Small Farms building Global Brands

through Social Networks

Seminaire International 2 – Indications Geographiques 16-19 December 2010, Antalya, Turkey

 

 

Dr. Domenico DentoniUniversity of Adelaide, now at Wageningen University

Prof. Thomas Reardon Michigan State University (USA)

 

The case of Italian Extra-Virgin Olive Oil Producers  

Introduction

It is crucial to build Collective GI Reputation & Individual Actor’s Reputation jointly in the marketplace:

• An effective collective action builds GI reputation• BUT individual actors have to link with customers and build

market channels (locally or globally)• With individual reputation, small actors gain

sustainable competitive advantage in their niche market -> Social & Environmental benefits

Problem: Small Farms’ marketing constrained by:• High costs, limited human & financial resources

Introduction

In this study we explored:Opportunity for Small Farms to Build “Global Brands”:• Building a Net of Social Relationships (i.e. Network) with

“High-Status” Third-Party Actors

• Signal of Quality which goes much beyond the GI (in terms of consumer value and buyers’ price) and

May be Financially CheapMay be Difficult to Imitate

Grounded Theory

Data TheoryAg Economics• Third-Party Certifications & Retail Transformation (Reardon)

Sociology• Status (Podolny 1993, 1994)• Social Ties (Granovetter 1985; Uzzi 1997)

Marketing• Familiarity with Product• Consumer Evaluation of Intangible Attributes of the Product

Primary Data from 34 Small Producers, 14 Importers and 4 Deli Store Managers in US

Open Interviews:• Define the problem• Identify the Variables

Semi-structured Interviews:• Measure the Variables

Instrumental Case Study

Italian Small Extra-Virgin Olive Oil Producers• < 10 employees, 500-50,000 liters bottled• 24 exporters, 10 domestic (but actively attempting to export)• Purposive Sampling

USA

Europe

Asia & Oceania

Social Ties with “High Status” Actors

US Consumers

US Distributors

Importers

Italian Producers

Web&BlogsPublic Ag Tr. Guides

NGOsTr. GuidesEventsJournalistsChefs Personal

Tasters

Journalists Personal

Transaction, product flow Social Tie, info flow

Social Ties: Effects & Drivers

Direct effects on Third-Party Endorsements• 18 out of 24 with endorsements had social ties (75%)

Ultimately, effects on Brand Equity• Choice: all exports started with third-party endorsements (100%)• Gate Price Premium: 17USD vs. 11USD (controlling for acidity)• Brand Associations & Perceived Quality: endorsement is

used to communicate with final consumers

Drivers of Social Ties:• 7 out of 18 based had social ties as path-dependence (40%) • 11 out 18 developed social ties with clear market purpose (60%)

– Slow Food Presidia, Tasters, Chefs, Journalists, Consultants

The Proposed Model: Effects

“High-Status” Third-Party

Endorsement of Small Farm’s

Brand

Small Farm’s Global

Brand Equity

Consumers’ Familiarity

with Product

P1

P2

Consumers’ Evaluation of

Credence Attributes

P3

The Proposed Model: Drivers

Small Farm’s Social Ties with “High-Status” Third-Parties

“High-Status” Third-Party

Endorsement of Small Farm’s

Brand

Small Farm’s Initial Status

P4

P5

P6International Market

Information

!Small Farm’s Capabilities

Managerial & Policy Implications

Small Farms’ Owners & Managers:• Opportunity for Sustainable Competitive Advantage• Access & Use of International Market InformationPublic & Public-Private Organizations:• If “High-Status”, then endorse products directly, otherwise no!• Provide market Information on

– International Markets– “High Status” Actors as potential Endorsers

• Provide Training on How to use Market Information– Develop Individual Actors’ Entrepreneurship, Market –Sensing

Capability

Teşekkürler! We look forward to keep discussing with you on these issues.

Contact:Domenico Dentoni, domenico.dentoni@adelaide.edu.au

Full paper referenceDentoni, D. and Reardon, T. (2010)

“Small Farms Building Global Brands through Social Networks” Journal of

Chain and Network Science, Dec 2010 (In Press).