TCE determinants and governance forms in the EU “Non-GMO” soybean supply chain

Abstract

The purpose of this study is to deepen the understanding of transaction governance forms adopted along the non-GMO soybean supply chain in the EU and to discuss the governance choice using determinants (asset specificity and uncertainty) from Transaction Cost Economics (TCE). The TCE framework is used in two different empirical models. The first distinguishes between the adoption of alternative governance forms including spot markets, hybrids, vertical integration and also considers the simultaneous and parallel adoption of these forms in “plural forms”. The second model focuses on plural forms and investigates their composition using hypotheses developed from TCE. Data was collected through a survey including 150 companies operating in the EU soybean supply chain. Companies range from international traders to retailers of 15 EU countries, representing a truly unique dataset of information. TCE framework proved significant to explain how the introduction of non-GMO standards has impacted the governance of the supply chain. However, TCE reasoning only offers partial explanation regarding the composition of plural form of governance, which is also the most frequently observed followed by pure hybrid choice, spot market, and vertical integration. Results also show that the supply chain is structured differently across its different stages, with vertical integration being rarely observed except at the retailer stage. Surprisingly, spot market transactions are still frequently observed despite the adoption of non-GMO standards.