Factors of business relationships change in agribusiness input distribution channel

Abstract

Purpose The purpose of this paper is to identify factors of change in business relationships among companies operating in agribusiness input distribution channel. Design/methodology/approach This study, based on a qualitative approach applying network perspective, is focused on agri-markets for plant protection products. Primary data were collected via individual in-depth interviews with among managers of trade companies operating on agri-inputs products market. Findings Although relation between input producers and trade companies on agri-inputs market is affected by a large number of factors, representatives of trade companies seem to be focused on a limited number of them. In particular two factors need to be underlined as main ones: contract conditions and structural changes on the markets which manifest themselves mainly by consolidation of market entities. The function differentiation of the trade companies results not only in generated sales but also in a larger intensity of interactions with other market operators and in the necessity of creating new relationships. In the long term, it may generate the intensification of competitive structures that occur at the same level in a distribution channel. Research limitations/implications Generalization based on qualitative approach employed in this paper requires further testing and quantitative validation. Originality/value Even though agri-markets appear to be well-suited for studying network systems, such an approach has hardly ever been used. Interactions between different kinds of entities on agri-markets are incredibly strong and complex. The paper contributes to the two fields. First, it provides results related to the business relationship dynamics, especially factors that trigger relation change. Second, paper contributes to the agribusiness markets theory, especially from the structural point of view.