Jerker Nilsson

Organisational principles for co-operative firms ☆

Co-operative firms have been the subject of criticism by many economists, who base their arguments on property rights and agency theory: members do not control management, investments are short term, accumulated investments are below the economic optimum, etc. Nevertheless, many co-operative organisations do function well for their members. An analysis of the assumptions underlying the criticism reveals that this is not generally justified. As it focuses mainly on the functioning of capital markets, it disregards the vertically integrated character of the co-operatives, i.e. that their purpose is to counteract market failures on product markets. For many co-operatives, however, the critique is valid. Individual ownership in the form of tradable residual rights is thus motivated in many co-operatives.

Gemeinschaft and Gesellschaft in Cooperatives

A cooperative business consists of a cooperative society and a cooperative business firm. The society of members intends to control the business in such a way as to focus the business operations on its interests. The two organizational units tend, however, to follow different behavioral logics. Borrowing some core concepts from classical sociology, Gemeinschaft norms rule ruling within the membership, while Gesellschaft norms dominate the business firms. Thereby it may be difficult to accomplish alignment between the membership organization and the business organization in order to be competitive. This paper addresses the difficulties of following the different logics by exploring Gemeinschaft and Gesellschaft within agricultural cooperatives with a focus on the membership logics.

The Russian top-down organised co-operatives – reasons behind the failure

Studies show that the co-operatives that have been established by governmental officials in Russia have not been successful. This study seeks to explore whether the government decision makers are badly informed about the conditions for running co-operative enterprises. The study is based on surveys within Kurgan region with agricultural producers who are not co-operative members, members of the co-operatives at the formation stage, the same members at a later point in time and a sample of government officials. The findings indicate that the government officials have poor knowledge about the socio-psychological conditions among agricultural producers.

Institutional changes in the Swedish meat industry

Purpose – The purpose of this paper is to explain institutional changes in the Swedish meat industry after major external events. Design/methodology/approach – Analysis based on secondary data sources and interviews with people involved when the dominant meat co-operative in Sweden underwent major changes. Findings – The decline in the Swedish meat industry is interpreted using the theory of institutional change presented by Aoki (2007, 2011). The country’s former national agricultural policy created a specific set of norms and values. Co-operatives were considered to be indispensable. The co-operative sector was large and hierarchically organised. Therefore, external signals did not create sufficient endogenous processes within the co-operatives. Co-operative adaptation to rising competitive pressure took place only reluctantly and belatedly. Hence many farmer-members defected and the major co-operative faced finally insurmountable problems. A strong ideological conviction caused the once dominant co-ope...

Reviewing changing institutional conditions for private farming in Russia

The dominant organizations of agricultural production (kolkhozes and sovkhozes) have become obsolete with independence and the abolition of the Soviet era’s planned economy. These organizations had to be restructured and family farms, or more generally private farms, were intended to form the new backbone of farm production. However, development since then has been difficult. Based on a literature review, this study reviews and assesses this development in terms of the changing institutional conditions. The Russian government’s policies, by interchangeably supporting large-scale farming organizations or private farming, have created uncertainties for private farmers. Russian farmers were once strongly influenced by the mentality from Soviet times, but there are indications now that they are gaining strength, possibly as a consequence of a more benevolent political order, more entrepreneurial attitudes and developing organizational arrangements.

Motivation Behind Members’ Loyalty to Agricultural Cooperatives

This article explores the importance of a number of motivational factors that may be related to farmer-members’ loyalty to their agricultural cooperative. A review of relevant literature allowed four factors to be identified: the farmers’ view of cooperative ideology, their conception of the cooperative as an assured market channel, their view of the cooperative as providing business orientation, and their trust in the information provided by the cooperative to members. Data from a survey of Finnish farmers showed that the four factors were stronger among loyal members than disloyal members. There were no statistically significant differences between loyal and disloyal farmers with respect to their age and the size of their farm operations.

Social capital in Russian agricultural production co-operatives

When the Soviet kolkhozy and sovkhozy were converted, a large number of agricultural production co-operatives was created. Most of these co-operatives still exist in Russia and some of them have a strong market position, accounting for almost one-third of the aggregate volume produced by large farms. This study explores whether social capital might be the explanation for this relative success, i.e. that members support their co-operative because they trust their fellow members as well as the leadership. Interviews with co-operative members resulted in 1401 usable answers. The results from an ordered logit model indicate that social capital plays a partial role. Members who consider co-operatives to be an efficient business form value social ties to other members, even though the leadership does not enjoy much social capital.

Conditions for structural change in the Macedonian dairy industry – the dairy farmers' choice of processors

Dairying is important in Macedonia though the industry is not seen as competitive internationally. New governance structures are required. The aim of this study is to identify the conditions for behavioural changes by Macedonian dairy farmers regarding their choice of dairy processors. Data were collected through interviews with 30 farmers. The findings indicate a pattern: smallholders sell to small processors and large farmers sell to large processors. Transaction cost economics provide explanations. There is human asset specificity in the form of personal relations between the smallholders and the small processors. Physical asset specificity exists as the smallholders produce low quality milk, which large processors do not buy.

Partnerships in the Irish Beef Industry: Contract Theoretical Analyses

A number of partnerships have recently been established in the Irish beef industry. A partnership consists of a meat processor and a number of farmers. This study analyzes 4 such Irish partnerships, based on contract theory. The conclusions are (a) it pays to collaborate with the best possible partners; (b) having control of a major part of the operations is necessary for success; (c) with time, better collaboration is achieved; (d) a simple relationship between the processor and the producers reduces conflicts; (e) a strong brand name is necessary to reach lucrative consumer markets; (f) information sharing facilitates the coordination.

GOVERNANCE OF PRODUCTION CO-OPERATIVES IN RUSSIAN AGRICULTURE

Many Soviet kolkhozy and sovkhozy were transformed into agricultural production co-operatives, because the farm workers would have had large transaction costs in any other type of organization. These co-operatives still hold a strong market position. This study explores the hypothesis that this market strength could be due to low governance costs, obtained through strong manager power. As managers want the co-operative to survive, they make limited investments in the co-operative and pay low wages. The members, however, do not consider this to be problematic. They appreciate the community within the village, their private plots of land and the co-operatives services. Hence the existence of the co-operatives is not threatened.