A conceptual framework for supply chain governance: An application to agri‐food chains in China

Chinese agri-food chains consist of the millions of small scale farmers, who are not well structured and organized in the supply chain. Owing to market liberalization and globalization, one of the most challenging issues along agri-food chains in China is becoming the issue of how to link these small-scale farmers into the modern chains. Consequently, it is essential for both policy makers and private sectors to understand the governance structure in agri-food supply chains. Therefore, the purpose of this paper is to develop a theoretical framework for supply chain governance, including its antecedents and consequences, as well as a series of hypotheses for empirical testing. A conceptual framework of chain governance is proposed in this study, where governance structure consists of two dimensions: contractual governance and relational governance. The study intends to propose a complementary relationship between contracts and relational aspects, such as trust, in the Chinese context. Future research is needed to empirically test this model. The proposed conceptual model is unique, since the majority of the articles addressing this topic focuses on contract farming while limited research touches upon the issues of trust and relations. However, a combination of both contracting and relationships are seldom addressed. This paper evaluates a novel concept of two dimensional governance structure in the agri-food supply chain, where transaction cost economics theory and relational theory are combined to study the governance relationships between small scale producers in China and their buyers. [PUBLICATION ABSTRACT]