Cooperative behavior between companies and contract farmers in Chinese agricultural supply chains. Relational antecedents and consequences

Publication Date11 Jun 2018
Pages1033-1051
DOIhttps://doi.org/10.1108/IMDS-05-2017-0194
AuthorShaoling Fu,Zhiwei Li,Bill Wang,Zhaojun Han,Baofeng Huo
subjectMatterInformation & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems
Cooperative behavior between
companies and contract farmers in
Chinese agricultural supply chains
Relational antecedents and consequences
Shaoling Fu and Zhiwei Li
College of Economics and Management, South China Agricultural University,
Guangzhou, China
Bill Wang
School of Engineering and Advanced Technology, Massey University,
Auckland, New Zealand
Zhaojun Han
Institute of Systems Engineering, Dalian University of Technology, Dalian, China, and
Baofeng Huo
School of Management, Zhejiang University, Hangzhou, China
Abstract
Purpose The purpose of this paper is to explore the relationships between relationship commitment,
cooperative behavior and alliance performance in agricultural supply chains. By investigating dyadic
relationships between companies and their contract farmers (hereafter denoted by C+F), this study aims to
investigate how relationship commitment influences cooperative behavior and how such behavior further
influences alliance performance in C+F agricultural supply chains in China.
Design/methodology/approach Based on data collected from 202 companies and462 farmers in China,
this studyuses the structural equation modelingapproach to test the conceptualmodel and related hypotheses.
Findings For both companies and contract farmers, normative relationship commitment is a necessity for
economicallyand socially cooperativebehavior (i.e. specificinvestment and communication,respectively), while
instrumental relationship commitmenthas no relationship with specific investment. Only socially cooperative
behavior (communication) can improvealliance performance, whileeconomically cooperative behavior(specific
investment) has no relationship with alliance performance. For companies, instrumental relationship
commitment reduces communication, but specific investment increases communication. For farmers, both
instrumental relationship commitment and specific investment have no relationship with communication.
Originality/value This study contributes to the literature on supply chain management by adopting a
bilateral perspective and examining relationships among relationship commitment, cooperative behavior and
alliance performance in the C+F context. It provides agricultural companies and contract farmers with
valuable guidance to use relationship commitment and cooperative behavior to improve alliance performance
in agricultural supply chains in China.
Keywords Relationship commitment, Alliance performance, Agricultural supply chain, Cooperative behaviour
Paper type Research paper
1. Introduction
In the agricultural sector, many companies collaborate with farmers on a contractual basis
(Trebbin, 2014). This mode of cooperation between one company and its contract farmers
(C+F) is known as contract farming, which can be defined as a system for the production
and supply of agricultural product under forward contracts with the essence of such
contracts being a commitment to provide an agricultural commodity of a type, at a time and
price, and in the quantity required by a known buyer(Singh, 2002, p. 1621). In China, C+FIndustrial Management & Data
Systems
Vol. 118 No. 5, 2018
pp. 1033-1051
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-05-2017-0194
Received 17 May 2017
Revised 1 September 2017
30 October 2017
Accepted 16 December 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
This research was supported by the National Social Science Fund of China (16BGL128).
This paper forms part of a special section Featured issue on supply chain innovation.
1033
Chinese
agricultural
supply chains
is one of the dominant modes of alliances between agricultural companies and farmers
(Wang et al., 2014). Companies cannot buy rural land, but they are equipped with advanced
production and marketing knowledge; conversely, farmers have the right to use the land,
but they are generally less educated and suffer from poor, inefficient production and
underdeveloped infrastructure (Wang et al., 2014). With C+F alliances, companies receive a
substantial supply of primary agricultural products by providing services before and
during production; farmers improve production efficiency and sell their products at fair
prices by consulting and communicating with companies ( Jia and Bijman, 2014). The
success of C+F alliances largely depends on mutual investment and close communication
between the two parties. These two types of cooperative behavior, whether specific
investment as economically behavior or communication as socially behavior plays a salient
role in influencing alliance performance, remains unexplored.
More importantly, studies find that although C+F alliances have the potential to benefit
both parties, such alliances face the problems of opportunism. For example, farmers may
exploit their supported inputs for non-contracted purposes ( Jia and Bijman, 2014), while
companies may seek market monopolies based on a full understanding of farmers. Thus, the
potential for opportunism in C+F alliances may greatly reduce both partiesincentives to
invest and communicate. Therefore, it is critical to investigate the antecedents that facilitate
specific investment and communication in C+F alliances.
Relationship commitment is central to all relational exchanges between supply chain
partners (Kwon and Suh, 2004). For example, relationship commitment plays an important
role in promoting collaborative supply chain activity such as customer integration
(Zhao et al., 2008) and supply chain coordination (Huo et al., 2015). Because relationship
commitment is likely to influence cooperative behavior in C+F alliances, it is important to
investigate the role of relationship commitment in China. China is a relationship-oriented
(Guanxi) society where deals grow out of relationships, whereas in the west relationships
grow out of deals (Vanhonacker, 2004). Chinese people heavily rely on relationships to open
dialogue and conduct business (Park and Luo, 2001). However, Chinas culture emphasizes
that collective interests are paramount and that individual interests should be subordinate
to those of the larger group (Chow et al., 2000; Eaton and Louw, 2000). This suggests that
relationship commitment is vital to businesses in China. Relationship commitment can be
classified into normative and instrumental commitment between exchange parties (Zhao
et al., 2008; Brown et al., 1995). However, there is scant research exploring whether
normative or instrumental commitment is more effective in promoting cooperative behavior
in the new setting of C+F alliances.
Therefore, this study aims to answer two research questions:
RQ1. How do the two types of cooperative behavior (i.e. specific investment and
communication) influence alliance performance in C+F alliances?
RQ2. How do the two types of relationship commitment (i.e. normative and instrumental
commitment) influence cooperative behavior in C+F alliances?
Distinct from traditional supply chain relationships, C+F relationships are characterized by
one-to-many configurations and severely unbalanced relationships between companies and
contract farmers (Fu, Lin and Sun, 2013). Normally, companies have absolute power in C+F
alliances and can decide the time, quantity and quality of products to be supplied, whereas
farmers are in a relatively weaker position. However, due to the different capacities of
companies and farmers, assets devoted to the relationships are different for each party,
placing companiesin the more vulnerable position of facing more opportunismfrom farmers.
For example, farmers usually devote land, labor and other tools to these relationships, and
their investments eventually bring about an output of products. Companies usually devote
advanced tools, technical support and knowledge to the relationships, and their investments
1034
IMDS
118,5

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