The effect of institutional innovations on food chain governance: a case study on the shifting role of the German QS system from certification to supply chain coordination

Abstract

In many European countries such as the Netherlands, France and Germany there is high division of labour in the red meat sector. In response to emerging demands for the meat industry, such as seamless traceability, increased food safety and animal welfare, the need for coordination across the stages is increasing. However, a trend towards vertical integration cannot be observed. Especially in price-competitive markets in which the production requirements are less specific, the spot market still seems to be advantageous in efficiency and costs. Largely unnoticed in research and practice, recent developments in the German meat market indicate an institutional change, allowing the maintenance of spot market structures by assigning various coordination tasks to an independent third party – the QS Qualität und Sicherheit GmbH. This association was originally founded in 2001 by shareholders from the whole of the agribusiness sector to develop a certification scheme. QS has since become the leading certification standard for the German meat industry. Based on coordination theory and empirical findings, a case study of QS GmbH was carried out. Various non-traditional certification activities that are more properly classified as functions of supply chain coordination were identified. In general, the development of QS can be considered as an institutional innovation in supply chain coordination. It demonstrates an alternative means for spot market oriented meat supply chains to deal with increasing uncertainties in the market.