Power use, cooperative behavior and alliance performance: evidence from contract farming supply chains in China

Purpose This study aims to explore the relationship among five types of power (expert, referent, legitimate, reward and coercive power), two dimensions of cooperative behavior (specific investments and communication) and three types of alliance performance (alliance stability, income increase and cost decrease) in contract farming. By investigating the dyadic perspectives of companies and contract farmers, the authors examine how power use influences cooperative behavior, which further enhances alliance performance. Design/methodology/approach The authors construct a theoretical model grounded on resource dependence theory (RDT). Data from 202 companies and 462 farmers in China are used to test the proposed hypotheses using structural equation modeling. Findings The authors' results show that the five types of power play different roles in cooperative behavior. On the one hand, farmers' expert, reward and coercive power enhance the company's specific investments; farmers' expert power enhances the company's communication but farmers' coercive power harms the company's communication. Also the company's specific investments enhance communication that is positively related to alliance ability, income increase and cost decrease. On the other hand, the company's expert, referent and legitimate power enhance farmers' communication, while the company's coercive power harms farmers' communication; the company's reward and coercive power enhance farmers' specific investments. Moreover, farmers' communication is positively related to alliance ability, income increase and cost decrease, but farmers' specific investments do not significantly influence such. Originality/value This study contributes to the literature on contract farming supply chain management by examining the relationships among power use, cooperative behavior and alliance performance from the dyadic perspective of companies and farmers. These findings have practical implications for agricultural companies and farmers promoting cooperative behavior and alliance performance through appropriate power use in contract farming supply chains.