The consequences of voluntary traceability system for supply chain relationships : An application of transaction cost economics

This paper analyses the effects of voluntary traceability on vertical relationships within food supply chains using a transaction cost perspective. The analysis makes reference to the Italian situation where the national standard organization has introduced a private standard for traceability that provides a higher degree of information associated with the individual product than the European mandatory traceability system. A survey was conducted by questionnaire to assess changes in transaction characteristics, costs and governance after the introduction of voluntary traceability. The sample represents all Italian firms applying this standard. Factorial and cluster analyses were applied to find the different reorganizations of transactions. The results highlight an increase in asset specificity and a decrease in the uncertainty level throughout the supply chains. The introduction of voluntary traceability shows increased vertical coordination for firms that previously used oral agreements and variation in transactions conditions for firms using contracts. Instead vertically integrated firms do not reveal any variation in the governance of transactions as they are already internally safeguarded.