Vladislav Valentinov

Why are cooperatives important in agriculture? An organizational economics perspective

This paper develops an organizational economics explanation for agricultural cooperatives by building upon the transaction cost theory of family farms. According to this theory, the importance of family farms in Western agriculture is a result of the low feasibility of hierarchical organization in agricultural production due to supervision and monitoring difficulties. This paper argues that the transaction cost-economizing effect of family farms has a price in the form of their limited ability to realize economies of scale and to develop market power comparable to that of their up- and downstream trading partners. The role of agricultural cooperatives is shown to help overcome these limitations in order to take advantage of the transaction-cost economizing properties of family farms. This explanation of agricultural cooperatives is sector-specific in the sense that it traces the benefits of cooperative organization back to the organizational attributes of agricultural production.

Corporate social responsibility and sustainability: insights from Boulding and Luhmann

The modern discourse on corporate social responsibility is framed by ideas many of which have important parallels in the literature on the general and social systems theory. Particularly the conceptions of the interdependence between business and society, and of the societal embeddedness of business, revolve around the theme of system–environment interaction that is potentially unsustainable. The paper draws upon the systems-theoretic arguments of Luhmann and Boulding in order to explain how sustainability is enhanced by corporate social responsibility practices. Systems are shown to risk becoming unsustainable if they develop their complexity to the point of overstraining the carrying capacity of the environment. To forestall this scenario, systems can improve their sensitivity to the environment and constrain their own complexity. These sustainability strategies reveal the systems-theoretic meaning of corporate social responsibility. Explained in this way, corporate social responsibility turns out to be a functional equivalent of vertical integration seen from the perspective of Williamsons transaction cost economics.

The Economics of Nonprofit Organization: In Search of an Integrative Theory

Abstract: The existence of nonprofit firms has been traditionally explained by two types of theories emphasizing the market failures that these firms address and the individual motivations to found these firms. To date, these theorizing strands have been mainly disconnected from each other. To fill this gap, this paper develops an integrative theoretical understanding of nonprofit organization by demonstrating the way market failures addressed by nonprofit firms are interrelated with the motivations of nonprofit entrepreneurs. Building on the arguments of Thorstein Veblen and the theory of the division of labor, it is argued that nonprofit organization embodies partial collective self-sufficiency necessitated by the limitations of the ability of market exchange to satisfy human needs.

Economic Theories of Nonprofits and Agricultural Cooperatives Compared New Perspectives for Nonprofit Scholars

This article explores the cross-fertilization potential that exists between the economic theory of agricultural cooperatives and that of nonprofit organizations. A number of central ideas in the agricultural cooperative theory are shown to generate two novel insights pertaining to the nonprofit economics literature. First, as with agricultural cooperatives, nonprofit organizations can be conceptualized not only as firms but also as service agencies and stakeholder coalitions. Second, the demand-side economic justification of nonprofit organizations, like that of agricultural cooperatives, likely includes reasons other than market failure. The article concludes by calling for research on how nonprofit economics can inform the theory of agricultural cooperatives.

The meaning of nonprofit advocacy: An ordonomic perspective

Abstract Orthodox economic theories of the nonprofit sector are focused on its service delivery role but have little to say about nonprofit advocacy. This study explains nonprofit advocacy by building upon the ordonomic approach, a recently developed strand of institutional economics that explores the interdependencies between institutions and ideas. From the ordonomic perspective, the evolution of a modern society occurs through an ongoing realignment between institutions and ideas. The meaning of nonprofit advocacy is shown to be in contributing to this realignment. This leads to a new understanding of the service delivery role of the nonprofit sector. This role is shown to have a compensatory character in that it is intended to maintain a reasonable quality of human life before the time-consuming ideational and institutional adjustments actually take place.

Accountability and the Public Interest in the Nonprofit Sector: A Conceptual Framework

This paper clarifies the nature of nonprofit accountability by distinguishing between the substantive and processual understandings of the public interest. The major theories of the nonprofit sector are shown to imply that this sectors activities correspond to the public interest only in its processual understanding, but not in the substantive one. Policy and management implications of this argument are discussed.

How to foster social progress:an ordonomic perspective on progressive institutional change

According to the institutionalist position, institutional change is progressive to the extent that ceremonial behavioral patterns are replaced by instrumental ones. This article shows how the ordonomic research program operationalizes and explains the feasibility of progressive institutional change. The key ordonomic argument is that instrumental value is expressed in the inclusive win-win semantics that, by virtue of its very inclusiveness, is capable of transcending the win-lose semantics implicated in ceremonial value. This argument is illustrated with the European growth miracle as the prime historical example of progressive institutional change.

The Transaction Cost Theory of the Nonprofit Firm: Beyond Opportunism

Building on the transaction cost theory of the for-profit firm, the article argues that the transaction cost-economizing role of the nonprofit firm has two distinct dimensions. One of them consists of reducing the cost of searching for, processing, and communicating information and the other minimizes opportunistic behavior by means of aligning incentives of concerned stakeholders. So far, the transaction cost theory of the nonprofit firm has been emphasizing the second dimension while largely ignoring the first one. The article fills this gap by demonstrating that nonprofit firms are able to economize on transaction cost not only by minimizing opportunism but also by facilitating cooperation among those stakeholders who derive utility from contributing to the realization of their nonprofit firms missions and hence would not be interested in opportunistic behavior. The article concludes by emphasizing the complementarity of the two dimensions of the nonprofit firms transaction cost-economizing role.

Opportunism in Agricultural Cooperatives in Greece

This paper compares the new institutional economics literature on agricultural cooperatives with their actual operation in Greece. The key contrast revealed by the comparison concerns the role of opportunism. New institutional economics explains cooperatives in terms of their ability to combat external opportunism, subject to the constraints of internal opportunism. In contrast, in Greek agricultural cooperatives internal opportunism is shown to inflate the formal organizational structure and to lower the cooperatives effectiveness in serving its members. The paper discusses some of the theoretical, policy and practical implications of this argument.

Rationalizing the GMO Debate: The Ordonomic Approach to Addressing Agricultural Myths

The public discourse on the acceptability of genetically modified organisms (GMOs) is not only controversial, but also infused with highly emotional and moralizing rhetoric. Although the assessment of risks and benefits of GMOs must be a scientific exercise, many debates on this issue seem to remain impervious to scientific evidence. In many cases, the moral psychology attributes of the general public create incentives for both GMO opponents and proponents to pursue misleading public campaigns, which impede the comprehensive assessment of the full spectrum of the risks and benefits of GMOs. The ordonomic approach to economic ethics introduced in this research note is helpful for disentangling the socio-economic and moral components of the GMO debate by re- and deconstructing moral claims.