Governance of market-oriented fresh food value chains: export chains from New Zealand

Abstract

The competition in international food markets is increasingly moving towards products with higher levels of added value and higher degrees of differentiation, requiring companies to become more market-oriented. Market orientation is ‘the extent to which an actor in the marketplace uses knowledge about the market, especially about customers, as a basis for decision-making on what to produce, how to produce it, and how to market it’. Market orientation comprises three constructs: market intelligence generation, dissemination and responsiveness. Value chain governance can facilitate market orientation requirements. Value chain governance includes network governance, contracting and informal relationships. Knowledge about how governance can facilitate a value chain’s market orientation is limited. Therefore, the aim of this study is to explore how the governance of a global food value chain can facilitate the value chain’s market orientation. The study applies a multiple case study design. Four in-depth case studies were conducted on global food value chains from New Zealand to Western Europe dealing with the products apples, kiwis, venison and lamb. Interviews were conducted with actors from these four value chains in the Netherlands as well as in New Zealand. In each value chain actors with similar functions were interviewed in order to make the results comparable. Analysis of the case studies shows that network governance (i.e. leadership, shared governance and facilitation), contractual agreements (i.e. type and content: price, volume, quality) and informal relationships (i.e. trust and commitment) can contribute to the market orientation of a value chain. Leaderships and shared governance, in combination with good informal relationships in the chain, as well as contractual incentives, are main contributors to market orientation in global fresh food value chains. The paper adds to the still very scarce literature on governance of value chains and market orientation of value chains.

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