Conventions in Cross-Border Trade Coordination: The Case of Organic Food Imports to Germany and Australia

Abstract

Monitoring and tracing product and process qualities along global supply chains have become increasingly challenging tasks for companies at the downstream end of the chain. High levels of uncertainty in trade coordination arise among importing companies in the face of these developments. The conceptual aim of this paper is to show, by the example of organic food imports to Germany and Australia, how convention theory can contribute to the analysis of trade coordination in global value chains. Our empirical results affirm that industrial conventions such as standards and third-party certification have gained increasing significance over the past two decades. Simultaneously, however, we argue that industrial conventions are not enough to overcome uncertainties in trade. They do not necessarily lead to reduced differences in perceptions of product quality between suppliers and importers. Less tangible factors such as trust established through relationship management and reputation are likewise significant. Furthermore, not only companies with a certain ideological tradition, but also individual people with altruistic motives within other types of firms, can determine how ‘dedicated’ a firm is in pushing trade coordination according to civic and domestic conventions. Market conventions (ie, the importance of price and competitiveness) are stressed more by Australian firms reflecting the country's liberal market economy and low state subsidies especially in the area of agriculture. Finally, compromises between conventions are sometimes necessary to end a situation of conflict between buyer and supplier.