Sustainability Strategies and Contractual Arrangements in the Italian Pasta Supply Chain: An Analysis under the Neo Institutional Economics Lens

Abstract

Contracts represent key governance mechanisms along the supply chain to pursue collective sustainable strategies in line with new citizen-consumers’ preferences for sustainable products. Adopting an embedded multiple case study approach, this paper explores and analyzes 11 cases of contractual relationships between Italian semolina and pasta producers and farmers in order to investigate whether sustainability strategies affect the design of contracts and the related consequences. Findings reveal that different sustainability strategies correspond to different design and combinations of (both monetary and nonmonetary) contractual incentives aimed to centralize property and decision rights. What emerges is that stronger sustainability strategies entail a higher degree of buyers’ control over strategic investments (such as land and seeds) as well as wider provision of technical assistance and knowledge and innovation transfer toward farmers. Therefore, mutual gains seem at stake, even if socio-economic implications of the shift in decisional and control rights from farmers toward buyers shall be neglected, to ensure a better coherence with the farm to fork strategy and sustainable development goals.

1. Introduction

The agri-food sector adversely impacts the environment and, consequently, climate change. In the last 30 years, there has been a 17% increase in greenhouse gas emissions (GHG) from agri-food systems, which, in 2019, accounted for about 31% of all emissions related to human activities [1]. At the same time, the agri-food sector is expected to suffer from the main consequences of climate change, that could irremediably affect biodiversity, soils fertility, and, therefore, food security, as well as rural communities engaged in agricultural activities [2]. Accordingly, the growing attention of citizen-consumers toward these issues has determined an evolution of purchasing and consumption patterns based on new demands for healthy and functional foods with ethical attributes and obtained through eco-friendly production processes [3,4,5].

In order to accelerate the transition process toward new and more sustainable production models, in 2015, United Nations (UN) Member States approved the 17 Sustainable Development Goals (SDGs) as part of the 2030 Agenda for Sustainable Development, which has become an integral part of European policies and strategies, such as the European Green Deal and the Farm to Fork and Biodiversity strategies, and aims to make the European agri-food system more sustainable [6].

The new common agricultural policy (CAP) will also support the transition to a more sustainable agri-food system through the implementation of national strategic plans in line with the European Green Deal and its Farm to Fork and Biodiversity strategies. Consequently, the CAP encourages the adoption of sustainable innovations in order to mitigate climate change while protecting the environment, landscape, and biodiversity [7].

To meet the new instances of citizen-consumers, and to catch the opportunities offered by European policies, many agri-food companies have begun to define specific sustainability strategies aimed at following one or more SDGs of 2030 Agenda. This has happened in the pasta sector, which represents a strategic supply chain of the Italian agri-food sector with unique characteristics. Additionally, Italy is the world’s leading producer of pasta, with a production of 3.2 million tons, which is a quarter of the total world production [8]. Moreover, pasta manufacturing absorbs 40% of total Italian cereal production, involving more than 200,000 farms and a cultivated area of 1.3 million ha, for an average production of 5 million tons and total value of approximately € 1.5 bn per year. Lastly, in the pasta and semolina industry, a few large international companies that hold the majority of market share coexist with a large plurality of small and artisanal firms that operate in specific market niches.

In order to contain emissions and increase the quality of products, pasta factories have started to use 100% Italian durum wheat semolina and encourage the adoption of sustainable collective innovations, both organizational and technological, along the entire value chain, starting from the cultivation of durum wheat to the transformation and commercialization phases [9,10].

The role of sustainable strategies adopted by agri-food companies in the ecological transition are little explored in the literature. Likewise, the role of governance mechanisms aimed to coordinate decisions among actors of agri-food supply chain in order to join sustainable strategies and adopt collective sustainable innovations deserves more attention. Previous studies mainly have focused on critical factors that hinder the implementation of sustainable initiative in the food supply chains [11,12,13]. However, contracts have emerged as a governance solution, adopted by leading pasta and semolina producers to promote the adoption of collective innovations aimed to pursue sustainability strategies [14]. Therefore, contractual relationships have increasingly represented a solution used by leading pasta companies to govern transactions along this value chain. Such a phenomenon, in turn, poses questions about the fairness of governance mechanisms in terms of shift of property rights and decision rights between farmers and pasta factories sharing the value created and the establishment and consolidation of trustworthy relationships among economic actors of the supply chain [15,16,17].

Against this backdrop, under the lens of the neo-institutional economics (NIE), this study innovatively analyzes how sustainability strategies of the main Italian pasta and semolina producers lead to different combinations of property and decision rights among economic actors in the supply chain. Following a case study approach, we analyze several contracts in order to evaluate how different clauses are used to safeguard investment and coordinate decisions about sustainable collective innovations aimed to achieve sustainability targets in the Italian pasta supply chain.

Consequently, the main objectives of this study are twofold: one, to provide an original and updated classification of sustainability targets set by leading pasta and semolina producers, and two, to investigate the role and impact of contractual solutions promoted by these companies on the distribution of decision and property rights among the contracting parties. Accordingly, we elaborate on the three main research questions (RQ) to orient the empirical analysis:

(1)

What are the main goals that characterize collective sustainability strategies promoted by pasta factories along the Italian pasta supply chain?

(2)

Do the variety of collective sustainability goals promoted by pasta factories correspond to contractual terms and incentives that, in turn, differently impact on allocation of property and decision rights?

(3)

Do companies with higher level of collective sustainability commitment tend to adopt contractual mechanisms characterized by a higher level of centralization of control over strategic sustainable investment and decision rights?

2. Theoretical Background

2.1. Literature Review

Pasta factories are adopting sustainable strategies in order to meet new requests from citizen-consumers that relate to food products (e.g., quality, health, safety, environment, ethics, etc.) and to support the ecological transition of agri-food systems toward more sustainable production models promoted by Agenda 2030 and its Sustainable Development Goals (SDG’s) [3,5,14]. Various contributions address issues related to the sustainability of the pasta supply chain and its relationship with the SDGs. In particular, Principato et al. [18] state that although the total amount of food losses and waste generated throughout the entire pasta supply chain is approximately 1.98 kg per 1 kg of produced pasta, this supply chain may represent an example of circular economy. According to Zingale et al. [19], the cultivation of ancient varieties in organic and low-input farming systems have a large potential for reducing the environmental impact of pasta. Cappelli and Cini [20] highlight the importance of several sustainable innovations and improvement strategies in order to increase the sustainability, productivity, and quality of flour, semolina, pasta, bread, and bakery products.

Previous contributions highlight the key role of sustainable innovations in order to converge toward more sustainable production models. Indeed, sustainable innovations are considered instrumental to the achievement of the multiple sustainable development goals (SDGs) by being able to trigger profound changes in the agri-food system, especially if they involve different economic actors [21]. However, the scientific debate on sustainable innovations, more commonly defined as eco-innovations, has only developed recently [22,23] and studies on the agri-food sector are still limited. Overall, the literature has focused on the determinants of eco-innovations [24,25], identifying three main drivers: the market pull, the regulatory push/pull, and the technology push. Specifically, the increasing demand of citizen-consumers for sustainable products and their greater willingness to pay, represent a push for companies toward eco-innovations [3,26,27,28]. Tax regulations and incentives are also considered possible drivers of eco-innovations [23,29]. Finally, a further driver of eco-innovations is represented by new technologies, which can be developed both through internal company resources and through cooperation and strategic alliances with customers, suppliers, universities, and research centers [30,31,32]. The cooperation for the development of eco-innovations is particularly relevant to small and medium-sized enterprises (SMEs) [33]. According to other studies, eco-innovations improve the competitive advantage of companies, both through cost reduction and revenue growth [33]. In fact, eco-innovations allow to optimize the use of production inputs and, in particular, to reduce energy and water consumption and, consequently, production costs [3,34]. Moreover, the higher revenues derive from the possibility of intercepting new market niches, represented not only by citizen-consumers more sensitive to environmental issues but also by public administrations that increasingly prefer responsible suppliers [33,35,36].

In a nutshell, the new citizen-consumers’ needs drive sustainable strategies of agri-food leading companies and the adoption of sustainable collective innovation processes associated with them. To illustrate, the effectiveness of these latter processes depends on (i) the structural characteristics and internal resources of the supply chain; (ii) the degree of integration between the various stages of the supply chain and the cooperation between the actors of the same supply chain, companies from other sectors, universities, research centers, and other local stakeholders; (iii) the supply chain governance; and (iv) the policies [14,24].

However, since the European agri-food sector is mainly characterized by SMEs with limited research and development capability, the integration with other companies may provide useful resources to start sustainable collective innovation processes.

Consequently, the issue of sustainable innovations has been conceptualized and addressed recently under a collective perspective. It has been proved that sustainable strategies of agri-food leading companies must foresee the implementation of different sustainable innovations (i.e., product and processes) to be effective along the entire value chain, starting from the cultivation phase to the transformation and marketing phases of the final product [10,14]. According to such a collective approach to innovation, it is deemed necessary to involve public and private actors in the food supply chain in a sustainable collective innovation process, entirely rethinking the relationships governance mechanisms [14]. For instance, cooperation with companies of other sectors or with the research community (universities or research centers) allows access to knowledge and technologies useful for the development of sustainable innovations to be implemented in the agri-food supply chain [37]. At the same time, policies may incentivize companies to both adopt sustainable innovations and promote forms of cooperation between actors of the same food supply chain.

However, the main risk in these cases is related to possible opportunistic behaviors of some actors in the food supply chain that could cause the failure of the sustainable collective innovation processes and, consequently, of the sustainability strategy implemented by the leading company. It is not by chance that the successful sustainable collective innovation processes strongly rely on a collective approach based on integration strategies (i.e., vertical and horizontal) and on coherent and synergistic behaviors of all economic actors involved [14].

In this framework, it follows that one of the most important determining factors for the success of the sustainable collective innovation processes is represented by the governance mechanisms established between the various actors in the supply chain. The more these mechanisms move toward an equitable distribution of the created value, the easier it will be to involve the actors of the supply chain in the processes of sustainable collective innovation [14].

The importance of governance mechanisms and, more specifically of contractual agreements, for achieving sustainable development objectives in the agri-food supply chains has already been highlighted by previous studies [38,39]. The contractual agreements push farmers to invest in sustainable innovations and practices that are useful to limit some negative externalities linked to agricultural productions [40,41]. Furthermore, some authors [42,43] stated that more easily measurable SDGs aspects, such as SDG 13 on climate actions, will be favoured by formal collaboration, such as comprehensive and detailed contracts ruling on all aspects in the collaboration [42].

2.2. Conceptual Framework

Starting from a collective approach to sustainability in the agri-food supply chains, this study identifies pasta factories (i.e., pasta and semolina producers) as leading companies that can intercept the new citizen-consumers’ needs in terms of sustainability by promoting sustainable objectives and the adoption of sustainable collective innovations (i.e., product, process, and organizational) along the pasta supply chains (Figure 1). In order for the pasta produced to suit to citizen-consumers’ expectations, it is also necessary that intermediaries (PTi) and different farms (Fi) adopt one or more sustainable innovations useful for improving the quality and sustainability of final product [14].

To encourage intermediaries (PTi) and farmers (Fi) to adopt sustainable collective innovation defined by the sustainability strategies of pasta factories, governance mechanisms aimed to improve coordination along the supply chain are needed (Figure 1).

In this regard, according to the NIE approach, contracts gain momentum as a governance solution that can provide incentives among economic actors in the pasta supply chain for the centralization/decentralization of both decision rights on innovation implementation as well as control over strategic investment in innovation and knowledge (that is, property rights). Therefore, property rights are about the residual claimant who, eventually, can transfer rights to use strategic investments and determine the conditions under which such transfer can be performed. Decision rights concern the way control over strategic resources is going to be exercised and/or about the procedures through which decision-makers can operate to implement innovation.

The Figure 2 illustrates how the combination of incentives to centralize or decentralize, respectively, decision rights (that is, the governance) and/or the control over strategic investments, often established by means of contracts, decisively affects the choice of the organizational decision-maker to minimize both production and transaction costs. The upper part of the figure shows the optimal combination of these two dimensions, whereas the lower one delimitates the area under which misalignments between decision and property rights tend to make transaction costs unfeasible.

As a result, what emerges is the acceptance area of relational contract, given by sets of decision-property rights centralization coordinates in which the efficiency is usually achieved by adaptation among different organizational solutions (market, hybrids, and hierarchy). The unique boundary lines on the extreme left (or extreme right, respectively) identifies situations where there is an optimal use of market (or hierarchical, respectively) solutions.

The ratio is that the more the strategic resources and investments are pooled among the parties, the more a centralization of the decisions rights becomes efficient leading toward hybrid or quasi-hierarchical solutions. The latter is the area where commonly production contracts—as defined by Cholez et al. [37] and Ciliberti et al. [44]—flourish, develop, and operate.

Figure 2 shows that a production contract has variable features of a hybrid governance structure, and at the same time, it contains clauses that offer stronger incentives to centralize decision rights and control over strategic assets than a marketing contract (which generates a ’spot’ market transaction, where only few decision rights are centralized, e.g., the time of delivering).

The more control (that is, property rights) over strategic resources (land, inputs, trademark, and work) are pooled among the parties, the more centralization of the decision rights established by production contracts becomes efficient. What follows is that the economic agents (one seller and one buyer, such as one farmer and one pasta or semolina producer) are expected to design adequate (contractual) mechanisms of relational adjustment in order to cope with different sources of uncertainty. To design the appropriate mechanism, e.g., contractual clauses for a variable price with a payment rule set up at the contract outset, both the processor and the farmer must provide and/or receive appropriate incentives.

In our specific case, the choice of durum wheat varieties, cultivation processes, and techniques are essential elements for the production of pasta that meets citizen-consumers’ expectations in terms of sustainability and quality. Overseeing selling of the final product to consumers, pasta factories need to establish both formal relational mechanisms able to align their sustainability strategies and objectives with farmers’ production decisions by minimizing transaction costs. Contractual relationships, therefore, may emerge as governance solutions that can provide right incentives to ensure a more coordinated control over the use of strategic investment (land, inputs, trademark, and work) as well as over decisions of implementation of sustainable collective innovation [47]. Finally, contractual solutions may play a role in building relationships and trust among economic actors, including farmers that are often sceptical in adopting sustainable innovations especially when they require new skills or need to create interdependence with external entities [48].

3. Materials and Methods

Since we focus on a multitude of case studies (i.e., pasta and semolina companies) with a prevalence of multiple units of analysis (i.e., contracts), our experimental design corresponds to the “multiple embedded” case study, according to Yin [49] classification (

Table 1. Basic types of designs for case studies.

		Case Study
		Single	Multiple
Unit of analysis	Single (holistic)	Single holistic case study	Multiple holistic case study
	Multiple (embedded)	Single embedded case study	Multiple embedded case study

).

These types of design have increased in frequency in recent years since the evidence from multiple cases is often considered more compelling and the overall study is therefore regarded as being more robust [50].

However, it must be noted that multiple case studies, like multiple experiments, follow a replication design. In this study we selected cases that either predicted similar results based on our conceptual framework (literal replications) or predicted contrasting results but for anticipatable reasons (theoretical replications).

Both types of replications were identified based on the different width of companies’ sustainability strategies in terms of commitment to specific sustainable development goals. Such a preliminary evaluation allowed us to distinguish companies with wider sustainability strategies (our literal replications) from those with narrower sustainability commitments (our theoretical replications). Both cases investigated how different types of sustainability strategies corresponded to different way of arranging and governing transactions by means of contractual solutions. Moreover, the analyses focused on how leading pasta companies used contractual clauses (attributes) that offer incentives to decentralize/centralize property rights (that is, control over pooled strategic assets) and/or decision rights (that is, governance for coordination purposes) to make farmers share their sustainable strategies and adopt sustainable collective innovations.

With regard to materials, the reliability of our case studies was substantiated by means of the triangulation of evidence, according to Yin [49]. This approach entails the convergence of empirical evidence from multiple sources of data in supporting the event or fact under investigation. Information gathering was conducted using different sources of evidence along the period 2018–2020. Documental information and multiple direct observations with experts and stakeholders were used to evaluate and validate companies’ sustainability strategies, in addition to focus groups with stakeholders and key informants. These sources were decisively complemented by the analysis of 19 contracts between durum wheat producers (or their associations) and buying companies (pasta factories or collectors who act on their behalf). Contracts under investigation were highly illustrative of the Italian supply chain of durum wheat since they were mostly signed by some of the leading pasta producers and durum wheat processors in Italy. Copies of the original signed contracts were gathered during interview with experts and stakeholders.

In more details, the empirical analysis was organized as follows:

• First, we detected which were the characteristics of the sustainability strategies promoted by the Italian pasta factories, in terms of specific objectives pursued based on available documentations (leaflets, company website, and publications) that were scrupulously fact-checked by means of open interviews with stakeholders and key informants. As a result, we identified, specified and associated each case with at least one of the 17 SDGs of the UN;
• As second step, we classified pasta factories according to the width of their sustainability commitments (that is, the number and typology of SDGs to which they intend to contribute) in order to identify literal and theoretical replications of our multiple embedded case study;
• The third step entailed the analysis of the relationships between different level of sustainability commitments and types of contracts used in order to govern transactions between pasta producers and durum wheat producers. Thus, we carefully explored and classified the variety of contractual clauses at stake and their functions related to the type of incentives they provided;
• Lastly, we scrutinized incentives in order to comparatively investigate whether and how different width of sustainability commitments differently impacted the centralization/decentralization of decision and property rights among pasta factories and farmers.

4. Results and Discussion

4.1. Case Studies and Contracts under Analysis

To illustrate, based on the availability of contractual agreements (and with no presumption of representativeness), we analyzed 11 case studies represented by pasta and semolina producers offering contracts to farmers (durum wheat producer). Each case study encompassed at least one contract (our unit of analysis). Henceforth, a description of the 11 case studies (and the related contracts) is provided.

Case study A is De Matteis spa, an important pasta factory with two production plants, located in central and southern Italy, close to the main cultivation areas for durum wheat (Puglia, Basilicata, Campania, and Molise). In this case, we analyzed two contracts (A1 and A2) that were used by De Matteis spa to indirectly buy Italian durum wheat of cultivar “Grano Armando” from farmers. In both cases, seed companies and collectors, in partnership with De Matteis, provided farmers with inputs and technical assistance to obtain high-quality and sustainable Italian durum wheat with high protein contents and low residuals of pesticides. Then, collectors bought durum wheat from farmers and sold it to De Matteis spa. Overall, the “Grano Armando” production contracts encompass around one thousand farmers, for a cultivated area of 12,000 hectares located in nine Italian regions.

Case study B is the leading Italian multinational for pasta production, Barilla spa. In this case we explored five contracts (identified as B1, B2, B3, B4, and B5) for high-quality durum wheat of different cultivar (i.e., Svevo, Aureo, and Marco Aurelio). Barilla widely uses long-term contracts that foresee both a fixed price and premium prices, under specific conditions, to ensure better economic conditions to farmers and incentivize the adoption of sustainable cultivation practices. Contracts included Barilla partners (collectors and other companies) that provide farmers (and their associations) with inputs and technical assistance and then bought and stored durum wheat before processing and pasta production. Moreover, Barilla elaborated a “Decalogue for a sustainable cultivation of high-quality durum wheat” and a decision support system available through a digital platform (granoduro.net) that allows contracting farmers to introduce innovative practices and techniques to reduce fertilizers, pesticides, and emissions. Barilla triennial contracts are aimed to buy around 210 thousand tons of durum wheat, of which a large majority is for the high-quality “Voiello” pasta trademark, made of cultivar “Aureo”.

Case study C is La Molisana srl, one of the emerging companies in the Italian pasta sector, owned by the processing company Ferro Semolerie Molisane srl. La Molisana is strongly involved in corporate social responsibility activities aimed to improve sustainability of pasta, for instance investing in recycling pasta packages and decision support systems for farmers to reduce input use and emissions. We investigated the content of two contracts (C1 and C2) for the production of “Maestà” and “Don Matteo” durum wheat cultivars, where seed companies and collectors provided farmers (or their associations) with inputs. Then, in turn, collectors sold the final product to Ferro Semolerie Molisane srl, which processed it first into semolina and then into pasta, which is finally commercialized with La Molisana brand.

Case study D is Sgambaro, a pasta factory strongly active in promoting sustainability and mainly focusing on local and organic production of durum wheat. Interestingly, its plants are located in Northern Italy, which is not the typical area for durum wheat production. In this case, we focused on one single contract (D1) between a collector and the farmer for the organic production of the national cultivar, “Cesar”. First, the collector provided farmers with inputs from Sgambaro trusted partners (mainly seed companies). Lastly, the same collector bought and stored durum wheat on behalf of Sgambaro, before pasta manufacturing occurred.

Case study E is Divella spa, another leading Italian pasta producer. The company aims to produce high-quality and sustainable pasta in line with consumers’ request and, therefore, makes large use of contracts to buy durum wheat from Italian farmers. We analyzed in detail two contracts (E1 and E2) between farmers and collectors, which then provided Divella with durum wheat of “San Carlo” cultivar.

Case study F is De Cecco spa, one of the leading pasta companies in Italy. It strongly promotes corporate social responsibility projects and activities in the pasta sector. We analyzed two contracts (F1 and F2) that encompass farmers’ associations, which, in turn, first provide producers with seeds and inputs (previously bought from trusted De Cecco partners) and, then, collected and sold durum wheat of the cultivars, “Don Matteo” and “Farah” to De Cecco.

Case study G is the Antico pastificio lucano, a regional pasta factory located in Southern Italy (Basilicata region). It aims to produce high-quality pasta using traditional manufacturing methods. We analyzed one contract (G1) that included several actors (farmer, collector, processor, and pasta producer). To illustrate, first, the collector bought durum wheat from farmers. Then, this durum wheat was sold to the processor. Lastly, durum wheat semolina was given to the Antico pastificio lucano for pasta production.

Case study H is F.lli Martimucci, a semolina and pasta producer that is located close to the main area of production of durum wheat in Italy, in the Puglia region. It produces several varieties of pasta, also focusing on organic production and quality certification. We explored the content of one contract (H1), which encompassed farmers, a cooperative of collectors, and F.lli Martimucci company. In this case, the cooperative provided farmers with inputs and then bought durum wheat on behalf of the pasta producer.

Case study I is Rustichella d’Abruzzo, a regional pasta factory located in Abruzzo, in Southern Italy. It mainly produces high-quality pasta using artisanal and traditional methods. We analyzed one contract (I1), where first farmers were provided by trusted companies with seeds and inputs and then a collector bought their durum wheat (cultivar “San Carlo”) on behalf of Rustichella.

Case study J is Consorzio agrario di Siena, which is a cooperative of farmers from Tuscany in Central Italy, that process durum wheat for the production of the “Pasta dei coltivatori toscani”. We investigated one contract (L1), where the Consorzio agrario di Siena played the role of provider of inputs to associated farmers (located in the provinces of Siena and Arezzo, in Tuscany) and then bought their durum wheat (of two varieties, “Maestà” and “Don Matteo”) for pasta production.

Lastly, case study K is De Vita srl, a processor which produces semolina from organic agriculture using 100% Italian durum wheat. In this case, we analyzed a contract (M1) where De Vita srl directly bought durum wheat from farmers to produce semolina for the pasta industry.

In the following sections results of the empirical analysis conducted on 11 case studies are reported, in order to address the research questions, we elaborated on the conceptual framework. Main findings are described following the steps of the analytical procedure we adopted.

4.2. Analysis and Classification of Sustainable Strategies of Italian Pasta Factories

As initial step, we analyzed the sustainability strategies of our case studies to answer the first research question (RQ 1). They reveal a certain degree of differentiation among companies. Figure 3 shows that our case studies cover a wide range of SDGs, such as 12 out of 17 SDGs.

These goals encompass traditional food security goals as well as socio-economic and environmental target; SDG 2 “zero hunger” (directly related to the provision of semolina and pasta in order to ensure food security) clearly prevails in terms of frequency (100% of cases). It is followed by SDG 12 “responsible consumption and production” (64% of cases), mainly due to actions aimed to reduce waste generations and foster a sustainable management of natural resources and SDG 7 “affordable and clean energy” and SDG 13 “climate action” (both 55% of cases), respectively, with regard to the use of renewable energy from photovoltaic and solar thermal power plants for pasta making and other actions aimed to reduce the use of pesticides and chemical inputs). SDG 8 “decent work and economic growth” and SDG 15 “sustainable use of terrestrial ecosystems” (both 36%) are also involved, because some pasta producers require farmers’ upholding working and employment standards as well as environmental practices, such as reducing soil tillage and increasing cropping diversification to combat desertification and halting and reversing land degradation and biodiversity loss. Moreover, SDG 3 “good health and well-being” and SDG 9 “industry, innovation and infrastructure” are also mentioned (both 27%), because some companies promote food quality and healthy food without renouncing to introduce technological innovation (decision support systems, precision farming techniques). Other goals (SDG 4, SDG 5, SDG 6, and SDG 11) are involved sporadically and to a lesser extent. These findings reveal that pasta factories’ contribution to SDG is similar to that of other agri-food sectors [44], and they are also aligned with the previous research contributions in the existing literature. According to previous contributions, results confirm that SDG 2 “zero hunger” is the most important for the agri-food sector [51,52,53,54]. Moreover, the link with SDG 12 is in line with the findings from previous research and confirm the interest of the agri-food sector in sustainable development [53,54]. Specifically, the centrality of this latter SDG highlights how the agri-food sector is concerned with the development of waste management practices for responsible internal and external consumption processes [55]. Moreover, the relevance of SDG 3 and 8 show that the food companies are responding to stakeholders’ increasing concern for healthy, safe, and fair foods and production chains [56,57]. All in all, results also allow us to recognize that progresses toward sustainable production and consumption (SDG 12) as well as climate change prevention (SDG 13) and improvement in energy efficiency (SDG7) in the agri-food sector are achievable, even if mainly in a collaborative fashion throughout supply chains efforts [42,58].

A further step is to classify our case studies according to the width of their sustainability commitments. Based on the number of SDGs to which each companies’ sustainability strategy refer, we can split our cases in two groups, corresponding to literal and theoretical replications (Figure 4).

The first group is composed by 4 out of 11 cases that declared to commit to the achievement of at least 50% of the overall 12 SDGs identified in the previous steps; therefore, these are companies that reveal a wider sustainability strategy and, according to our conceptual framework, represent our literal replications.

To illustrate, they are all pasta producers’ companies that reveal a strong commitment to the achievement of a wide array of SDGs, such as contributing to food security (SDG 2) and responsible consumption and production (SDG 12), ensuring affordability and clean energy, as well as committing to climate action (SDG 13) and decent work and economic growth (SDG 8); in some cases, they also strive for sustainable use of terrestrial ecosystems (SDG 15) and good health and well-being (SDG 3).

However, the remaining seven cases reveal a lower level of commitment toward sustainability targets and represent our theoretical replications. They cover a narrow array of SDGs, being mainly committed to ensuring food security (SDG 2). Other socio-environmental goals are less frequent instead, such as fostering a responsible consumption and production (about 40% of cases) and (in less than 30% of cases) contributing to affordable clean energy.

As a result, the literal replications encompass 10 out of 19 contracts at our disposal, whereas the theoretical replications encompass the remaining 9 contracts.

4.3. Analysis and Classification of Contractual Attributes and Functions

In order to answer the second research question (RQ 2), the third step of the analysis concerns the examination of contracts used by pasta factories to buy durum wheat from farmers and their associations.

Table 2. Analysis of contracts (n = 19): identification of functions and types of contractual attributes (marked with the symbol “✔”).

			Functions and Types of Contractual Attributes
			Control over Strategic Assets		Coordination of Production Decisions							Coordination of Decisions on Selling			Safeguard Clauses
Type of Case Study	Case Study ID	Contract ID	Identification of Cultivated Area—Location and Provenance	(Supply of) Durum Wheat Cultivar	Agricultural Practices (Production Specification)	Technical Assistance	Decision Support System	(Environmental, Social) Certification/Requirements	Quality Requirements	Pesticides Requirements (Acceptability Threshold)	Premium Price for Protein Content	Fixed Price	Modality of Payment	Modality of Delivery	Exclusivity	Non-Disclosure	Visit and Inspections
Literal replications	A	A1	✔	✔	✔	✔		✔	✔		✔	✔	✔	✔	✔	✔	✔
		A2	✔	✔	✔			✔	✔	✔	✔	✔	✔	✔
	B	B1	✔	✔		✔			✔		✔	✔	✔	✔	✔
		B2	✔	✔	✔			✔	✔		✔	✔	✔	✔			✔
		B3	✔	✔	✔	✔	✔		✔		✔	✔	✔	✔	✔	✔	✔
		B4	✔	✔	✔	✔	✔		✔		✔	✔	✔	✔	✔	✔	✔
		B5	✔	✔	✔	✔	✔		✔		✔	✔	✔	✔	✔	✔	✔
	C	C1		✔	✔	✔	✔		✔		✔	✔	✔	✔			✔
		C2	✔	✔	✔	✔	✔		✔		✔	✔	✔	✔	✔	✔	✔
	D	D1	✔	✔	✔	✔		✔	✔	✔	✔		✔	✔	✔		✔
Theoretical replications	E	E1	✔	✔					✔		✔			✔
		E2	✔						✔	✔	✔		✔	✔	✔
	F	F1	✔	✔	✔	✔		✔	✔		✔	✔	✔	✔	✔	✔	✔
		F2	✔	✔	✔				✔	✔	✔	✔	✔	✔	✔	✔	✔
	G	G1	✔		✔			✔	✔		✔		✔	✔	✔		✔
	H	H1	✔	✔	✔	✔			✔		✔		✔	✔		✔	✔
	I	I1	✔	✔	✔	✔			✔		✔	✔	✔	✔	✔	✔	✔
	J	J1	✔	✔	✔	✔			✔		✔	✔	✔	✔	✔
	K	K1	✔					✔	✔		✔	✔		✔	✔	✔	✔

shows the contractual clauses (attributes) identified in each contract. What emerges is a rich and wide combination of contractual attributes. We can identify 15 distinct contractual attributes, which include a variety that goes far beyond the traditional clauses (referred to price, quantity, modality of payment, and, sometimes, modality of delivery) used in basic contracts for selling/buying products in order to coordinate decisions rights on trading only. Other important contractual attributes are at stake, with specific and relevant functions related to the type and intensity of incentive they provide. Results confirm that contracts have progressively spread in the Italian pasta sector to encourage farmers to join sustainability strategies promoted by pasta and semolina producers and to adopt sustainable innovations as well [14]. Accordingly, we are able to distinguish functions related to (i) controlling over strategic asset, (ii) safeguarding against opportunistic behavior to protect specific investments, and (iii) coordinating product decisions. This evidence supports the fact that production contracts require farmers to make a series of commitments and play a fundamental role as governance structures in terms of allocation and coordination of decision and property rights, appositely specified in contractual clauses [37,45,46,59]. We observed the presence of two clauses that directly incentivize a certain degree of centralization of control over strategic assets (mainly, land and inputs). However, these clauses contributed to identifying and establishing in advance the amount and the location of the cultivated area and, therefore, to foreseeing the provision or the use of specific seed varieties to ensure the provenance of the raw material and produce 100% Italian grain semolina brands.

Moreover, we identified several attributes aimed to incentivize a more centralized coordination of the decisions about the production process. They particularly respond to the need of ensuring at the same time high-quality, safe, and sustainable durum wheat to pasta factories. In our cases, all these goals can be achieved by means of specific terms referred to in the production processes, which introduce and establish specific quality requirements, premium prices for protein content above certain thresholds, production specifications, provision of technical assistance (sometimes joined by decision support systems), limitations to the use of pesticides, and presence of (environmental and social) certifications or standards.

To illustrate, both monetary and nonmonetary incentives are, therefore, at stake. As for the former, the production contracts guarantee the purchase of durum wheat at fixed prices, ensuring farmers against market volatility and uncertainty. Furthermore, a premium price, which varies according to the protein content of wheat, is added to the fixed price. Consequently, farmers are pushed to constantly improve their efforts in order to provide high-quality durum wheat and to access to the highest premium price. Other studies [60,61] also highlight that contracts tend to reduce the market uncertainty related to price fluctuations, to which European farmers are exposed after CAP reforms eliminated price support mechanisms for several productions. At the same time, results confirm that monetary incentives provided by contracts represent a useful tool to encourage farmers to improve the quality of raw materials and to adopt more sustainable cultivation practices in different sectors [37,44,62]. With regard to nonmonetary incentives, the provision of technical assistance and decision support systems revolving around a production specification for durum wheat cultivation plays a key role in sharing collective sustainable strategies, as they guarantee the access to knowledge and technologies that would otherwise be precluded to most farms involved in wheat production. Therefore, contracts offering the access to knowledge and new technologies allow responsible agri-food companies to ensure the supply of sustainable raw materials and to create shared value along the agri-food chains [37,44,63,64].

Lastly, we also observe some typical safeguard clauses. However, they foresee field visit and inspections aimed to guarantee a correct application of production requirements and techniques established in contracts. Therefore, exclusivity and nondisclosure clauses are introduced to protect strategic investments and innovations at stake. In line with the classification of contractual functions proposed by Mellewigt et al. [65], these terms are aimed to protect specific investments against possible opportunistic behaviors.

4.4. Impacts of Collective Sustainable Commitments on Decision and Property Rights

As a final step and useful in responding to the third research question (RQ 3), we examine whether a wider sustainability strategy can affect governance of transactions promoting a higher level of centralization of property and decision rights between pasta factories and farmers. To do so, we comparatively analyzed the occurrence of the types of contractual clauses across our literal and theoretical replications. As a result, Figure 5 compares the frequency of each of the above-identified 15 contractual attributes in companies with different width of their sustainability strategies.

To illustrate, apart from some contractual attributes that are common to both literal and theoretical replications (such as quality requirements, premium price for protein content, and modality of delivery), differences emerge based on the width of sustainability strategy pursued by pasta and semolina producers.

First, in most of the cases, companies with wider sustainability commitments (that is, literal replications) make a larger use of contractual terms, confirming that the latter are widely used to adapt and coordinate techniques and practices of production in order to increase farms’ performances in terms of environmental sustainability [66]. Such a richness of contractual details determines some consequences in terms of incentives to centralize both property and decision rights, with shift of rights to the buyer and loss of autonomy for farmers as potential side effect, in line with a traditional trend of modern agri-food systems all over the world, as highlighted by Van der Ploeg [67]. Additionally, we notice a larger adoption of attributes by which pasta factories incentivize the centralization of control over strategic assets. Consequently, farmers often agree to externalize the provision of key inputs and then, according to Van der Ploeg [67], the labor process needs to be modified to meet the requirements of the acquired inputs. This is particularly the case of the provision of specific seed varieties, which are key specific investments made by pasta factories and their partners (i.e., breeding companies) in order to increase durum wheat productivity despite the reduction in chemical input (pesticides and fertilizers), as already noticed by Ciliberti et al. [59]. Therefore, it is not by chance that we also observe a higher frequency of contractual clauses aimed to centralize production decisions, which are another typical consequence of the modernization of agri-supply chains in Western counties according to De Schutter [68]. Attributes related to the presence of production specifications, provision of technical assistance and decision support systems, and request of environmental and social standards play such a role in enhancing coordination of decisions among parties related to a sustainable use of natural resources and a reduction in chemical input. In line with Ménard [69] and Cholez et al. [37], all these contractual attributes decisively contribute to making collective sustainability strategies feasible, strongly coordinating both the transfer and the application of innovation and knowledge across the supply chain, leading to co-investment and, in turn, to a more coordinated production of durum wheat, semolina, and pasta. Lastly, terms related to minimum guaranteed fixed prices ensure farmers involved in more sustainable productions against market and income uncertainty, confirming that durum wheat producers are not willing to bear the cost of environmental friendly techniques when such an effort is not explicitly compensated by additional revenues [44].

Therefore, pasta and semolina producers with narrower sustainability strategies tend to use more frequently safeguard clauses (such as exclusivity and nondisclosure clauses) as well as to specify and identify in advance areas of durum wheat cultivation. However, the contracts they offer to farmers and/or their associations are poorer of details and therefore, contain less incentives aimed to control strategic assets (apart from land) and production decisions.

All in all, our results confirm that progress toward some SDGs (such as sustainable production and consumption, climate change prevention, and improvement in energy efficiency) are difficult to achieve without a stronger coordination between leading companies and suppliers throughout their value chains [42]. In this regard, our study provides empirical evidence for some Italian pasta value chains that converge with previous findings, suggesting that an approach to obtain improved environmental performance is a hybrid of captive (direct supervision) and relational governance mechanism revolving around the design of production contracts containing environmental requirements and aimed to establish long-term relationship with suppliers [70].

5. Conclusions

The present work was aimed to investigate sustainability strategies and the adoption of sustainable collective innovation pursued by pasta and semolina producers, focusing on the role of production contracts as governance mechanisms to coordinate transactions with durum wheat producers. To this purpose, this study was based on an embedded multiple case study approach aimed to answer three different research questions. Some main contributions emerged that are worth noticing.

First, we examined both width and depth of companies’ sustainability commitments in terms of number of SDG involved. Results show that a variety of goals are involved in sustainability strategies in the pasta supply chain, ranging from traditional food security purposes to those more related to socio-environmental issues. However, a certain degree of heterogeneity in terms of strength and width of these strategies is at stake. Therefore, we also scrutinized the impacts of such a variety of strategies on contractual terms negotiated among pasta and semolina producers, on one hand, and farmers, on the other hand.

As a second result, we observed that differentiation emerges also in the way transactions with farmers are managed and governed by means of contractual arrangements. We observed that companies revealing stronger sustainability commitments (that is, involved in the achievement of a larger number of SDGs) tend to offer farmers contracts with a wider array of contractual attributes. This leads to the elaboration of contractual clauses with different monetary and nonmonetary incentives (such as premium price for quality, agreement on product specification, request for certifications, and so on), that in turn impose different allocation of property rights (i.e., different use of land and strategic inputs) and decision rights (different production decisions).

The third and last finding, in line with theoretical expectations based on most recent advancement in the field of NIE, reveals a pattern with higher levels of sustainability strategies corresponding to higher levels of incentives offered by buyers in order to centralize decision and property rights. In this regard, a decisive role is played by contractual clauses referred to the provision of inputs, technical assistance, and decision support systems to incentivize farmers to comply with strict production specification imposed by buyers. As a whole, these terms contribute to rationalize both the use of chemicals (i.e., fertilizers and plant protection products) and the use and consumption of natural resources (i.e., soil, water, and energy) owned and managed by farmers, aimed to make production processes more sustainable.

In conclusion, even declaring the main limitations of the study due to the qualitative nature of the research approach and the non-random selection of the cases, some implications are at stake that can contribute to some analytic generalization of the theory. On one hand, pasta and semolina producers ensure and safeguard their supply of Italian, sustainable, and high-quality durum wheat and, most importantly, the possibility to contribute to SDGs to meet pressing citizen-consumers’ requests related to the sustainability of pasta production. On the other hand, contractual terms and incentives also lead to a loss of autonomy for durum wheat producers. They are not allowed to choose inputs anymore, which are instead directly provided by buyers and their partners (mainly seed companies and other intermediaries). Likewise, farmers’ managerial and decisional autonomy is bound to the compliance with specific farming practices, which are also subject to inspection visits by buyers and/or their specialists. As a direct consequence, building on NIE theory, this research adds empirical knowledge about the key role played by production contracts as transaction–cost economizing solutions in governing and coordinating the implementation of a variety of collective sustainability strategies and their direct consequences.

Lastly, implications and recommendations for both managers and policymakers emerge. The former need to recognize that the intimate relation between governance configurations and sustainability strategies is affected by the nature of transactions and goods at stake as well as by the connection between stakeholders, value chain structure, business strategy, institutional factors, and regulation context. As for the latter, in a framework characterized by an increasing demand for sustainability from citizen-consumers, they must be aware that price signals do not necessarily provide sufficient incentives to ensure sustainable pasta and semolina production in the short and medium run. Finally, alternative governance solutions, such as production contracts, should be endorsed. In this sense, attention must be paid to contractual design and their implementation, without neglecting to monitor how (and the extent to which) contractual terms impact on farmers’ decisional autonomy to safeguard producers’ sovereignty and freedom of initiative, fully grasping the real spirit of the 2030 Agenda and the Farm to Fork strategy. To this purpose, future researchers may aim to expand the study of production contracts to other sectors at the European level.