IDEAS home Printed from https://ideas.repec.org/p/ags/aaea05/19140.html
   My bibliography  Save this paper

Farmer Identification and Commitment Responses to Institutional Change in Marketing Channel Structures

Author

Listed:
  • Gow, Hamish R.
  • Stevenson, Mark
  • Westgren, Randall E.
  • Sonka, Steven T.

Abstract

The structure of the New Zealand merino industry has been through a period of rapid organizational change and marketing innovation over the past decade. This has seen it move away from a publicly regulated spot auction market structure characterised by undifferentiated product receiving pooled equilibrium commodity prices often at a discount to the international market price to a market structure composed of both privately controlled strongly vertically integrated marketing initiatives characterised by tight contractual relationships gaining substantial premiums over the international market place operating concurrently along side the traditional spot auction markets. The emergence of these new marketing structures has thus forced farmers to seriously re-evaluate the manner in which they identify with and commit to market channel partners. In the mid 1990's, the merino sector made an initial effort to move out from under the umbrella of the 'public' statutory control of the New Zealand Wool Board (NZWB) to grower control by establishing a merino-specific 'industry good' organization, Merino New Zealand Incorporated (MNZ Inc). MNZ Inc was established to focus on promotion and management of the merino sectors special characteristics and to maximise opportunities for improving returns to merino growers. MNZ Inc acted as a facilitator in the market, working along-side traditional merino grower servicing and broking companies. The new organization successfully undertook increased commercial responsibility under the NZWB, leading to the formation of Merino New Zealand Limited (MNZ Ltd) in 1998, which took over the majority of MNZ Inc's functions. Finally in 2001, MNZ Ltd and Wrightson Ltd's fine wool business entered into a commercial joint venture, which led to the privatization of the activities of MNZ Ltd. This merger established the New Zealand Merino Company (TNZMC), a privately held joint venture that leveraged MNZ Ltd's marketing expertise and supply chain knowledge, with Wrightson's grower relationships and selling expertise, and the NZWB owned New Zealand Merino brand. As a result of these changes, merino growers presently face a very different marketing landscape in which both traditional and new innovative firms offer a variety of marketing arrangements, ranging from direct auction (spot market) to highly vertically-integrated and relationship-intensive contractual arrangements that link growers to final retail brand partners. The evolving market landscape has forced growers to make a conscious decision about their merino wool marketing practices. They must decide whether to continue marketing their clip through their traditional wool brokers and channels, or to switch allegiances and market their clips through an alternative servicing company or broker. Complicating the growers' dilemma even further, successful initiatives and programs initially developed as an industry public good under MNZ Ltd were transferred to TNZMC, where they are now exclusively available to growers who market their clips through TNZMC. As a result, increased dissent and voice can be heard among some members of the New Zealand merino industry who are disgruntled with the organizational changes. These organizational changes have confronted growers with a number of challenges and questions about how closely they identify with and commit to their chosen servicing company and marketing channel. Merino growers responded to the changes in a number of ways: some have exited their usual servicing company and switched the marketing of their clip to an alternative, some have stayed with their usual servicing company but are unhappy, and some others have stayed with their usual servicing company and are happy. The purpose of this research was to determine how growers now identify with and commit to their respective merino wool servicing and broking companies. A mixed methods approach was implemented to effectively analyze large quantities of qualitative and quantitative data. Qualitative data collected in 16 unstructured and semi- structured interviews were synthesized into a case study analyzing changes that took place in the industry and the motivations for those changes. This was followed by an analysis of data collected in an enumerated and stratified survey of 131 New Zealand merino growers conducted in January and February 2004 designed specifically how growers identify with and commit to their merino wool servicing and broking company. Using structural equation modelling techniques, the initial results indicate strongly statistically different structures in the ways in which farmers identify and commit to their respective marketing channels. Farmers who remain within the traditional marketing channels do not identify or commit with the channel from a business stand point, only they only identify and commit on personal relationship basis with their broker/trader who markets their wool. They view all business services provided and market outcomes as equivalent and fair as they are operating in a highly competitive spot auction market and therefore neither their broker or themselves can affect outcomes. Alternatively, farmers whom have switch to the highly integrated and contract controlled channels strongly identify and commit to their marketing channel partners on both a business and personal relationship basis. Interestingly, these results show strong positive business commitment when things are going well, but the reverse when perceptions do not meet expectations. Thus these farmers expect their marketing channels out perform expectations and if they do not they become vocal and begin looking for alternatives. Similar, the way in which the commit differs, the new marketing channels provide a mechanism to learn about the marketing opportunities available but also provide the farmers an opportunity by pass the marketing channel if expectations not meet. This places the marketing channel in a precarious catch 22 position of being required to continuously provide up to date information about the market to ensure farmers maintain realistic expectations and thus ensure that they remain but at the same time not give away too much information thereby allowing them to operate by themselves.

Suggested Citation

  • Gow, Hamish R. & Stevenson, Mark & Westgren, Randall E. & Sonka, Steven T., 2005. "Farmer Identification and Commitment Responses to Institutional Change in Marketing Channel Structures," 2005 Annual meeting, July 24-27, Providence, RI 19140, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19140
    DOI: 10.22004/ag.econ.19140
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/19140/files/sp05go02.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.19140?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Randall Westgren & Kelly Zering, 1998. "Case study research methods for firm and market research," Agribusiness, John Wiley & Sons, Ltd., vol. 14(5), pages 415-423.
    2. Erin Anderson & Barton Weitz, 1989. "Determinants of Continuity in Conventional Industrial Channel Dyads," Marketing Science, INFORMS, vol. 8(4), pages 310-323.
    3. Peter Foreman & David A. Whetten, 2002. "Members' Identification with Multiple-Identity Organizations," Organization Science, INFORMS, vol. 13(6), pages 618-635, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael E. Cummings & Alan Gamlen, 2019. "Diaspora engagement institutions and venture investment activity in developing countries," Journal of International Business Policy, Palgrave Macmillan, vol. 2(4), pages 289-313, December.
    2. Manolis, Chris & Nygaard, Arne & Stillerud, Bård, 1997. "Uncertainty and vertical control: An international investigation," International Business Review, Elsevier, vol. 6(5), pages 501-518, October.
    3. Aparicio, Gloria & Basco, Rodrigo & Iturralde, Txomin & Maseda, Amaia, 2017. "An exploratory study of firm goals in the context of family firms: An institutional logics perspective," Journal of Family Business Strategy, Elsevier, vol. 8(3), pages 157-169.
    4. Bitsch, Vera, 2005. "Qualitative Research: A Grounded Theory Example and Evaluation Criteria," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 23(1), pages 1-17.
    5. Robin Stevens & Nathalie Moray & Johan Bruneel, 2015. "The Social and Economic Mission of Social Enterprises: Dimensions, Measurement, Validation, and Relation," Entrepreneurship Theory and Practice, , vol. 39(5), pages 1051-1082, September.
    6. Marco Pini, 2019. "Corporate social responsibility, family firms and territorial institutions in Italy: an empirical analysis," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 73(2), pages 99-110, April-Jun.
    7. Zur, Andrew & Leckie, Civilai & Webster, Cynthia M., 2012. "Cognitive and affective trust between Australian exporters and their overseas buyers," Australasian marketing journal, Elsevier, vol. 20(1), pages 73-79.
    8. Hoang Linh VU & Dominique BONET FERNANDEZ, 2014. "Proposition d’un modèle de relations producteur-distributeur : une application à la gestion des conflits en contexte interculturel," Working Papers 2014-231, Department of Research, Ipag Business School.
    9. Yadong Luo & Yi Liu & Jiaqi Xue, 2009. "Relationship Investment and Channel Performance: An Analysis of Mediating Forces," Journal of Management Studies, Wiley Blackwell, vol. 46(7), pages 1113-1137, November.
    10. Greta Hsu & Kimberly D. Elsbach, 2013. "Explaining Variation in Organizational Identity Categorization," Organization Science, INFORMS, vol. 24(4), pages 996-1013, August.
    11. Bart S. Vanneste & Phanish Puranam & Tobias Kretschmer, 2014. "Trust over time in exchange relationships: Meta-analysis and theory," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1891-1902, December.
    12. Artz, Kendall W. & Brush, Thomas H., 2000. "Asset specificity, uncertainty and relational norms: an examination of coordination costs in collaborative strategic alliances," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 337-362, April.
    13. Robert Heckert, 2019. "Challenges for a Multiple Identity Organization: A Case Study of the Dutch Blood Supply Foundation," Corporate Reputation Review, Palgrave Macmillan, vol. 22(3), pages 101-119, August.
    14. Selin Kucukkancabas & Ayse Akyol & Berk Ataman, 2009. "Examination of the effects of the relationship marketing orientation on the company performance," Quality & Quantity: International Journal of Methodology, Springer, vol. 43(3), pages 441-450, May.
    15. Gatignon, Aline & Gatignon, Hubert, 2010. "Erin Anderson and the Path Breaking Work of TCE in New Areas of Business Research: Transaction Costs in Action," Journal of Retailing, Elsevier, vol. 86(3), pages 232-247.
    16. Goldsmith, Peter D. & Ramos, Gabriel & Steiger, Carlos, 2001. "Intellectual Property Protection And The International Marketing Of Agricultural Biotechnology: Firm And Host Country Impacts," 2001 Annual meeting, August 5-8, Chicago, IL 20672, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Ahmed Abdullah Danook & Muthanna Saad Yassin & Omar Falah Hasan al.obaidy & Ferman jarad Almejdhab, 2024. "The Absorptive Capacity of Knowledge as an Approach for Building Strategic Reliability in the Sponge Organizations/Small Organizations in Kirkuk Governorate as a Model," Corporate Reputation Review, Palgrave Macmillan, vol. 27(1), pages 33-51, February.
    18. Li, Jizhong & Jiang, Fuming & Shen, Jie, 2016. "Institutional distance and the quality of the headquarters–subsidiary relationship: The moderating role of the institutionalization of headquarters’ practices in subsidiaries," International Business Review, Elsevier, vol. 25(2), pages 589-603.
    19. Paul A. Pavlou & David Gefen, 2004. "Building Effective Online Marketplaces with Institution-Based Trust," Information Systems Research, INFORMS, vol. 15(1), pages 37-59, March.
    20. Dentoni, Domenico & Pascucci, Stefano & Poldner, Kim & Gartner, William B., 2018. "Learning “who we are” by doing: Processes of co-constructing prosocial identities in community-based enterprises," Journal of Business Venturing, Elsevier, vol. 33(5), pages 603-622.

    More about this item

    Keywords

    Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea05:19140. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.