Network Embeddedness in the Food Supply Chain and Firm Strategy on Signaling Quality

Events influencing the global food system and managerial decision-making within the supply chain include genetic engineering, food safety, and animal welfare. These events result in an increasing expectation by supply chain participants that information, perhaps not normally collected and disseminated, will be available as commodities and products move from upstream suppliers to downstream value added firms. Managerial choice for firms in the supply chain relative to this information expectation comprises a signal to the firm’s customers in terms of quality. Four distinctive choice sets confront managers. The analysis here indicates that designing and implementing a strategy among the signaling alternatives depends on network embeddedness. Network embeddedness includes both relational embeddedness and structural embeddedness. The signaling mechanism chosen is important because it influences long-term firm performance. Network embeddedness dictates that managers consider alternative strategies based around cornerstones of tighter vertical information flows, intangible assets, quality monitoring and signaling throughout the supply chain, and differentiation of the firm or its products. Each mechanism for signaling is bound, a priori, by network embeddedness.