Bridging the Small-Big Divide: A Transaction Cost Approach to Enterprise Modelling for Mussel Mariculture in Saldanha Bay / Bridging the Small-Big Divide: A Transaction Cost Approach to Enterprise Modelling for Mussel Mariculture in Saldanha Bay

Small-scale mussel farming in Saldanha Bay is more efficient than production by large vertically integrated firms. A number of transaction cost factors however favour coordination between mussel production, marketing, processing, and the provision support services. The premise in this paper is that high transaction costs essentially constrain the participation of emerging farmers in the open economy. In this paper, the transaction costs associated with mussel mariculture are discussed and analysed with the purpose of identifying an appropriate farm model. Four models are compared and agricultural franchising was found to be the most suitable model. In this model the efficiency advantages of small-scale production are retained and high transaction costs are circumvented through more effective vertical co-ordination.