Specific investment, relational governance and cooperation risk: from the perspective of farmers in China’s “Company+Farmers” alliance

Junyi Wan, Lijun Zeng and Jiazhuo Ao

Applied Economics, 2019, vol. 51, issue 7, 676-686

Abstract: The ‘Company+ Farmers’ alliance is the main organization for China’s agricultural industrialization management. Based on the survey data of farmers cooperating with companies in Guangdong and Jiangxi Provinces, this article explores the relationship among farmers’ specific investment, the relational governance of the alliance and farmers’ cooperation risk. The results show that the relational governance of the alliance can be divided into cognitive relational governance and coordinated relational governance. Among these types, cognitive relational governance can significantly promote farmers’ specific investment. However, with the increase in farmers’ specific investment, farmers’ cooperation risk is significantly improved, and the coordinated relational governance can significantly enhance the role of farmers’ material-specific investment in promoting cooperation risk. Therefore, agricultural enterprises can use cognitive relational governance to encourage farmers’ specific investment, and the specific investment of farmers must rely on a contract governance mechanism.

Date: 2019
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DOI: 10.1080/00036846.2018.1508868

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