Governance and Contractual Structure in the Vegetable Supply Chain in Romania

The paper studies the relationship type and contractual aspects in the Romanian vegetable supply chain and farmers’ contracting choice. The paper draws on Williamsons’ governance contractual structure of non formal and formal relationship existing between farmers and buyers in order to see what type of contractual relationship is prevalent in the vegetable supply chain. It also tries to empirically analyze the key determinants of vegetable farmers’ contracting choice drawing on the transaction cost theory. The analysis is both qualitative and quantitative and uses binary choice models in order to assess the contractual choice of the vegetable producers. The analysis reveals that informal contractual relationships are prevalent on the market while in many cases the contractual enforcement is at stake.