Contrasting the governance of supply chains with and without geographical indications: complementarity between levels

Purpose The aim of this paper is to explain the organizational changes along supply chains when a geographical brand, i.e. a place name that has value for commercial purposes, becomes a geographical indication (GI). Design/methodology/approach Using a case study research design, this paper compares GI vs non-GI supply chains in the European Union and describes the organizational changes that occur in supply chains when a GI is adopted. Findings When a GI is adopted, an additional “public” level of governance is added along the supply chain that forces it to reallocate and specialize quality controls between the public and private levels of governance to avoid redundancies and to adopt more market-oriented mechanisms of governance in dyadic relationships. The paper argues that these changes occur because the private and public levels of governance complement one another. Research limitations/implications More aspects of supply chain management (the power balance or relationship stability) and a more systematic longitudinal analysis using supply chains in various agrifood industries should be considered to generalize the conclusions. An econometric analysis formally testing the main conclusions (propositions) is also required. Practical implications The changes needed to successfully adopt a GI are identified, and an explanatory map of these changes is offered. Originality/value The structural governance tensions created by the use of common-pool resources within supply chains are explored. It is hypothesized, first, that when a “common-pool resource”, namely, a geographical name, is used in a supply chain, some type of public level of governance that promotes cooperation is required to preserve its value. Second, this public level of governance complements the dyadic mechanisms of governance, requiring the specialization and reallocation of quality controls and the move toward more market-oriented transactions.