The impact of concentration and government subsidies on vertical coordination of food supply chain in China

Abstract

Although vertical coordination of supply chain is a classic topic, with the development of market economy and the increase of uncertainty, smooth and stable supply chain is of great importance on sustainable production and consumption, among which the market and government play an increasingly important role in food supply chain coordination. Taking 93 companies in Shanghai and Shenzhen A-share of food supply chain as examples, this study use "panel Tobit" model and regression to analyze the influence of concentration and government subsidies on the vertical coordination in the food supply chain, as well as the final impact on the enterprise performance. The study finds that the higher the degree of vertical integration, the worse the enterprise performance, and the closer the relationship of interorganizational governance, the better the enterprise performance. The increase of concentration and government subsidies are conducive to the improvement of the close relationship between the interorganizational governance of enterprises. Meanwhile, state-owned enterprises also play an active role in this process. Since it is difficult for enterprises to establish a close cooperative relationship with dispersed upstream agricultural producers, the government can formulate corresponding policies, such as cooperatives, to increase the concentration of agricultural suppliers. In addition, as the concentration cannot be changed in the short term, it is also important for the government to appropriately subsidize enterprises for better vertical coordination of the food supply chain.