The Fordist crisis renewed the interest in the role endogenous variables might play in the development of enterprises and economic sectors. The model of diffused economic growth, that characterise the areas of the 'Third Italy' as well as some highly specialised local systems, generated a range of studies that stress not only the relevance of endogenous resources, but also the importance of the relations through which these resources are reproduced. Through specific reproduction patterns original and important responses have been constructed vis à vis the tendencies towards globalisation.
Together these studies converged into a definition of endogenous development, or development "from below", which differs from local development precisely because of the capacity to retain , within the concerned area, the control over the mobilisation and use of the local factors of production that are central to these development processes and, also, to the distribution of the wealth they generate.
The exploration and study of endogenous development processes in the agricultural sector represents a strategic interest due to two conditions the agricultural sector is facing today and which emerge from the expectations of European society at large towards the agricultural sector. These conditions regard, in the first place, the reproduction of the natural resources that are involved in agriculture as process of co-production as well as the knowledge and normative frameworks connected to this co-production. Secondly, it regards the maintenance of an elevated number of farm enterprises in order to sustain the countryside.
The implied goals might be reached by means of different organisational models and within differently structured markets (ranging from the natural oligopolies linked to the production of region-specific products to the competition within and between district-type of markets). In each of these solutions the local elements linked to the specificity of the environment permit the enterprise to valorise its investments (both the material and the non-material ones) whilst maintaining the control over their use.
The Farming Styles Theory, as developed by Van der Ploeg, has highlighted the existence of a strong coherence between (1) production methods and techniques, (2) the organisation of the enterprise and (3) the institutional context. Taken together, these elements unfold into a large heterogeneity of managerial strategies and practices. Consequently, within one and the same economic sector and/or within one and the same area, different styles might be identified. Amongst them, some styles will represent more endogeneity than others. The degree of endogeneity will coincide with the degree of control, of the concerned farmer, over the involved resources and with the process through which specific competencies will be created.
From an economic point of view, the presence of farming styles might explain the existence of different organisational forms in both the agricultural and the agro-industral sector, just as has been done by Williamson and Chandler who specified the U-type (specialised enterprises) as well as the M-type (multidivisional enterprises) to explain the diversified performances of the industrial sector. The different organisational assets correspond with the entrepreneurial choices concerning the internalisation of processes and functions ( make ) and/or the acquisition of goods and services on the markets ( buy ). But in contrast with industry, in agriculture such choices are strongly related with the chosen technologies, as well as with the role of the land within the process of production. This relation constitutes, as it were, the central axis of the different farming styles. That is, in some styles of farming the land is, as factor of production, nearly completely marginalized from the core of the process of production - which implies simultaneously an elimination of its multifunctional role. In other styles, land or more generally speaking all factors entailing nature, remains central to the process of production. The related decisions are specified within neo-institutional theory. That is, the comparison between the governing costs on the one hand and the cost of using the market (and the interrelated institutional context, the specificity of the object of exchange and the behaviour of those who are involved in the exchange process) on the other, becomes central in the analysis.
The different modalities of these variables produce a wide and continuous range of intermediate forms meant to govern exchange processes, being the market one and the enterprise the other extreme. It is, though, more probable to encounter forms of quasi-organisation and quasi-market , as has been made clear by Saccomandi. In such constellations, the transaction-costs are reduced through mechanisms such as reputation , the social construction of norms regarding process and product, authority , satisfaction, trust and reciprocity. Such mechanisms result, indeed, in the reduction of the complexities inherent to entrepreneurial choices, embedded in conditions of limited rationality and uncertainties. Such mechanisms are, as is argued in the main text, specific if not central to models of local development in as far as the latter are the outcome of historically constructed relations, norms and bodies of knowledge.
In endogenous models the control over the process of development is grounded in the existence of a local domain for negotiation and renegotiations between local actors and institutions. This domain becomes, on its turn, the locus from which innovative processes are emerging. These innovative processes are, nearly by definition, the outcome of the specific and highly localised interaction between blocks of knowledge and particular technological solutions stemming from different origins (both endogenous and exogenous), which materialise in the technological and organisational assets of the enterprise, that is, which specify the modality and the type of productive process and product. The indicated domain for negotiation functions as an activator of innovative processes or as an element of inertia. That is, such a domain functions as a protected space in which the conditions for an ongoing renewal of the reigning technological regimes are created and reproduced. Or it functions as the constellation reproducing the existing technological regime. Whenever the control is and remains to be local, the innovative processes (or the inertia) are aiming at the maintenance and reproduction of the resources of the enterprise and/or those of the local system.
The elements that are involved in the indicated processes might be decomposed in 4 constituting and mutually interrelated elements. These are:
- The single operator, who disposes of the competencies, the required decisional autonomy and the needed rationality.
- The enterprise, embodying the capacity to develop future-oriented projects as well as the capacity to carry the risks associated with these projects.
- The network of enterprises (also of intersectorial nature), that organises the division of labour according to different competencies.
- The local system that mutually integrates the enterprises located in the area and that integrates also the whole set of enterprises with the local community at large.
Endogenous development models might obtain a specific morphology according the presence and relative weight of the indicated elements and the modalities through which economic actors and local institutions are interlinked. Here two extreme poles might be identified. The first regards local production settings in which atomistic exchange relations govern the specificity of the socio-economic interrelations. The second regards local production systems characterised by a high degree of integration between firms and socio-political and institutional context.
The first model is to be encountered in the animal breeding sector in Umbria. In this sector different farming styles might be discerned, some of them close to the "traditional" pattern and others representing "modern" solutions, being the discriminating elements precisely the different degrees of internalisation/externalisation of the process of production. Especially important, is the centrality (or absence) of the major local breed, i.e. the Chianina . The presence of the "traditional" style, which in whatever neo-classical type of analysis would emerge as inefficient, is due to the existence of a micro-institutional context. In this context the specific circuits for commercialisation play a decisive role. The same applies to the involved local actors: the butchers, the consumers, but also the veterinary doctors and the local authorities. Within the micro-institutional context the transaction costs are minimised. This is due to the fact that the exchange operations are embedded in a quasi-organisation , composed of informal and formal rules that, taken together, govern the transactions. Also important is the presence of a 'third subject' (apart from the two actors involved in the transaction), that facilitates the indicated exchanges and that might function as a referee is the need to do so arises. In the case of the traditional circuit this 'third subject' is entailed in the impersonal authority given by and related to traditions, local habits and customs and mechanisms such as e.g. reputation as linked to the frequent repetition of certain transactions. Taken together, these traditions, habits, routines and reputations compose an institutional micro-context, which, on its turn is the carrier of inertia as well as a shock damper in the frequent clashes between the local system on the one hand and modernising and globalizing tendencies on the other. This is especially important since the latter tendencies tend continuously towards a strong reduction of the breeding farm-firms in the local circuits. Through these circuits, that is through the internalisation of social benefits into the market exchange-processes, many local resources have been defended and saved. These range from local breeds to the presence of permanent fodder production (essential for the maintenance of landscapes) and local blocks of knowledge. Especially today, these resources are matching very well with society's needs and expectations, such as food security and low environmental pressure In more general terms, the presence of these local resources allows for a redefinition of the spatial and economic boundaries of the concerned circuit, thereby offering a new and important development opportunity for the meat producing sector of the region as a whole.
The second model is represented in this study by the tobacco growing area of the High Tiber Valley. This area is characterised by an impressive heterogeneity, regarding structural features, types and styles of farming and horizontal and vertical relationships that give together to the area a degree of systemness which is similar to the one encountered in "districts" as defined within industrial economics. This systemness is due to the accelerated diffusion processes: starting from a leader enterprise, technological and organisational innovations are spreading quickly throughout the area, giving rise to a dense and complex network of economic, social and political relations that sustain the overall development process of the area, as well as the maintenance of the tobacco culture. The innovations, introduced as a response to the institutional and commercial changes in the tobacco market during the 1960's and '70s, have become very rapidly a kind of collective property . On its turn this collective property turns out to be a decisive element in the competition between the High Tiber Valley and other tobacco producing areas.
Currently, the local tobacco production system is functioning in quite a contrasting way. It is, as it were, a suspension system as far as external changes are concerned. Shocks are absorbed, amongst others because the local system is functioning like a quite adequate lobby. Nowadays, those innovations that might disrupt, i.e. modify the structure and organisation of the system, are blocked and/or redesigned in order to prevent a massive exclusion of farm-firms with the subsequent weakening of the political influence at regional, national and supranational level. The density of the relations between the economic agents and civil society as well as between the local system and the outside world, is functioning like a collective actor that "takes time" regarding changes that might be influenced anyway since they stem from the institutional and normative setting as represented by the European Union. Consequently the internal changes within the local system are many: they tend towards a diversification of productive activities, whilst the farm-firms remain linked anyway to the institutional networks represented above all by the cooperative structure for transformation and services.
The innovating enterprises are above all the family farms, for which the production of tobacco was the main economic activity. The surplus labour, resulting from the reduction or even elimination of tobacco cultivation, is reallocated in new activities that need a high input of specialised labour. Labour exchange, interlinkages with other farms through cooperatives for commercialisation and service delivery, the credit institutions and the informal relations of reciprocity, constituting together the culture of the area, explain how these family farms, "inefficient" when judged according to their dimensions only, are reproduced within the local district, in which they play, anyway, a double function. They provide on the one hand a socio-political justification for the maintenance and defence of the system as a whole, whilst on the other hand, they embody, as pioneers, the innovativeness of the system as a whole.
The heterogeneity stemming from the unequal availability of natural resources, the history of the area and from the range of farming styles, can definitely not be governed through generic administrative rules. What is needed are regulating principles that are to be applied in a dynamic way in the different local situations. Such a process of decentralisation already started at the level of the European Union with the elaboration of horizontal regulations that are to be applied in specific ways by the single nation states. Hence, the state as well as the regional and local authorities emerge as factors that might be decisive for the success of the individual enterprises and consequently also for the areas as a whole, since at the level of these areas the interaction between exogenous and endogenous elements is strategic. Thus, the responsibility of regional and local government is increasing, not only in as far they actively implement the required modalities for the application of general regulating principles, but also in as far as they design these modalities.
The exploration, specification and classification of different development models within local agricultural systems will become increasingly important, since it constitutes one of the most important cognitive instruments for the design and the implementation of norms, regulations and interventions. With the decentralisation of the Common Policies, the differentiated capacities of regional and local administrations might modify considerably the context of competition for the different farming styles and local production systems. Hence, the way in which decisions are elaborated at the indicated levels (and especially, the degree in to which farmers are involved in it) becomes a highly interesting and relevant field of study - a field that evidently requires once again the theory of transaction costs - and the way they structure both the knowledge ability and the behaviour of the actors involved.