Aquaculture farmer organizations and cluster management: concepts and experiences

2.6.4 Organization theory
Organization theory looks at factors that determine the effectiveness of organizations 
in meeting objectives. Much of organization theory relates to private or corporate 
organizations; however, it can also be relevant to FOs, especially those organizations 
that are run as rural enterprises or businesses. Handy (1999) divides the factors that 
influence the effectiveness of organizations into three broad categories: individuals, the 
organization, and the environment. Figure 1 breaks these categories down further.
2.6.5 Collective action
Development of FOs involves collective action that occurs when a group of individuals 
come together to solve a shared problem by establishing a set of rules that, if followed, 
will allow the group to meet a common goal. However, like market exchange, collective 
action can also sustain transaction costs associated with negotiation, information 
gathering, monitoring and enforcing rules. If transaction costs of working together as a 
group are higher than those associated with other institutional alternatives or working 
individually, the group will be unsuccessful (Stockbridge, Dorward and Kydd, 2003). 
According to Ostrom (1990, 1999), there is much empirical evidence to suggest collective 
action is successful in finding solutions to the problems of managing scarce natural 
resources. Through an empirical study of collective action, the author has identified 
design principles (shown in Box 1) that characterize institutions associated with the 
sustainable management of common pool resources (CPRs). Although this is not the 
same as FOs, there are many similarities between managing CPRs as a group and the 
operation of FOs (e.g. access to CPRs by group members is similar to FO members’ 
access to services provided by FOs) that enable these principles to hold useful insights 
into factors for successful FOs (Stockbridge, Dorward and Kydd, 2003).