The governance of value creation and capture in agribusiness value chains: A New Zealand case : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

The management of value chains is increasingly gaining the interest of practitioners and academics. Central to the concept of the value chain are the components of a common vision, collaboration, value creation, and a heavy emphasis on the final consumer. This perspective is in conflict with many agribusiness chains, particularly in New Zealand, where the majority of agricultural exports are sold as commodities. As the country’s legislation and economic plan has moved towards environmental protection and a shift from a ‘volume to value’ focus, farmers have been encouraged to become more entrepreneurial. In order for a supply chain to move from producing commodities to producing higher value products, chain upgrading takes place via improved technology, knowledge, and skills. Therefore, it is logical that when investigating a system as a whole, chain governance plays an important role in this process. However, this is still a relatively new area and there is a lack of research that adequately addresses the issue of chain wide governance and value chain upgrading. Adopting a multi-paradigmic approach, this research is anchored in organisational, econmic, and behavioural theory in an attempt to explore end-to-end chain governance in the context of value creation and capture objectives. While the adoption of a multi-paradigm approach is not not unusual, perhaps unique to this research is the application of the Resource-Based View of the firm at a supply chain level. This study provides evidence that unique competencies and the resources deployed act as isolation mechanisms that all actors in the chain benefit from. Thus, providing some empirical support that the Resource-Based View of the firm is applicable at the chain level, rather than just a firm view. Further, this thesis proposes several value chain attributes important in the value process, and introduces a conceptual framework that illustrates the governance decision making that takes place within a chain in the pursuit of value creation and value capture goals. These attributes and conceptual framework form the basis of the research design and a multiple qualitative case study method was adopted. Five New Zealand agribusiness value chains were purposefully selected from across the agribusiness sector, and 34 interviews were conducted over a six month period. The findings suggest that there are a range of value chain attributes important to creating and capturing value. These attributes highlighted the importance of the consumer, social mechanisms, strong leadership, and product innovation and quality. Notably, the findings suggest that values are a driver for value creation and capture, acting as a moral boundary for firms and the ‘glue’ for inter-organisational relationships. While the consumer is indeed a crucial consideration, values were the main driver for the development of the product offering and also entering into, and maintaining business relationships within the context of a supply chain network. In addition to value chain attributes, a number of chain governance typologies were identified. This was enabled via the interviewing of participants across various stages of a chain, rather than a single dyad. Indeed, all chains had unique governance structures, thus, showing that there is no ‘no one size fits all’ when considering value chain governance. However, all chains in this study were aligned through shared goals, visions, and values. Finally, this research contributes to the governance literature through the separation of power and leadership. This study proposes that the two terms are distinct and that each play a role in the management of a value chain. The results suggest that the main influencer of the chain is the leader (not necessarily the power broker), who provides cohesion in terms of identity, purpose, and coordination of members. The power holder of the chain then dictates the product quality specifications and exerts influence in the contract negotiations. Thus, highlighting the multi-faceted issue of value chain governance.