Member Participation in Cooperative Governance: Does Heterogeneity Matter?

Informações

Código: ESO1582
Divisão: ESO - Estratégia em Organizações
Tema de Interesse: Tema 07 - Estratégia e Cooperação

Autores

Daniela Maria Pozzobon, Decio Zylbersztajn

Resumo

The motivation for this study is the observed loss of competitiveness of agriculturalcooperatives comparing to investor-owned firms. One important cause of this is the costs ofdecision making which cooperatives face. Not only democratic costs but also agency costsare likely to be more severe in a cooperative than do in an investor-owned firm. Then, achallenge cooperatives face is to minimize decision making costs. In particular, two aspects ofcooperatives affect the ability with which they can control democratic and agency costs: thelevel of heterogeneity and the level of member participation. These two variables play a veryrelevant role in this study. The level of heterogeneity affects the level of member participationin cooperative governance, and this last one affects decision making costs (democratic andagency costs). By means of theory building research, in the first part of the study, we developa measurement of heterogeneity based on grouping, with the aim of showing the presence(absence) of dominant groups and the size of the minorities. It ranks cooperatives fromhomogeneous to more heterogeneous based on both cooperatives and memberscharacteristics. Five levels of heterogeneity are identified. In the second part of the study, byextending the work of other authors, we develop a model that predicts a non-linear relationbetween heterogeneity and member participation. Two propositions have been developed inorder to examine whether member participation is related to some aspects of heterogeneity.Previous research has not compared differences in member participation betweenhomogeneous and heterogeneous cooperatives. The first proposition examines the relationbetween level of heterogeneity and member participation attending general assemblies, whilethe second examines the relation between heterogeneity and member participation at theboard of directors. The first proposition has been examined by means of scatter plots and thesecond by means of logistic regression. With regard to proposition 1, the results were in linewith the theoretical model developed in the study which postulates that there is a non-linearrelation between member participation and level of heterogeneity. With regard to proposition2, the results significantly supported the proposition for the relation between one type ofcooperative heterogeneity (size of producer groups) and board participation. The presentstudy provided some theoretical, methodological and managerial contributions. For instance,the present study has developed a method, called grouping, for measuring the level ofheterogeneity in cooperatives. It is important to measure heterogeneity, because it is asignificant source of conflict of interests between members. No previous studies have beenidentified which have operationalized the concept of heterogeneity. Additionally, the presentstudy has contributed to insights about how cooperative heterogeneity and level of member ofmember participation at the general assembly are related. Gaining an accurate picture of thisrelation is important, because both heterogeneity and member participation are sources ofdecision making costs.

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