The Governance Mechanism Of Agricultural Products Transaction Relationship

Since 1980s, as promoting the reform of agricultural production system with household contract resposibility system as its core, Central Party Committee and State Council have launched the reform of rural distribution system centered on marketization, breakting up the monoply of state-owned commerce in rural distribution, and promoting marketization of distribution of rural commodities step by step. After over 20 years’development and reform, based on market regulation, the multi-form and multi-channel rural distribution system under national control has initially established. With promoting two forms, farmers have become the basic organization unit of agricultural prodution and agricultural products distribution. However, with these two reforms deepening, some new contradicions appear gradually, among which the contradiction between "small rural households" and "large market" is especially serious. The task of implementing agricultural industrialization is to solve how the "small rural households" enter into the "large market" under the condition of household contract system. Based on the above, scholars have studied considerably on the forms of economic organization which could bring the farmers into makets and their connections mechanism with fanmers in the progress of agricultural industrialization, and achieved fruitful results. In the extant researches, based mainly on New Institutional Economics, especially Transaction Cost Economics, scholars focus on the types and nature of contract in the transaction relationship of agricultural products and governance mechanism of breaking contracts and opportunistic behaviors caused by incomplete contract. Such single method not just lead to replicated researches, but is not conducive to know and understand relevant issues deeply. For instance, among the researches based on economics, since scholars pay much attention to contract types of various transtion relationship and their implicit propositions of economics, the other important level of transaction relationship——the process of establishing, developing, maintaining and terminating the transaction relationship, and the interaction behaviors of the parties during these processes——is not paid sufficient attention. According to Embeddedness of Economic Sociology, economic actions are embedded in social relationships. Thus, transaction behaviors can not be explained fully if the background of social interaction in which economic transaction behaviors are embedded is ignored. Based on New Institutional Economics, researches on agricultural products distribution are blind to the social dimensions of transtion relationships, which is main defect of development of theory and guidance of practice. Meanwhile, also based on New Institutional Economics, the extant researches on governance mechanism of transaction relationships of agricultural products are centered on Williamson’s model of transaction governance, and the social and cultural factors in transation relationships are ignored. Based on this, this paper will study the agricultural transaction relationship mainly from the perspective of relationship marketing and governance of marketing channel, and focus on two parts ignored:the process of establishing, developing, maintaining and terminating the transaction relationship, and the interaction behaviors of the parties during these processes. By focusing on social cultural background of transaction relationships, this paper will study deeply some factors of social behaviors and their impact on stablity of transaction relationships.The findings could be summarized as follows:First, the transaction relationships include economic dimension and social dimension. This paper introduces the political economies comparative analytical framework of marketing channel to distribution channel of agricultural products, and establishes a political economies analytical framework of distribution channel of agricultural products. According to analytical framework of political economies, this paper regards transaction relationships of agricultural products as analytical unit, and then divides the field of distribution of agricultural products into economics dimension and social dimension. Based on this analytical framework, through studying the literatures on distribution of agricultural products, this paper finds most researches focus on economic dimension of transaction relationships of agricultural products, which mainly discuss the types of agricultural products transaction, nature and types of contract and decision mechanism in transaction relationships. Compared with literatures mainly on economic dimension of agricultural products, literatures lack social dimension of agricultural products, especially interaction between economic dimension and social dimension. According to this, the researches on social behaviors of transaction relationships of agricultural products should be strengthened, and the attention to the impact of various factors of social behaviors on transaction performance should be paid in particular. Based on Marketing, behavioral dimension of transaction relationships of agricultural products could be studied deeply by borrowing theory about relationship marketing and marketing channel behavior. But during such process, the problem of theoretical generality caused by transforming background and object of research should be paid attention.Second, factors of social behavior have significant impact on life cycle of transaction relationships of agricultural products. Based on political economies analytical framework of agricultural products distribution, to explore the behavioral dimension of transaction relationships of agricultural products, the impact of factors of social behavior on the process of establishing, developing, maintaining and terminating the transaction relationships of agricultural products are studied firstly. Two cases studies confirm the political economies analytical framework. In the life cycle of transaction relationships of agricultural products, traditional economies focus on price, competition, etc. In addition to that, factors of social behavior, such as equity, conflict, satisfaction, use of power, trust and promise, also have significant impact on the life cycle of transaction relationships of agricultural products. But such impact is different due to the types of transaction relationships. In market transaction relationships, price is the only determinants in the beginning stages of transaction relationships, while as the transaction relationships developing, factors such as equity, satisfaction, trust play more and more important role. In the contract transaction relationships of made-to-order agriculture, since transaction relationships are long-term oriented initially, price plays less important role than in market transaction relationships. On the contrary, factors such as solving conflict, use of power, level of satisfaction, trust and promise play extremely important role in the developing process of transaction relationships. Findings of the two case studies confirm the view of the theoretical research in this paper. The running mechanism of the transaction relationships of agricultural products could be understood comprehensively by studying the dimensions of social behavior.Third, the behavioral norms of interpersonal relationships embedded in rural social culture are an important transaction governance mechanism of agriculture. As mentioned, the extant researches on governance mechanism of transaction relationships of agricultural products mainly regard New Institutional Economics as theoretical tool, and most of them are based on Williamson’s classic theoretical framework. However, factors of social behavior in transaction relationships are ignored. Based on this theoretical gap, this paper introduces marketing channel governance and relationship marketing to transaction relationship governance of agricultural products, and focus on the factors of social behavior Economics analytical paradigm ignores. Findings of cross-case study show that, in different transaction relationships of agricultural products, there is a transaction relationship which provides internal stability mechanism, inhibits opportunistic behaviors, and promotes the governance mechanism of transaction performance. Such governance mechanism is rooted in the behavioral norms of interpersonal relationships in China rural social culture. This result, on the one hand, confirms the important role of governance mechanism in marketing channel governance theory; on the other hand, this result enriches and extends to some extent the researches on relationship governance, because the governance mechanism of behavioral norms of interpersonal relationships in rural social culture could not be totally equal to relationship governance in literatures on marketing channel governance theory. The former reflects the Chinese local culture better, in which the interpersonal behavioral norms are embedded, rather than behavioral norms of relationship governance are established on the interactions of firms, as western scholars argue. From this point of view, researches on "relationship governance" mechanism in Chinese culture should be deepened, which is also helpful to promote the governance theory of marketing channel.Fourth, government should position its role exactly and the level of participation in the work of promoting transaction performance of agricultural products. In agriculural industrialization, the role and responsibility of government, especially local government in promoting transaction performance of agricultural products are always hot issues scholars are concerned about. Theoretically and practically, the roles of local government are tending to be rational and reasonable, and transform from intervening directly in transaction relationships of agricultural products to providing public goods and assiting indirectly. Findings show that, government defines its role reasonably in participating in transaction relationships of agricultural products, which is significant to promote transaction performance and increase farmers’income. On the one hand, the local governmeng can not be free with the distribution of agricultural products, which is determined by the reality in Chinese country. Government not just provides public goods, such as market information, transportation, but help establish the transaction relationships between firms and farmers. On the other hands, when intervening in the distribution of agricultural products, government must define its roles and resposibilities clearly. It is appropriate to be provider of publice goods to intervene in transaction relationships of agricultural products, rather than pursue profits or control the distribution of agricultural products. It is beyond the main body of this paper to discuss deeply and detailedly the roles and resposibilities government plays in the distribution of agricultural products. However, it is an important theoretical and practical issue that is worthwhile to study deeply.