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Agroholdings, turbulence, and resilience: The case of Ukraine

September 2019
Journal of East European Management Studies 24(3):484-496

DOI:10.5771/0949-6181-2019-3-484

Authors:

Taras Gagalyuk

Leibniz Institute of Agricultural Development in Transition Economies

Vladislav Valentinov

Leibniz Institute of Agricultural Development in Transition Economies

The agricultural sector in transitional and emerging market economies is marked by the prominence of agroholdings, i.e., conglomerates of agricultural enterprises controlling up to hundreds of thousands of hectares of farmland. Drawing on secondary information from Ukraine, this paper explores how institutional turbulence gives rise to agroholdings. The key hypothesis is that membership in an agroholding presents a strategy for agricultural enterprises to remain resilient in the midst of the severe institutional turbulence characteristic of a transitional economy. The focus on resilience provides a tentative explanation of why the remarkable growth of agroholdings fails to be accompanied by evidence of their superior efficiency.

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JEEMS

Journal of East European Management Studies

Table of Contents

Articles

Research Notes

Taras Gagalyuk, Vladislav Valentinov

Agroholdings, turbulence, and resilience: The case of Ukraine......................... 373

Number 3 | 2019

Volume 24

Editorial Committee: Thomas Steger (Editor-in-chief), University of Regensburg | Rainhart Lang,

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ISSN 0949-6181

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Agroholdings, turbulence, and resilience:

The case of Ukraine*

Taras Gagalyuk, Vladislav Valentinov**

Abstract

The agricultural sector in transitional and emerging market economies is marked by the

prominence of agroholdings, i.e., conglomerates of agricultural enterprises controlling up to

hundreds of thousands of hectares of farmland. Drawing on secondary information from

Ukraine, this paper explores how institutional turbulence gives rise to agroholdings. The key

hypothesis is that membership in an agroholding presents a strategy for agricultural enterpris-

es to remain resilient in the midst of the severe institutional turbulence characteristic of a tran-

sitional economy. The focus on resilience provides a tentative explanation of why the remark-

able growth of agroholdings fails to be accompanied by evidence of their superior efficiency.

Zusammenfassung

Der Agrarsektor in Transformations- und Schwellenländern ist durch die zunehmende Verbre-

itung sogenannter Agroholdings gekennzeichnet. Hierbei handelt es sich um Konglomerate

von Agrarunternehmen, die hunderte bzw. tausende Hektar Ackerland bewirtschaften. Auf der

Grundlage von Sekundärinformationen aus der Ukraine beschreibt der vorliegende Aufsatz,

wie institutionelle Turbulenz zur Entstehung von Agroholdings beiträgt. Dabei wird die Kern-

hypothese begründet, dass die Mitgliedschaft in einem Agroholding eine Strategie von

Agrarunternehmen darstellt, die Widerstandsfähigkeit in einem für Transformationsländer

typischen turbulenten institutionellen Umfeld aufrechtzuerhalten. Der Fokus auf den Aspekt

Widerstandfähigkeit kann erklären, warum das enorme Wachstum von Agroholdings trotz

weniger Nachweise zu ihrer höheren Effizienz fortfährt.

Keywords: agroholdings, environmental turbulence, firm growth, resilience, transition econo-

JEL: L220, P320, Q120

Introduction

The development of so-called agroholdings is a well-documented phenomenon

for a number of transitional and emerging market economies (Chaddad/Valenti-

nov 2017; Visser et al. 2012). Agroholdings are large-scale farming entities typi-

* Received: 02.03.2018, accepted: 25.10.2018, 2 revisions.

** Gagalyuk, Taras, Dr., Research Associate, Department of Structural Development of Farms

and Rural Areas, Leibniz Institute of Agricultural Development in Transition Economies

(IAMO), Halle (Saale), Germany; gagalyuk @ iamo .de. Research interests: strategic man-

agement, agricultural economics, entrepreneurial strategies and organization of farms in

transition and emerging market economies.

Valentinov, Vladislav, Prof. Dr., Research Associate, Department of Structural Develop-

ment of Farms and Rural Areas, Leibniz Institute of Agricultural Development in Transi-

tion Economies (IAMO), Halle (Saale), Germany; valentinov@iamo.de. Research interests:

institutional economics, systems theory, economics of non-profit organizations, and rural

development in transition and emerging market economies.

Agroholdings, turbulence, and resilience: The case of Ukraine 373

JEEMS, 24 (3) 2019, 373 – 385 DOI: 10.5771/0949-6181-2019-3-373

cally consisting of a mother company that holds a controlling stake in dozens or

hundreds of corporate farms and manages several dozens or hundreds of thou-

sands of hectares of farmland (Hermans et al. 2017). Along with specialisation

in crop production, agroholdings include elements of vertical integration with

multiple stages of the agri-food supply chain, such as animal production, distri-

bution of inputs, logistics, exports, and food manufacturing (Matyukha et al.

2015). For the most part, the development of these large enterprises is possible

due to the inflow of excess capital from other industries that allows for the

growth in land and assets through the acquisition of other, non-holding enter-

prises (Petrick et al. 2013).

A surprising fact, however, is that agroholdings continue expanding despite be-

ing generally inefficient. Agroholdings are reported to suffer from disadvanta-

geous cost structures caused by their propensity to employ more labour and

spend more on production inputs than non-holdings (Lapa et al. 2015; Petrick

2017). Agroholdings’ ability to outperform other farms due to lower susceptibil-

ity to transaction cost problems is questionable as well (Lapa et al. 2015). The

bottom line is that, on average, farms in agroholdings do not seem to be more

profitable or efficient than those not in agroholdings, and therefore, the growing

membership base of agroholdings challenges traditional views on the nature of

firm growth. Conventional wisdom indicates that firm growth strategy is driven

by efficiency considerations, i.e., firms are assumed to decide whether to grow

organically, by the use of their own available capacities, or through mergers and

acquisitions based on the efficiency gains or losses each of the modes of growth

entails (Williamson 1985; Thompson and Valentinov 2017). However, the case

of agroholdings’ growth demonstrates that relatively efficient enterprises delib-

erately forego the possibility to grow on their own, instead choosing to join less

efficient, slow-growing structures. This firm behaviour casts doubt on the validi-

ty of the efficiency rationale for growth.

Most studies that compare the efficiency of agroholdings and non-holding farms

in transitional economies fail to be comprehensive because the ongoing activity

of agroholdings occurs amidst underdeveloped markets for capital and land

(Gagalyuk 2017). Coupled with inadequate first- and second-order institutions

(Koester 2005; Sutela 2012), these market imperfections shape the highly

volatile business environment that renders market functioning unpredictable and

may undermine the ability of traditional types of farming to survive. The central

contention of the present paper is that, given the high volatility of the business

environment, it is most likely resilience, rather than economic efficiency, that

primarily determines the farms’ choice to grow through membership in an agro-

holding.

The concept of resilience (Pal et al. 2014; Gunasekaran et al. 2015) has recently

gained currency among those organisational theorists who have become keenly

374 Taras Gagalyuk, Vladislav Valentinov

aware of the radical influence of the external environment on organisational sys-

tems. According to this concept, a resilient organisation possesses the capability

to maintain critical variables and the stability of an internal environment despite

turbulent external environmental conditions (Burnard/Bhamra 2011: 5583). In

the strategic management literature, environmental turbulence is understood as a

measure of change in the components of a firm’s environment (Smart/Vertinsky

1984: 200) or volatility and difficult-to-predict discontinuities in an environment

(Haleblian/Finkelstein 1993: 845). The burgeoning literature on organisational

resilience addresses the sources of environmental turbulence, such as a disrup-

tive market and technological changes (Fainschmidt et al. 2016), as well as natu-

ral and man-made disasters (Rose/Krausmann 2013). However, organisational

resilience scholarship has rarely addressed the institutional turbulence that origi-

nates from the institutional foundation of the markets itself (Gagalyuk et al.

2018), and it is this turbulence that renders the efficiency rationale for firm be-

haviour so precarious.

With particular reference to the transitional context characterised by underdevel-

oped markets and poor institutions, this paper addresses the research question of

how institutional turbulence gives rise to agroholdings. In doing so, the paper

extends the existing organisational resilience theory by showing that environ-

mental turbulence arises not only from market disruptions, technological discon-

tinuities and natural or man-made catastrophic events but also from institutional

shortcomings. In line with the literature on organisational resilience, this argu-

ment demonstrates that firm growth in turbulent environments is no less about

resilience than it is about efficiency.

Drawing on the recent history of Ukrainian agroholdings, the paper demon-

strates that firm growth in a turbulent environment, which is marked by perva-

sive institutional problems, drives firms’ preferences for resilience over efficien-

cy. The following section highlights some key facts about agroholdings in

Ukraine. The subsequent section discusses the rise of agroholdings as a reaction

to institutional turbulence. Conclusions and implications for further research fol-

low.

The development of agroholdings in Ukraine

The result of structural change in Ukrainian agriculture so far is that some 80

agroholdings, whose sizes exceed 10,000 hectares each, operate approximately

six million hectares or approximately 30% of total farmland in the use of corpo-

rate farms (Figure 1). To exemplify, the two largest agroholdings, Ukrlandfarm-

ing and Kernel, manage slightly more than 600,000 hectares each (Lati-

fundist.com 2017). Additionally, Ukrlandfarming is the largest industrial egg

producer in Eurasia (Ukrlandfarming 2017), while Kernel is the number one

sunflower oil exporter in the world (Kernel 2016). The example of these two

Agroholdings, turbulence, and resilience: The case of Ukraine 375

agroholdings suggests that, apart from expansion in the sector of primary agri-

culture, agroholdings often integrate enterprises from different upstream and

downstream stages of the agri-food supply.

Farmland area operated by agroholdings in Ukraine

1,70 2,73 3,09 4,00 5,10 5,60 6,04 5,85

8,1

12,1 13,8

18,1

23,1

25,3

27,4 27,9

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

2007 2008 2009 2010 2011 2012 2013 2014

Land operated by agroholdings, million hectares (left axis)

Share of land used by corporate farms, % (right axis)

Source: UCAB (2015).

In part, agroholdings were able to proliferate due to the inflow of excess capital

from non-agricultural sectors (Petrick et al. 2013; Gagalyuk 2017). Additionally,

this expansion was driven by some important market and political developments

throughout the 2000 s. First, large-scale technology- and knowledge-based farm-

ing was instigated by the growing global demand for food, fibre, and energy

(Hermans et al. 2017). Second, the orientation of public policies towards self-

sufficiency in the food supply, the growth of agricultural exports, and the dereg-

ulation of domestic markets favoured large-scale industrialised agriculture over

traditional family farming (Matyukha et al. 2015).

Earlier studies particularly emphasised the role of the public sector in the devel-

opment of agroholdings. Vast tax exemptions and heavy subsidisation gave a

boost to the continuous scale-up of large forms of production organisation (Viss-

er et al. 2012). Added to this was and still is the moratorium on farmland sales in

Ukraine that enabled the consolidation of very large land areas through the

mechanism of leases (Lapa et al. 2015). While the state was busy arranging

these favourable conditions for large corporate farming, processes of institution

Figure 1.

376 Taras Gagalyuk, Vladislav Valentinov

building in the social sphere as well as in other branches of public policies con-

tinued (Keyzer et al. 2013). Eventually, this led not only to a growing uncertain-

ty regarding the strategic factor markets, i.e., capital and land markets, but also

to a worsening socio-economic situation in rural areas, which increased societal

pressure on agriculture and brought the problem of the labour deficit to the fore-

front.

Given these circumstances, it seems safe to conclude that the development of the

agroholding type of farming in Ukraine was, and still is, to a great extent, the

result of high environmental turbulence. Marked by institutional problems and

underdeveloped strategic factor markets, uncertain business conditions pose a

major challenge to the sustainability of traditional types of farming. To demon-

strate that membership in agroholdings presents a resilient strategy for farms in

their attempts to respond to this type of turbulence, we further address the status

quo of the institutional environment in Ukrainian agriculture by drawing on sec-

ondary information and previous research findings. Particular attention is drawn

to institutional problems in the markets for finance, land, and labour that con-

tribute to the shift in institutional equilibrium.

Institutional turbulence in strategic factor markets: the case of

agriculture in Ukraine

Financial markets

The underdeveloped financial markets have long been assumed to be an obstacle

to corporate growth (Peng/Heath 1996). If that would be a fully non-relaxable

assumption, however, the story of growth of Ukrainian agroholdings would end

here. Indeed, an effective stock market has not yet been developed in Ukraine,

while commercial banks are providing loans under very restrictive refinance

rates (UCAB 2013). Nevertheless, business size and the diversified structure of

agroholdings have been conducive to attracting outside capital from a number of

alternative sources.

From the mid-2000s to the mid-2010s, some twenty Ukrainian agroholdings

were able to raise approximately $1.5 billion in total through the initial public

offering (IPO) of their shares on international stock exchanges (UCAB 2014).

Among the ten largest agroholdings in terms of farmland, seven are or were list-

ed on international stock markets such as the Frankfurt Stock Exchange, London

Stock Exchange, and Warsaw Stock Exchange (see Table 1). In addition to inter-

national listings, several agroholdings received loans from international finance

institutions such as the European Bank for Reconstruction and Development

(EBRD) and the World Bank Group’s International Finance Corporation (IFC).

The concerned loans are or were targeted at financing working capital, land

lease rights, the expansion of processing lines and storage capacities and are of-

Agroholdings, turbulence, and resilience: The case of Ukraine 377

ten complemented by technical assistance and advisory services from the donors

(EBRD 2016; IFC 2014).

International capital raising by the top 10 largest Ukrainian agroholdings

Company

name

Land use,

thousand

hectares

(2017)

Major owner Sources of outside capital Shares

placed

during

IPO, %

Capital

raised

through

IPO, USD

million

Capital raised

from other

international

sources, USD

million

IPO on stock

market

(Date of

IPO)

Other sources

(Eurobonds,

project ﬁ-

nance, etc.)

Ukrlandfarm-

ing

605.0 Oleg

Bakhmatyuk

LSEa

(May 2010)

ISEb22.5 186.0 500.0

Kernel 602.5 Andriy

Verevskyy

WSE

(Nov 2007)

ISEb36.0 218.0 665.0

Agroprosperis 430.0 NCH Capital

(George Rohr,

Moris

Tabacinic)

n.a. NCH Capital,

EBRD

n.a. n.a. 30.0

MHP 370.0 Yuriy Kosyuk LSE

(May

2008)

IFC, EBRD,

ISEb22.3 322.5 885.0

Astarta 250.0 Viktor

Ivanchyk

WSE

(Aug

2006)

EIB, IFC, Fair-

fax Hold-

ings, FMO

14.6 31.0 87.0

Mriya 185.0 The Huta

family

FSEc

(Jul 2008)

EBRD, IFC,

USEXIM, EKF

20.0 90.0 200.0

Agroton 151.0 Yuriy Zhu-

ravlov

WSE

(Nov 2010)

LSEb26.2 54.0 50.0

IMC 136.6 Oleksandr

Petrov

WSE

(May 2011)

IFC, EBRD 24.0 30.0 50.0

Agrain 127.0 Pavlo

Ovcharenko

n.a. n/a n.a. n.a. n/a

Ukrpromin-

vest

122.0 The

Poroshenko

family

n.a. n/a n.a. n.a. n/a

Sources: multiple years’ data of stock exchanges; corporate reports and websites of agro-

holdings; reports of IFC and EBRD; Cbonds1 reports.

a Ukrlandfarming is listed on London Stock Exchange with its daughter holding Avangardco.

b Capital raised through issue of Eurobonds and listing on a respective stock exchange.

c Mriya was delisted from FSE in 2014.

EBRD = European Bank for Reconstruction and Development; EIB = European Investment

Bank; EKF = Danish Export Credit Agency; FMO = Dutch development bank; IFC = Internation-

al Finance Corporation; FSE = Frankfurt Stock Exchange; ISE = Irish Stock Exchange; LSE = Lon-

don Stock Exchange; USEXIM = Export-Import Bank of the United States; WSE = Warsaw

Stock Exchange; n.a. = not applicable; n/a = not available.

Table 1.

1 http://cbonds.com/.

378 Taras Gagalyuk, Vladislav Valentinov

Apart from growth financing and technical assistance, access to international

capital sources entails changes in business models, as it requires new approaches

to corporate governance and transparency in both reporting and operation

(Horváth et al. 2017). While relying on closely held ownership structures, non-

holding farms are generally unable to achieve such strategic change, as they can-

not utilise outside directorship on the board or diversify their top management

teams. Constraining as they are for non-holding agricultural enterprises, these

requirements are increasingly regarded as contributing to the resilience of agro-

holdings. The presence of independent directors on the boards, independent au-

diting and disclosure of information about owners and financials serve as safe-

guards against opaque business practices. This type of transparency is particu-

larly important in the face of frequent transition-specific problems, such as

raider attacks and hostile takeovers (Rojansky 2014).

Another remarkable outcome of these new requirements towards transparency is

their spillover effect such that not only investors and shareholders but also other

stakeholder groups become addressed. Handbooks on corporate culture for em-

ployees, sustainability requirements for suppliers, and corporate newspapers for

rural communities are becoming common practice among agroholdings (Astarta

2017; MHP 2016). These initiatives usually require additional investments and

thus stand in contrast to an efficiency orientation. As a result, they can be imple-

mented more effectively and at a wider scale through diversified and financially

strong structures such as agroholdings rather than through the production-fo-

cused structures of non-holding farms.

Land market

Ukraine’s Land Code allows certain farmland transactions for owners – rural

households and family farms. However, the moratorium on buying and selling

land is still in effect. In addition, the investment of agricultural land in the equity

capital of businesses is banned. According to the government, this is a precau-

tionary measure that aims to counter pressure from farm managers on landown-

ers to transfer their land to corporate farms. At the same time, the Land Code

does not limit the lease term, and very long-term leases lead to a de facto ab-

sorption of land in corporate equity (OECD 2003). The expansion of large-scale

farms is one of the outcomes of this legal framework. Another outcome is that

the land lease is an important source of income for rural residents. As landown-

ers, they earn money from renting out their plots of land to corporate farms (Ler-

man et al. 2007).

The available evidence suggests that non-holding farms cannot afford to pay

higher rents to landowners than farms in agroholdings, as they are financially

constrained relative to agroholdings (see Figure 2). Consequently, non-holding

farms are disadvantaged in the context of increasing competition for land under

Agroholdings, turbulence, and resilience: The case of Ukraine 379

uncertain lease terms. Since a lease is the only way to access land, non-holding

farms’ lease agreements are insecure due to the threat that a significant number

of lessors may obtain better lease price offers from agroholdings.

Annual average farmland rents paid by agroholding and non-holding farms,

USD / ha

39,3 34,5 43,2 51,1

83,2 96,2

33,8 30,0 35,8 42,8

64,3 73,2

0,0

20,0

40,0

60,0

80,0

100,0

120,0

2008 2009 2010 2011 2012 2013

Agroholdings Non-holdings

Source: own calculations based on the UCAB database.

It should be noted that the turbulence in the farmland market is intertwined with

uncertainties of a technological and social nature. Increasing farmland rent

prices compel farms to constantly search for and introduce new technologies.

The adverse effects of this process are manifested in growing unemployment

and other social problems in rural areas. This puts farms under growing societal

pressure and gives weight to their corporate social responsibility (CSR) activi-

ties. Notably, most Ukrainian farms inherited the service delivery feature of for-

mer Soviet kolkhozes to a certain degree (Gagalyuk/Schaft 2016), but as they

are considerably smaller in size, non-holding farms have a substantially less de-

veloped capability to address landowner communities’ needs. While agrohold-

ings establish special charity funds and departments in charge of community de-

velopment issues with annual budgets of up to $2 million (MHP 2016; Kernel

2016), non-holding farms’ support to landowners is most often limited to ad hoc

activities, such as the ploughing of a vegetable garden located next to a

landowner’s household or the removal of snow from rural access roads in winter.

In contrast, the CSR of agroholdings includes both ad hoc aid and well-planned

infrastructural projects. Agroholdings offer charitable donations to schools, hos-

pitals, churches, sports clubs and kindergartens; provide their own finance, ma-

chinery and equipment for infrastructure works, construction and repair of elec-

tricity lines, and water and gas pipelines; and are involved in other related activi-

ties (Astarta 2017; Kernel 2016; MHP 2016).

Figure 2.

380 Taras Gagalyuk, Vladislav Valentinov

Labour market

As a transitional country, Ukraine generally suffers from the inadequacy of safe-

ty nets provided by the public sector. Contrary to expectations, the reforms im-

plemented in the social sphere have continuously failed to improve welfare, par-

ticularly in rural areas. The most dramatic has been the loss of employment ac-

companied by labour migration to cities and abroad. The supply of social ser-

vices has also declined due to the lack of purchasing power (Keyzer et al. 2013).

Against this background, non-holding farms again appear to be less suited to

solving these types of problems. Their narrow specialisation in crop production

does not allow for an extensive offer of alternative jobs, for example, in milk

production (see Table 2).

Employment and pay in Ukrainian corporate farms

2008 2009 2010 2011 2012 2013

Employees per 1000

hectares of total farmland

Agroholdings 35.1 30.7 29.6 28.8 28.2 27.1

Non-holdings 31.8 28.9 27.5 26.9 25.4 24.1

Employees in crop produc-

tion per 1000 hectares of

arable land

Agroholdings 22.5 19.4 18.9 18.7 18.8 17.5

Non-holdings 23.1 21.1 20.2 20.3 19.1 18.6

Employees per 100 cows in

milk production

Agroholdings 48.4 44.5 44.3 44.0 39.1 39.5

Non-holdings 30.3 29.8 28.5 26.9 24.6 23.6

Average salary, USD* per

worker

Agroholdings 184.6 138.9 157.1 192.8 213.1 245.1

Non-holdings 151.3 112.6 130.5 182.8 184.7 206.3

Source: own calculations based on the Ukrainian Agribusiness Club (UCAB) database**.

*As per the oﬃcial annual average exchange rate of the National Bank of Ukraine.

** The UCAB database contains information about the whole population of approximately

8,500 Ukrainian corporate farms on the data points such as land use, employee numbers,

production volumes, costs, and sales of agricultural production as well as farm aﬃliation

with an agroholding. All the data, except the agroholding aﬃliation, come from oﬃcial

statistics provided by the State Statistics Service of Ukraine. UCAB adds an update on farms’

aﬃliations with agroholdings based on an annual survey of corporate farms and continuous

monitoring of the reports of the Antimonopoly Committee of Ukraine on farm acquisitions.

While the substitution of technology for hired labour is, to a greater or lesser ex-

tent, common to all farm types in Ukraine, unattractive living conditions in rural

areas worsen this situation by forcing young people to leave in search for better

opportunities. The result is a growing deficit of qualified farm workers that the

majority of corporate farms face (Koester et al. 2010). In agroholdings, this is-

sue gives weight to professional human resource management (HRM), as it im-

pels agroholding management to increasingly design and offer above-average

compensation packages and qualification improvement programmes (Morley et

al. 2016) for both managers and non-managerial workers. Staff retirement pay,

Table 2.

Agroholdings, turbulence, and resilience: The case of Ukraine 381

profit sharing and health protection schemes are becoming an indispensable part

of employee compensation. In non-holdings, the development of HRM is still at

the level of Soviet-type kolkhozes, i.e., unattractive for talented workers (Petrick

2017).

The above-average benefits are additionally able to promote employees’ self-

identification with and loyalty to an employing company. This seems to be par-

ticularly important in the midst of pervasive employee fraud in Ukrainian agri-

culture (Gagalyuk/Schaft 2016). For the most part, this problem exists due to the

embedded institutions, which accompany the transformation process in former

planned economies. Rural societies in Ukraine and some other transitional coun-

tries are characterised by high risk aversion, lack of trust, preference against be-

ing self-employed, lack of self-reliance, and corruption and nepotism (Koester

2005). Professional HRM and new labour monitoring technologies provide suc-

cessful solutions to the problems of opportunistic behaviour by employees

(Chaddad/Valentinov 2017). However, investments in these solutions often fail

to pay off quickly. Due to the lack of requisite infrastructure and funds in non-

holding farms, such investments are much more extensively realised in agro-

holdings.

Conclusion

The extant literature on agroholdings in Ukraine as well as other transitional

countries exhibits several highlights whose inter-related logic has not been fully

clear. Agroholdings are very large and thus exemplify the radical expansion of

the firm boundaries; their rise to prominence cannot be traced back to their supe-

rior efficiency compared to other forms of agricultural enterprises; they operate

in the transitional business environment marked by a high degree of institutional

turbulence. The present paper ties three highlights into a coherent story drawing

on the core idea of resilience. The high degree of institutional turbulence expos-

es the traditional forms of agricultural enterprises to severe existential risks, dis-

rupting their access to critical finance, land, and labour resources. Agricultural

enterprises seek to cope with these risks by joining agroholdings that facilitate

access to these resources and create a type of protected enclave in which enter-

prises can concentrate efforts on the organisation of production.

Crucially, this rationale for membership in an agroholding is centred on re-

silience rather than efficiency. The focus on resilience rather than efficiency thus

provides a tentative explanation for why the remarkable growth of agroholdings

fails to be accompanied by evidence of their superior efficiency. This explana-

tion lends credence to the extant organisational resilience scholarship by reaf-

firming that the exclusive focus on the idea of efficiency is not only scientifical-

ly incomplete but also potentially dangerous from the sustainability point of

view. For all the merits of the efficiency idea, it alone cannot explain the sur-

382 Taras Gagalyuk, Vladislav Valentinov

vival and decline of firms that are embedded in the complex textures of socio-

ecological systems, except in the negative sense of the sustainability risks asso-

ciated with the exclusive focus on efficiency. The organisational resilience

scholarship emphasises the point that a firm’s survival may call for the firm’s re-

silience no less than its efficiency.

In terms of implications for further research, the organisational resilience litera-

ture may benefit by acknowledging that agroholdings exemplify a growth strate-

gy and a resilience strategy at the same time. This is possible because the main

risks to the sustainability of agricultural enterprises come in the form of institu-

tional turbulence. Far from being generally incompatible with growth, resilience

strategies turn out to be contingent on the nature of the relevant sustainability

risks. More generally, further research is needed to explore the limits of the effi-

ciency-based explanations of organisational survival. If these explanations in-

deed ignore the limits of the carrying capacity of the relevant social and natural

environment, then the idea of resilience must be taken seriously, and conven-

tional business growth strategies may not be attractive.

Acknowledgments

The first author gratefully acknowledges the support from the Leibniz Associa-

tion.

The second author gratefully acknowledges the support from the German Re-

search Foundation (DFG).

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Jan 2016
J E EUR MANAG STUD

The paper explores organisational level training practices in the Central and Eastern European (CEE) region and tests their impact on overall organisational performance. We draw upon data from the CRANET international survey of HR practices in order to provide a comparative overview of training and development in selected CEE Countries. Distinguishing between organisations focusing on the international and on the domestic market, and drawing upon data from 1147 companies in eight countries (Bulgaria, the Czech Republic, Estonia, Hungary, Lithuania, Slovakia, Slovenia and Serbia), we examine training practices and approaches and test their impact on organisational performance. Our findings demonstrate that the use of more developed training practices contributes to better organizational performance assessed by reference to service quality, productivity, profitability and rate of innovation. The market focus of the organisation in terms of serving a domestic or an international one also appears consequential with those operating internationally recording more extensive training practices.

The emergence and proliferation of agroholdings and mega farms in a global context

Article

Mar 2017

During the last two decades an increasing amount of large-scale farming operations have emerged all over the world: from (Eastern) Europe, to South America, China and the countries of the Former Soviet Union. These agribusinesses go under the name of mega-farms or agroholdings: horizontally or vertically integrated operations with farm sizes of up to 500,000 hectares and sometimes even more. These types of farms are not only found in crop farming, but also in animal husbandry. Although some information on agroholdings and other forms of mega-farming operations is available, a systematic analysis of their prevalence, economic performance as well as their social and environmental implications in an international perspective is missing. In this special issue of the International Food and Agribusiness Management Review we present a number of papers that highlight the different aspects of such farms. In this editorial we introduce the topic of agroholdings and place the papers in within the context of the a

Dynamic Capabilities and Organizational Performance: A Meta-Analytic Evaluation and Extension

Article

Apr 2016

We move the dynamic capabilities view (DCV) forward in two important ways by meta-analysing prior empirical studies. First, we evaluate the two core theoretical tenets of the DCV: (1) Dynamic capabilities are positively related to performance, and (2) this relationship is stronger in industries with higher levels of technological dynamism. We find support for the former (r c 5 0.296) but not for the latter, though results suggest the existence of moderators. Second, we theorize and demonstrate empirically that higher-order dynamic capabilities are more strongly related to performance than lower-order dynamic capabilities, lower-order dynamic capabilities partially mediate the relationship between higher-order dynamic capabilities and performance, and dynamic capabilities contribute more to performance in developing economies than in developed economies. These findings illustrate how the nature of the dynamic capability and the economic context in which it is utilized shape its value, thus offering a more nuanced conceptualization of the dynamic capabilities-performance relationship.

Agro-holdings in Russia, Ukraine and Kazakhstan: temporary phenomenon or permanent business form? Farm-level evidence from Moscow and Belgorod regions

Article

Aug 2015
POST-COMMUNIST ECON

The transition process did not affect the organisation of agricultural production as originally anticipated. Since the late 1990s, in Russia and some other CIS countries, numerous large-scale agro-holdings emerged which agglomerated multiple farms, entities of the upstream and downstream sectors of agribusiness, as well as nonagricultural industries. Owing to the common practice of registering such affiliated farms/firms as independent business units, data on agro-holdings’ aggregate group performance are extremely scarce. It is therefore difficult to capture their emergence, determinants of growth and developmental prospects. This study is based on a unique panel dataset from Moscow and Belgorod regions. The growth trajectories of farms affiliated to agro-holdings vis-a`-vis independent farms were investigated by applying a quantile regression approach. Overall, only minor differences were found. Any advantages of affiliated farms appear to be due to extramural factors; i.e. it is all about how to link individual production units, thus benefiting from strong positioning in local and regional markets and making the most of lobbying and ties to relevant politicians. In sum, agro-holdings are expected to remain as a model for organising agricultural production.

The Economic Institutions of Capitalism

Article