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This paper examines factors that might affect performance of cooperatives and investor-owned firms (IOFs). The empirical work tests whether significant profitability differences between the two groups exist, in the case of the Greek dairy industry, over the period 1990-2001. The relevant descriptive statistics show that IOFs are more profitable, while results suggest that profitability differences between cooperatives and IOFs can be attributed mainly to the greater effectiveness of IOFs' capital structure determinants and market share. [ABSTRACT FROM AUTHOR]

Modern agricultural cooperatives need considerable amounts of capital. Theoretically the financing of cooperatives has been identified as one problem area for their future success. In part, the difficulties associated with raising capital are asserted to stem from heterogeneity among cooperative members, not the least of which is the so-called horizon problem. Here a number of potential heterogeneity dimensions are empirically investigated, in relation to financing and ownership of cooperatives. Almost all the hypotheses surrounding conflicting interests in relation to ownership and financing building on heterogeneity must be rejected. Reported answers provide no support for a horizon problem in agricultural cooperatives. [ABSTRACT FROM AUTHOR]

This paper challenges the general view in the literature that cooperatives underinvest, because some members will exit the cooperative before the full benefits from their investments are harvested (the horizon problem). This paper demonstrates that full equity redemption will solve the horizon problem. The majority of members will, however, bias the exit payment to their own advantage. This will lead to overinvestment. Thus, the main finding in this paper is that if there is a horizon problem, it will lead to overinvestment - not underinvestment. [ABSTRACT FROM AUTHOR]

The aim is to investigate the value that the cooperative ownership form might have in agricultural cooperative firms' relations to consumers. The empirical basis consists of interviews with 782 consumers in France and Sweden. Consumers have positive attitudes toward cooperatives while their level of knowledge is limited. Even though the concept of "cooperative" can be freely used by all cooperatives, it seems that nobody misuses its positive values. The main use could be made by well-established cooperatives, mentioning "cooperative" in conjunction with other attributes, and by local cooperatives trying to build a cooperative brand asset. [ABSTRACT FROM AUTHOR]

We show that the internal conflicts in cooperatives can distort sales and reduce the marketing of high-quality products. The conflicts arise because modern agricultural marketing cooperatives must implement farm-level differentiation to meet requirements from high-quality market segments, e.g. consumers focusing on animal welfare. When standard producers hold the majority vote in the cooperatives, they are reluctant to promote the sales of specialty products to first best levels even though this does not affect the sales of standard products. The cooperatives will therefore tend to under-produce specialty products. [ABSTRACT FROM AUTHOR]

Horizontal integration has been widely used by cooperative dairy processors in an effort to reduce costs. This is seen as a necessary condition for the payment of higher farm-gate milk prices. However, the observation that farm-gate milk prices are not consistently correlated with degree of horizontal integration raises questions about other factors. The aim here is to investigate the relationship between the farm-gate milk price and three variables, namely, degree of horizontal integration, degree of diversification and size irrespective of volume of milk processed or degree of diversification. A positive relationship with farm-gate milk price was found for all three variables but was relatively weak especially after a certain scale of operation in the case of horizontal integration. [ABSTRACT FROM AUTHOR]

Abstract. A model of a two-stage vertical market structure consisting of producers, processors, and acooperative is developed to analyze the market incentives agricultural cooperatives may have forintegrating forward into processing activities and the comparative impacts of cooperative forwardintegration on producers and consumers when processors are alternately characterized by Cournot,competitive, and collusive behavior. Results suggest that cooperatives do not have an incentive tointegrate forward in competitive markets. In markets with some degree of market power, the potential forcooperative forward integration is linked to the cooperative's ability to restrict the output of its membersto optimal levels. [ABSTRACT FROM AUTHOR]

Capital structure efficiency is viewed as contributing to good financial performance. According to the traditional arguments, cooperatives have difficulties in getting an optimal capital structure. This paper argues that governance rules may explain their less efficient performance. By combining the arguments of the political model of governance and the traditional theory of regulation, a unified approach is developed that makes the link between regulatory governance and capital structure explicit. It is argued that the heterogeneity of cooperatives' members may result in powerful coalitions and in a sub optimal capital structure. The evidence gathered from the empirical literature confirms these results. [ABSTRACT FROM AUTHOR]

This article addresses two observations regarding the board of directors in agricultural cooperatives. First, it is sometimes stated that cooperatives seem to behave like ordinary enterprises. Second, it is argued that cooperatives may have advantages compared to corporations with publicly exchanged shares. These observations are analyzed from complete as well as incomplete contracting theory. [ABSTRACT FROM AUTHOR]

Structural changes in the agricultural set-up challenge the value of traditional practices in cooperatives. The major sector development causes a lock-in effect for individual farmers and gives rise to non-Pareto-optimal outcomes for individual farmer members. Constitutional economics may be a theoretical source for reviving the effect of exit by addressing potential adjustments to the traditional cooperative institutional set-up and, thereby, generating more stable equilibria in collective bargaining processes between farmers. The approach focuses on voting rules, investment levels as well as individual positive and negative rights in farmers' collective actions and calls for adjustment of traditional practices in agricultural cooperatives. [ABSTRACT FROM AUTHOR]

The poor financial performance of a number of previously successful agricultural cooperatives appears to be connected to member commitment, which in turn is linked to the decisions made by the cooperatives' leaders. While cooperative members should have an incentive to hire leaders that promote strong organizational commitment, the evidence suggests this incentive is weaker than imagined. This paper shows that cooperatives that believe they have a well-defined and loyal membership are less likely to hire leaders that will enhance member commitment. Thus, historical success is no guarantee of future success and may in fact contain the seeds of failure. [ABSTRACT FROM AUTHOR]

This paper examines marketing cooperatives' (MCs') structure from a members' perspective. We support the notion that the utility that members derive from the attributes of MC's structure enhances our insight in members' commitment. Using a conjoint experimental design, we elicit the utility that producers attach to attributes of a MC. These attributes are related to the cooperative's internal organizational structure and strategic behavior. The results of 120 producers of a Dutch horticulture cooperative show that the selected cooperative attributes are significant drivers of members' utility. In particular, members attach high importance to strategic attributes and prefer a more individualized cooperative structure. [ABSTRACT FROM AUTHOR]

This paper discusses exit strategies in U.S. agricultural cooperatives. Compared to other mutual organizations, liquidations and conversions have not been common in U.S. agriculture. We attribute this phenomenon to the "stickiness" of the cooperative organizational form in agriculture. Hypothesized factors that lead to this conclusion include existence of considerable economic incentives for the continued role of cooperatives, low member pecuniary incentives to pursue an exit strategy, and lack of disruptive institutional and market changes. We conclude that if property right constraints continue to be ameliorated with selective incentives and innovative structures, producers will be more likely to invest in cooperatives. [ABSTRACT FROM AUTHOR]

This paper combines economics and economic sociology to assess the role of local inter-firm networks in innovation dynamics and economic performance in a cluster of cooperatives. Focusing on the exchanges of advice between managers, our study is based on 31 cooperatives in southern France. Using both sociometric and economic data, we find correlations between cooperatives' relational, innovation and economic scores. The cooperatives' specificity, however, questions the results obtained in different settings. The network analysis may thus ground a comprehensive interactionist approach to cooperatives, but may also offer tools to renew their governance strategies. [ABSTRACT FROM AUTHOR]

Cooperative organizations may develop networks, in order to reduce transaction costs, to facilitate knowledge transfer and exchange of resources, and be competitive. The pork industry in Denmark evolved along a path of cooperation and networking. The evolution is path-dependent with roots in the Grundtvig and the folkehøjskolen movement in the late 1800s. Today, the Danish pork industry is characterized by three levels of networks, beyond the family farm: the primary cooperative, the federated structure and the policy network. All four levels are interlinked via a nexus of director interlocks. [ABSTRACT FROM AUTHOR]

Recent developments in organization theory about arrangements that are neither markets nor hierarchies provide an opportunity to reconsider the nature of cooperatives and their fundamental characteristics. The concept of "hybrids" developed by transaction cost economics to encapsulate the properties of these arrangements may be particularly relevant in that it provides a theoretical framework in which to embed cooperatives among other modes of governance. This paper goes in that direction and proposes a characterisation of different regimes among cooperatives, establishing a typology grounded in theory. An important result of this approach is that it challenges standard competition policies towards cooperatives. [ABSTRACT FROM AUTHOR]