Governance structure and contractual arrangements: Sourcing strategy of agricultural enterprises

Abstract

Using the survey data of 86 fruit companies in Shandong and Shaanxi provinces, this article has conducted an empirical analysis of the governance structure and contract selection of the procurement of agricultural products. The survey found that the main sources of supply for agricultural enterprises are self-supported bases, cooperatives and dealers. Most companies have 2 to 3 supply channels. The source procurement governance structure through self-operated bases, cooperatives, and dealership channels corresponds to bureaucratic systems, hybrid systems, and markets, respectively. The statistical results show that among the 86 fruit companies, 26, 42 and 18 respectively have the procurement governance structure for the market, the mixed system, and the bureaucratic system; among them, the 42 source management structures for the procurement of mixed fruit products Among them, there were 16 and 26 written contracts and verbal agreements. The empirical analysis shows that the stronger the asset specificity and the higher the quality of the supply of goods, the more the source procurement governance structure tends to shift from the market to the mixed system or the bureaucratic system, and the more inclined it is to adopt a written contract instead of an oral agreement; When the uncertainty of transaction is high or the degree of trust to the supplier is high, the possibility of using the mixed system and the bureaucratic system for the supply management structure of agricultural enterprises is higher, and it is more inclined to adopt verbal rather than written contracts. (via Google translate)