industry players, is similar to the development and introduction of former EDI
standards that followed the principle market power permits standard enforcement
(e.g., Webster, 1995).

© 2004 International Food and Agribusiness Management Association (IAMA). All rights reserved.

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