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　　Abstract: Relational governance between Chinese big agricultural firm and farmers is an issue which has not been studied in the existing research. This paper establishes a framework of the relational governance between the firms and their cooperative farmers.
　　Key words: Relational governance, trust, reciprocity, interaction intensity, satisfaction
　　INTRODUCTION
　　The alliance between Chinese big agricultural firm and farmers can be seen as a very special economic organization, which is an intermediary mode between market and hierarchy, but different from the organizations of traditional pattern such as strategic alliances, corporate networks and so on. In this kind of organization, the two parties are not all organizations, but one is corporate, the other is many natural persons. Therefore, study the relational governance between Chinese big agricultural firm and farmers have significance both theoretically and practically.
　　Foreign study of relational governance has been focused on the relationship between more equal enterprises, the rules of relational governance of which followed are generally consistent. But in the situation among Chinese big agricultural firm and farmers, the dominant positions of both sides are unequal. Usually firms are implementers of relational governance, and farmers are often passive recipients. Therefore, the paper will execute cross-level research.
　　LITERATURE REVIEW
　　1 Relational Governance Review
　　A large number of researches have examined the relational governance’s significance for cooperation performance. Zaheer and Venkatraman (1995) studied the relational governance of the strategic alliance between insurance companies and insurance agents in insurance industry, and hold that relational governance can improve the performance of the alliance. Zhang, Cavusgil and Roath (2003) found that firms can increase its export turnover by using relational rules to govern the relationship with their foreign distributors. Claro, Hagelaar and Omta (2003) found that trust, corporate network activity and other relational rules will affect trade performance (including sales growth and trading satisfaction). These studies are all from the respect of one party in the exchange.
　　Relational governance means bilateral governance practices, but there is little empirical researches to examine both sides of the transaction because of the difficulty to obtain data, the limitation of statistical methods and other reasons(Vandaele et al,2007). Existing bilateral studies have reflected that relational governance has differences between parties in the transaction from different perspectives. For example, Ferguson, Paulin, and Bergeron (2005) examined the commercial banking transaction management model by using bank account managers’ and business clients’ interview data, and found significant difference in the structure of both models. All of these show the importance of research using the data of both parties in the same time. However, existing research is clearly insufficient in the statistical methods of study. Ganesan’s (1994) research also examined the data of 124 retail buyers and 52 suppliers to these retailers, but the empirical analysis of both aspects is fragmented. He made structural equation analysis to the retailers’ data, and conducted multiple regression analysis to the suppliers’ data. Ferguson et al (2005) used multi-group analysis of the EQS software, which only can examine that relational governance has difference between different perspectives of both parties in the transaction, and cannot analyze the interaction of relational governance between them. Although Siguaw, Simpson and Baker (1998)’s study to 179 suppliers and distributors analyzes the interaction of relational governance between both parties in the transaction, it doesn’t distinguish them from the level. Instead, it directly corresponds the data of both aspects to the same model, and then verifies the goodness of fit though path analysis. This paper attempts to make up the shortfall of the content and methods in the existing research, using the particular situation of cooperation between Chinese big agricultural firm and farmers, applying hierarchical linear analysis which is a more cutting-edge tool, and executes cross-level research to relational governance of both parties in the transaction.