Coordinating food quality: How do quality standards influence contract arrangements? A study on Uruguayan food supply chains

Abstract

Purpose The aim of this paper is to study the influence of quality standards on contract arrangements in food supply chains. Design/methodology/approach A qualitative double case study was conducted on the dairy and citrus sectors in Uruguay. A transaction cost theoretical framework was used. All current public and private quality standards applied by processors were studied in relation to contract arrangements between processors and upstream producers as well as downstream buyers for each sector. Findings Quality standards complement contract arrangements for upstream transactions, leading to hierarchy-type contract arrangements. Quality standards substitute contract arrangements for downstream transactions, leading to market- or hybrid-type contract arrangements. Research limitations/implications Longitudinal studies that measure changes in contract arrangements over time are recommended. Practical implications Supply chain actors can reduce transaction costs by aligning quality standards with appropriate contract arrangements – further supported by public instruments. Originality/value Quality standards have differential influence on underlying transaction characteristics, and therefore on contract arrangements, depending on the location of the transaction in the supply chain.