Influence of governance instruments on supply chain quality: a qualitative investigation in the dairy industry

Abstract

PurposeThis paper aims to explore the formal (i.e. contracts, standards, processes, and structure) and informal (i.e. social structure, norms, information sharing, and value system and culture) governance instruments used in supply networks and their influence on quality.Design/methodology/approachThis research is qualitative-exploratory in nature, involving semi-structured interviews with 20 managers from three essential layers in the dairy industry's supply chain: companies that supply essential inputs to milk producers; milk producers; and milk cooperatives.FindingsAnalysis of the generated data show that formal governance instruments have a strong and/or weak influence on products' and operations' quality in the dairy industry context; informal instruments have a strong and/or weak influence on quality, as a counterpart to formal instruments; and the integration of verified governance instruments positively influences the quality of products and operations.Practical implicationsThis paper offers several managerial and practical implications. The first is to encourage suppliers of primary inputs and milk producers to invest in the formal structure, primarily in formal contracts with each other. The second implication suggests the relevance of creating different training and qualification courses with members from all organizational levels. Third, there is a need for cooperatives, encompassing all industries, to consider several informal instruments, complementary to contracts and standards currently used for processes.Originality/valueGovernance instruments can lead to desired supply chain outcomes, including those related to quality. Although previous supply chain studies have investigated the relationship between governance instruments and the supply chain, and quality management and the supply chain, studies on governance instruments' influence on supply chain quality are limited.