Substitution or Complement: How Do Contractual and Relational Governance Shape Members' Organizational Commitment to Farmer Cooperatives?

Organizational commitment is key to sustainable development and the success of farmer cooperatives. The relationship and effectiveness of contractual and relational governance as important means of managing partnerships remain debatable, and their impact on organizational commitment is unclear, particularly in the context of farmer cooperatives. Based on transaction cost theory and social exchange theory, we investigate how contractual and relational governance affect members' organizational commitment (MOC) under different market uncertainties. Using survey data of 239 farmer cooperatives in China, we examined the conceptual model utilizing hierarchical regression and bootstrapping techniques. The results showed that both contractual and relational governance have significant positive impacts on members' continuance and affective commitment, but relational governance exerts more positive effects. Contractual governance can significantly promote relational governance; the two have complementary rather than substitute relationships. Moreover, relational governance mediates the link between contractual governance and members' continuance/affective commitment, and this mediating role strengthens as market uncertainty increases. This study expands the literature on MOC from the perspective of alliance governance, and has important implications for cooperative governance mechanisms and partnership management. Farmer cooperatives, as collective action organizations primarily formed by farmers for mutual benefit, play increasingly important roles in connecting smallholder farmers to markets and increasing members' well-being, but they are currently facing a challenge of declining member commitment with increasing heterogeneity in members' attitudes and perceptions as they grow and expand. The challenge is especially severe in developing-country cooperatives because their relationships with members are more akin to buyer-supplier relationships than ownership relationships. Contractual and relational governance are important means of managing partnerships; however, their relationship and effectiveness are debatable due to their context-dependence, and their impact on organizational commitment is unclear. This study takes China's farmer cooperatives as our research context and investigates how contractual and relational governance affect members' organizational commitment (MOC) under different market uncertainties. Based on face-to-face survey data from 239 farmer cooperatives, hierarchical regression and the bootstrapping technique were used to test the hypothesis. The results show that both contractual and relational governance can significantly enhance members' continuance and affective commitment. Contractual governance complements rather than replaces relational governance; it can significantly promote relational governance, thus increasing members' continuance and affective commitment. This positive indirect effect is reinforced by the increased market uncertainty for farmer cooperatives. This study expands the MOC literature from the perspective of alliance governance and offers new insights into cooperative governance mechanisms and partnership management. Such knowledge would assist cooperatives in scientifically leveraging contractual and relational governance according to market uncertainty, thereby increasing MOC and cooperative sustainability.