Governance costs and the problems of large traditional co-operatives

Abstract

During recent decades, there have been many failures among large and complex agricultural co-operatives with a traditional organizational structure, that is, with mainly collective governance and collective ownership. Many co-operatives have been converted into the so-called hybrid co-operatives, owned together with external financiers. This article applies governance cost theory to explain this development. The results show that members are not able to govern a collectively owned firm that is large and complex; members are thus reluctant to invest in co-operatives; and members do not perceive that co-operatives benefit them economically. Thus, strong leaders take control and non-member investors gain ownership and influence.

Keywords

governance cost; traditional co-operative; co-operative conversion; hybrid co-operative; co-operative governance

Published in

Outlook On Agriculture
2018, Volume: 47, number: 2, pages: 87-92

SLU Authors

• Nilsson, Jerker

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Business Administration


Publication identifier

DOI: https://doi.org/10.1177/0030727018761175

Permanent link to this page (URI)

https://res.slu.se/id/publ/95680