Diversity of coordination mechanisms to support transactions : farmer - buyer relationships and farmer performance in the Brazilian pork chain

In the last decades consumers preferences have continuously triggered changes in quality regulations and the implementation of various private quality standards. New quality demands also imply new coordination arrangements to support transactions between food companies and their suppliers. To coordinate these transactions, food companies (i.e. buyers) use different types of governance structures (GSs) made up of different coordination mechanisms (CMs). These mechanisms are used to coordinate aspects such prices, quality, and allocation of resources (e.g. services, inputs). The general goal of this thesis is to analyse the complexity behind the GSs used to support transactions in the Brazilian Pork Chain (BPC). Furthermore, this thesis examines how these GSs impact on farmer performance and farmer investment. Brazil is the fourth world producer and exporter of pork. The quality standards and GSs used in this supply chain offer an interesting background to be examined with implications for theory and management. Chapter 1 presents a general introduction depicting the research problem, the research questions and the theoretical framework used in this thesis hich is grounded on Transaction Costs Economics, Supply Chain Management and Networks Theory. Chapter 2 examines, through an exploratory approach, the relationships between quality requirements and CMs. This study allows us to demonstrate that, in the BPC, chain actors use a wide array of CMs to support a non-diverse set of quality requirements. Quality requirements are based on public regulations and on a few specific requirements set by specific customers. The differences in CMs regard aspects such as base prices, criteria for bonuses, control on inputs and processes and resource allocation. Chapter 3 addresses the complexity of CMs embedded in a GS and the use of plural forms of coordination by individual buyers. A framework setting values of CMs on price, volume, quality and resource allocation, was used to demonstrate that a single GS (e.g. a contract) may include CMs on distinct positions within the market-hierarchy continuum. In addition, this framework is used, in four case studies, to support analyses on how and why individual buyers use plural CMs to support similar transactions. The main explanations that were found were the need to handle market fluctuations, the implementation of new and specific quality requirements, to adopt to CMs used by competitors, and to deal with bargaining power of specific groups of farmers. Chapter 4 applies structural equation modelling (SEM) to analyse influences of vertical (buyer-farmer) and horizontal relationships (farmer-farmer) on performance of pig farmers. Data were obtained through a survey questionnaire applied to 269 pig farmers. The results demonstrate that vertical and horizontal relationships improve performance and that horizontal relationships improve information exchange. In addition, the findings suggest that the context in which transactions take place (i.e. spot market, contracting), may affect these relationships. Chapter 5 analyses, based on the farmer survey, influences of buyer support on famer performance and farmer investments. A SEM analysis was applied to 199 farmers that deliver pigs through contracts. The results demonstrate positive influences of buyer support on farmer performance and farmer investment capacity. Chapter 6 provides a general discussion including theoretical, policy and management implications.