The moderating effect of farming contracts on the relationship between responsive supply chain elements and supply chain resilience

Abstract

Food supply chain disruptions have of recent increased in terms of severity and frequency leading to viability problems for most businesses in related supply chain networks and hunger among millions of human beings. In the extant supply chain literature elements of responsive supply chain such as velocity, versatility, and visibility have been suggested as some of the possible strategies to build supply chain resilience. It has therefore been suggested in this study that these elements’ influence on supply chain resilience is moderated by contract farming as a special form of supplier development. Farming contracts are either production or marketing contracts. Data was collected from a conveniently selected sample of 200 restaurants that use supplier development in the form of contract farming for acquiring critical resources for their operations. A structural equation modelling was used to analyse data related to the direct effects and multi group structural equation modelling was used to assess the moderating effects. The results revealed that there is a statistically significant relationship between the three selected elements of responsive supply chain management and supply chain resilience, and all the hypothesised relationships were moderated by type of farming contracts, with the relationships being stronger under marketing contracts for supply chain velocity, and under production contracts than under marketing contracts for relationships involving versatility and visibility. Therefore, the study recommended that production contracts be used in the fast-food restaurant industry in order to reduce supply chain vulnerabilities, and marketing contracts to build supply chain capabilities. This is the first study that has sought to assess the differential utility of different farming contracts through assessing their moderating effects as a build-up on previous research that has already established that supplier development in the form of contract farming leads to supplier development.