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Determinants of sustainable business relationships in selected German agri-food chains

Reynolds, Nikolai, Fischer, Christian, Hartmann, Monika
British food journal 2009 v.111 no.8 pp. 776-793
interviews, business management, communication skills, attachment behavior, market economy, business planning, farmers, models, direct marketing, psychosocial factors, business development, retail marketing, Germany
Purpose – The purpose of this paper is to identify factors which influence the sustainability of selected German agri-food chains. Design/methodology/approach – The paper is composed of a literature review, qualitative and quantitative expert interviews, and structural equation modelling. Findings – Effective communication, the existence of personal bonds and equal power distribution between buyers and suppliers are key determinants of sustainable vertical business relationships. The relevance and significance of the determinants differ across the investigated chain stages (farmer-processor versus processor-retailer), the use of formal versus non-formal relationship types and the maturity of a relationship. Research limitations/implications – Further research needs to empirically apply the analysis to agri-food chains other than the investigated pig-meat and cereal ones. Practical implications – Agribusiness and farm managers can enhance the sustainability of their business relationships by effective communication by fostering personal bonds with their suppliers and/or buyers, and by employing – and retaining – key staff who fit culturally and/or socially with those with whom they transact. Finally, managers also need to be aware of the fact that a business relationship can be negatively affected by abusing a more powerful market position. Originality/value – A model for measuring the sustainability of vertical business relationships is presented and empirically tested. In addition, factors influencing the sustainability of these relationships are identified for the case of selected German agri-food chains.