Rural Managemment

Problems
• Market and Government Failure
• Uncertainty
• Lack of bargaining power
• Economies of Scale
 Solutions
• Develop mechanisms managed by self to
serve shared interest
– COLLECTIVE ACTION
• Trust
• Reduce the uncertainty
• Increase economies of scale
• Market linkage
• Technology
 What is Rural Management?
• Action taken by a group (either directly or on
its behalf through an organization) in pursuit
of members’ perceived shared interests
• Joint action for the same goal
• Actions to achieve a common objective, when
the outcomes depend on interdependence of
members
• Collective action requires
– involvement of a group of people
• Members can contribute in various ways to achieve the
shared goal: money, labor or in kind contributions (food,
wood)
– common action which works in pursuit of that
shared interest
– Own labour or product – usage based
 Manifestation of Collective Action
• Event
– a one time occurrence
• an institution
– rule of the game applied over and over again
• A process
Institutionalization of Collective Action
• Institutions are rules of the game of a society
or more formally are humanly devised
constraints on human interaction
• Institutionalization reduces transaction costs of
renegotiation, as well as uncertainty
– Transaction cost increases with incomplete
information and limited mental capacity to
process information
• Cooperation is required for building institution
 Role of Manager
• Identify the transaction cost
• Build institution to reduce transaction cost
• Lay our formal rules and regulation suitable
for community/society
• Implement rules and regulations
• Monitor rules and regulations
• R&D