The Impact of Tie Strength on the Sustainable Participation of Farmers in Contract Farming: An Empirical Study in Inner Mongolia, China

Abstract

Contract farming can reduce transaction costs and improve agricultural productivity. With the establishment of stable and effective contractual relationships, not only have agricultural products been provided with a stable market, but the standardization, refinement, and branding transformation of agricultural products can also be realized, thus further promoting the progress of agricultural modernization. The willingness of farmers to renew their contracts is a key factor in maintaining long-term, stable cooperative relationships. This research involves the empirical verification of the impact model of tie strength between enterprises and farmers in contractual agriculture on the willingness of farmers to renew their contracts and reveals the working mechanism of tie strength on sustainable participation of farmers in contract farming. We utilized survey data from 276 agricultural households in Inner Mongolia, China, and the method of structural equation modeling (SEM), with the following results: (1) Interaction and reciprocity have a significantly positive influence on trust; (2) trust has a significantly positive impact on farmers’ willingness to renew their contracts. Also, reciprocity and interaction have an indirect impact on contract renewal willingness through trust; and (3) the perceived economic value can significantly increase the contract renewal willingness of farmers and plays a mediating role between trust and contract renewal willingness. Overall, on the basis of tie strength, this research provides a new perspective for the investigation of the sustainable stability of contract farming and presents empirical evidence for the sustainable development of the contract farming supply chain.