A strategic alliance model for economic organisation of small-scale forestry in Australia

Small-scale plantation forestry is likely to have a number of discrete agents contributing endowments to the production function. In this paper it is argued that the traditional methods of economic organisation used in plantation forestry may not be appropriate for achieving the objectives of the venture partners so alternative methods may be required. A strategic alliance model for small-scale plantation ventures in north Queensland is developed, which has multi-nodal features and which incorporate vertical and horizontal alliances. The core alliance is vertical and involves seven potential primary factors of production necessary for a successful forestry venture (namely land, labour, capital, silviculture skills, marketing skills, harvesting and processing skills and government). The strategic alliance model also incorporates horizontal alliances because each partner may participate in a network with other like partners within their field, therefore representing economies of size or scale alliances. The proposed model recognises the importance of minimising transaction costs, building trust, promoting sound corporate governance and ensuring continuing information exchanges between partners are being the factors behind successful alliances.