Post-pandemic vertical boundary strategies in the South African agricultural sector

Abstract

This research project aims to investigate and analyse the impact of the Covid-19 pandemic on the vertical boundary strategies of firms in the South African agricultural sector (SAAS). It attempts to determine how firms have adapted to the disruption of vertical supply chains during periods of deep uncertainty. Vertical integration is regarded as a "paradigm" problem for explaining firm- and market organisation in modern economics. Considering global dynamics and food security concerns, SAAS should revisit strategic and economic practices. It is essential to analyse how firms have adapted vis-à-vis disruption of vertical supply chains during periods of uncertainty, considering empirical difficulties in developing a theoretical account of these adaptation responses. The research adopted a qualitative analysis approach, embracing interpretivism and an exploratory, multi-case study strategy to identify and compare the insights concerning vertical boundaries strategies of leading firms’ senior management. Indepth-, semi-structured-, open-ended interviews were conducted, and secondary data were collected to investigate three pertinent research questions. A dynamic gears model was created to illustrate the value of three themes emanating during the results' analyses: post-pandemic resilience, vertical boundary strategies, and strategising vs economising. Principal findings aligned with the agent-based model of Histen (2022), arguing that integrated firms better negotiate systemic change and uncertainty. However, as uncertainty decreases, markets outperform firms, indicating that dynamic interdependencies exist and vertical integration is crucial in market expansion and firm existence. A theoretical timeline visualises complex firm organisation within economic evolution, reflecting leadership’s strategic and economic mindsets and affirming the argument by Williamson (1991) that SAAS firms are not economically-, rather strategically focused.