The objective of this perspective paper is to propose an analytical framework for the study of sustainable agro-industrial systems (AGS). Different from the prevailing literature, the article examines sustainability by its systemic character in which different economic agents are organized to produce and deliver sustainable goods to the ultimate consumer.

In general terms, although sustainability has been studied deeply by many researchers, few have advanced toward proposing a workable analytical framework. In this essay, the authors propose a comprehensive notion of sustainability based on a systematic approach rooted on the study of production chains and its vertical relations.

Specifically, the paper introduces the concept of netsystem: a strictly coordinated agro-system in which horizontal and vertical transactions play a key role and the institutional environment plays a strategic role. In order to accomplish this undertaking, the authors base their ideas on (i) assumptions form the New Institutional Economics, especially when studying the efficiency of productive chains (Coase, 1937; Williamson, 1985, 1996; Zylbersztajn, 1995; Zylbersztajn; Farina, 1999), and (ii) the concept of netchains (Lazzarini et al, 2001). The authors also explicitly incorporate into the analysis the role of institutions (North, 1991; Barzel, 1997), allowing for legal issues (legislation) and informal aspects (beliefs, costumes, taboos, etc.) to be predominately present in sustainability matters.

Considering this theoretical background, the paper introduces five propositions: (i) Sustainability may be interpreted as a specific asset within a particular supply chain; (ii) The transaction of ‘sustainability’ is highly dependent on the quality of the institutional environment, so that institutions become a key variable to value the specificity of sustainability; (iii) Sustainable products might be transacted along strictly coordinated systems; (iv) Regarding a sustainable AGS, the stability of the value chain presupposes the existence of vertical and horizontal coordination mechanisms; (v) The stability of a sustainable AGS stems from the convergence of interests of the (vertical and horizontal) coordinator agents.

The analytical framework is then illustrated by means of a comparative analysis of two empirical cases: (1) organic beef cattle netsystem and (2) a market alliance netsystem (GLP). In both cases, the coordination forms, the determining factors for a higher economic efficiency and the identification of potential failures are described.

As its main contributions, the paper: (i) introduces the assumption of sustainability as an asset, with different dimensions which are subject to value capture; (ii) proposes a netsystem model of sustainability in agro food chains; and (iii) examines institutions as strategic variables that effectively participate in the arrangements structured within a netsystem.