Fabio R. Chaddad

Advancing the Theory of the Cooperative Organization: The Cooperative as a True Hybrid

What is a cooperative? Is it a form of vertical integration, an independent organization or an intermediate form of governance between the market and the hierarchy? This paper contributes to the economic theory of the cooperative organization by examining it from a comparative economic perspective. Departing from Williamsons one‐dimensional continuum of governance structures, the paper adopts the view that governance structures exhibit multiple dimensions and true hybrids are market‐like on some of these dimensions while hierarchy‐like on others. I show that the cooperative blends market‐like attributes with hierarchy‐like mechanisms and thus should be viewed as a true hybrid rather than as an intermediate form. The paper concludes with a discussion about the usefulness of this approach and potential avenues for future research.

Ownership Structure and Incentives to Invest: Dual-structured Irrigation Cooperatives in Australia

In the past decade, Australia has begun to privatize its irrigation system. Two general models have emerged: a single and a dual ownership structure. This paper examines the trade-offs, costs and benefits, and the attendant efficiencies regarding costs of ownership. In particular, we examine member capital investment incentives and resultant risk-bearing costs related to capital formation. The paper concludes that the dual ownership structure system has significant economic advantages relative to its single-structured counterpart.

Distribution channel choices of wineries in emerging cool climate regions

The number of wineries in nontraditional cool climate regions of the United States has increased dramatically in the last decade. We examine factors influencing distribution channel choices by these wineries, including winery characteristics, marketing strategies, and the extent of vertical and horizontal integration. Using a survey of winery operators in Michigan, Missouri, and New York, we developed fractional logit models to test hypotheses regarding their distribution channel choices. We find that the share of wine sold through intermediated channels increases with winery size, years of operation, increased vertical and horizontal integration, and greater promotional intensity and levels of self-reported marketing challenges.

Separação entre propriedade e decisão de gestão nas cooperativas agropecuárias brasileiras

A visao predominante na teoria economica e que organizacoes de propriedade difusa e complexas apresentam melhor desempenho se forem separados os direitos ao lucro residual das decisoes de gestao. Nos paises de economia desenvolvida, os modelos de governanca corporativa das cooperativas agropecuarias de propriedade difusa e complexas, tal como ja informado pela literatura economica, promovem a desvinculacao dos cooperados da gestao da empresa. Em contraposicao, no Brasil, embora nao haja estudos sistematicos sobre o tema, evidencias pontuais indicam que essas organizacoes concentram a propriedade e decisoes de gestao. A possivel divergencia entre os modelos de governanca utilizados nos diferentes paises revela a necessidade de mensuracao do grau de separacao entre propriedade e decisao de gestao em cooperativas agropecuarias brasileiras, tarefa a que se dedica este artigo. A partir de dados coletados junto a 77 cooperativas agropecuarias, identificou-se que diferentes modelos de governanca coexistem no Brasil. Embora grande parcela de cooperativas tenha governanca concentrada, ha um grupo que ja adota modelos de governanca que promovem a separacao parcial de jure ou de facto entre propriedade e decisao de gestao. Esses resultados revelam a necessidade de pesquisas futuras voltadas a identificar os determinantes da variabilidade de modelos de governanca nas cooperativas brasileiras.....Contract and Organizational theories establish that complex organizations with diffuse ownership, such as agriculture cooperatives, should benefit from the separation of ownership and decision control. In developed economies, such as the USA and Canada, these organizations, aligned with the theoretical proposition, adopt governance models that promote the separation of ownership and decision rights. However, in Brazil, despite the lack ofquantitative studies that measure governance separation, anecdotal evidence suggests that ownership and decisions rights are concentrated in Brazilian cooperatives. By means of a survey with 77 Brazilian agricultural cooperatives, this paper measures the degree of de jure and de facto separation of ownership and decision control, providing new evidences on the governance models observed in different countries. Different models coexist in Brazil, i.e., although the majority of agricultural cooperatives concentrate ownership and decision rights, a significant proportion organize themselves consistently with the theoretical proposition, adopting the American models of agricultural cooperatives. Further research is required in order to address the determinants of the variety of governance models in Brazil.

Conversions and Other Forms of Exit in U.S. Agricultural Cooperatives

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.

Decisões financeiras em cooperativas: fontes de ineficiência e possíveis soluções

Este trabalho explora o impacto de determinadas caracteristicas organizacionais de cooperativas sobre suas decisoes financeiras. Procede-se a uma analise teorica da questao financeira em tais organizacoes, definido-se variaveis importantes para o estudo da estrutura de capital e das decisoes de investimento, tais como a natureza do patrimonio, o custo do capital, os incentivos organizacionais e a especificidade de ativos. O desafio principal refere-se ao desenho e implementacao de uma estrutura organizacional visando aumentar a disponibilidade de capital proprio, permitindo a contracao de um nivel eficiente de capital de terceiros. Outro desafio refere-se a geracao de incentivos organizacionais para a selecao de projetos que adicionem valor a empresa, evitando-se um nivel excessivo de investimentos - um problema tipico em cooperativas devido a tendencia de se subestimar o custo do capital proprio. Este estudo e de ordem conceitual e sugere alguns topicos relevantes para futuras pesquisas de ordem teorica e empirica.

Conduits of innovation or imitation?assessing the effect of alliances on the persistence of profits in U.S. firms

Abstract This paper examines if a firm’s alliances affect the persistence of its financial performance. The literature suggests two conflicting views concerning this effect. In particular, access to resources and innovation and the risk of imitation from alliances can have different impacts on performance. In our empirical analysis, based on a panel of 509 firms covering the years 1992 to 2002, return on assets was regressed on the number of alliances and other control variables using hierarchical linear modeling. Results support the positive view of alliances as mechanisms to sustain competitive advantage and escape from competitive disadvantage through access to external, valuable resources held by other firms. Alliances also help firms to constantly innovate and buffer themselves from external shocks that erode existing advantages. Our results, however, may be specific to the period and the institutional context under consideration and we do not distinguish between types, purposes and “strength” of alliances. We contribute to the debate about profit persistence by examining one particular factor that has been neglected in the literature: the extent to which firms engage in alliances with other actors. From a managerial perspective, our study shows that alliances can be used as an effective tool to support superior performance or avoid lock-in into inferior performance.

Transaction attributes and adoption of hybrid governance in the Brazilian cattle market

A transaction cost economics framework was used to test hypotheses on the alignment of transaction attributes and governance structures using data from a sample of 84 beef cattle farms in Brazil. A bivariate logit model was employed. It was found that the adoption of traceability and its certification and highly capital-intensive production systems, used here as proxies for asset specificity, plays a positive role in the choice of hybrid forms of governance.

Agency costs and organizational architecture of large corporate farms: evidence from Brazil

Drawing inspiration from American institutionalism and new institutional economics, this paper discusses the rise of large corporate farms as the transition from the classic capitalist firm to the corporate form of organization based on the separation of ownership and control. Three case studies from the Brazilian cerrado show the rise of large corporate farms to be enabled and impelled by the advance of agricultural production technologies and the search for scale economies. The key finding from the case studies is that complex technology not only necessitates large-scale farming but also generates technical and organizational solutions to the potentially pervasive agency problems. In addition to the use of sound corporate governance practices, these solutions include organizational architecture encompassing computer-aided accounting and budgeting systems, incentive-based compensation, clear definition of performance goals, and delegation of operational decisions to farm managers. Furthermore, organizati...

Ownership versus management: the role of farming networks in Argentina

Agroholdings are ‘horizontally and vertically integrated agricultural and agribusiness enterprises, which often have an explicit holding structure consisting on quite a number of legal entities’. This might be true in the countries the authors evaluated, but it certainly is not the case in Argentina, where horizontal and vertical coordination (rather than integration) is the norm. During the last 25 years the institutional environment impacted the way farming is organized in Argentina, mainly by using contracts between different players and service providers. The agricultural production sector increasingly shifted from a low to medium and to a large-scale business model, and production units expanded horizontally by means of land leases (coordination) and purchases (integration) in order to increase the scale of production and dilute fixed costs in an attempt to generate higher margins. In that sense this paper arises four questions: (1) why is it that in Argentina large-scale farming is predominantly don...