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Principal-Agent Relationships in Agricultural Cooperatives: An Empirical Analysis from Rural Alberta

Author

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  • Richards, Timothy J.
  • Klein, Kurt K.
  • Walburger, Allan M.

Abstract

Cooperatives throughout North America are consolidating at an increasing rate and for a variety of reasons. While many cooperatives merge with others or are acquired to achieve greater economies of scale, several fail due to changes in the external economy, which make them redundant. Often, such redundancy is reflected in a heightened sense of member dissatisfaction. Many argue that such dissatisfaction is likely to arise in cooperatives as a result of principal-agent problems. In order to determine whether or not cooperative managers maintain the same goals as their owners, this study uses data from a member-survey to compare Alberta cooperative members' objectives with those they believe to be held by their cooperatives' managers. An econometric model of the difference between members' expectations and perceptions shows how various socioeconomic variables affect the extent to which these objectives are aligned. The results of this analysis can help cooperative boards design managerial incentive programs to better align their goals with those of the cooperative membership.

Suggested Citation

  • Richards, Timothy J. & Klein, Kurt K. & Walburger, Allan M., 1998. "Principal-Agent Relationships in Agricultural Cooperatives: An Empirical Analysis from Rural Alberta," Journal of Cooperatives, NCERA-210, vol. 13, pages 1-14.
    • Handle: RePEc:ags:jlcoop:46223
    DOI: 10.22004/ag.econ.46223
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    Cited by:

    1. Stavros Kalogiannidis & Simeon Karafolas & Fotios Chatzitheodoridis, 2024. "The Key Role of Cooperatives in Sustainable Agriculture and Agrifood Security: Evidence from Greece," Sustainability, MDPI, vol. 16(16), pages 1-20, August.
    2. Hakelius, Karin & Hansson, Helena, 2016. "Members’ attitudes towards cooperatives and their perception of agency problems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), October.
    3. Peter Österberg & Jerker Nilsson, 2009. "Members' perception of their participation in the governance of cooperatives: the key to trust and commitment in agricultural cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 181-197.
    4. Julia HÖHLER & Rainer KÜHL, 2018. "Dimensions Of Member Heterogeneity In Cooperatives And Their Impact On Organization – A Literature Review," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(4), pages 697-712, December.
    5. Constantine Iliopoulos & Vladislav Valentinov, 2018. "Member Heterogeneity in Agricultural Cooperatives: A Systems-Theoretic Perspective," Sustainability, MDPI, vol. 10(4), pages 1-22, April.
    6. Zieseniß, R., 2013. "Anreizorientierte Entlohnung in Bezugsgenossenschaften: Eine theoretische Analyse eine leistungsorientierten Entlohnung zur Maximierung des monetären Mitgliedernutzens," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 48, March.
    7. Li Feng & Anna Friis & Jerker Nilsson, 2016. "Social Capital among Members in Grain Marketing Cooperatives of Different Sizes," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 113-126, January.
    8. Fulton, Murray E. & Gibbings, Julie, 2000. "Response And Adaption: Canadian Agricultural Co-Operatives In The 21st Century," Miscellaneous Publications 31768, University of Saskatchewan, Centre for the Study of Co-operatives.
    9. Mkhabela, Thulasizwe, 2018. "Dual Moral Hazard and Adverse Selection in South African Agribusiness: It Takes Two to Tango," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(3), February.
    10. Zieseniss, Roland & Kuehl, Rainer, 2013. "Relative Performance Payment in Cooperatives – A Model-Theoretical Analysis," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152162, Australian Agricultural and Resource Economics Society.
    11. Kumse, Kaittisak & Suzuki, Nobuhiro & Sato, Takeshi & Demont, Matty, 2021. "The spillover effect of direct competition between marketing cooperatives and private intermediaries: Evidence from the Thai rice value chain," Food Policy, Elsevier, vol. 101(C).
    12. Michael KOPEL & Marco A. MARINI, 2016. "Organization And Governance In Social Economy Enterprises: An Introduction," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 309-313, December.
    13. Lang, K.A. & Fulton, Murray E., 2004. "Member Commitment and the Market and Financial Performance of the Saskatchewan Wheat Pool," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 5, pages 1-15, December.
    14. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural Cooperatives I: History, Theory and Problems," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(1), pages 1-29, March.
    15. Wytske O. Chamberlain & Ward Anseeuw, 2018. "Inclusive Businesses and Land Reform: Corporatization or Transformation?," Land, MDPI, vol. 7(1), pages 1-17, January.
    16. Marco A. MARINI & Paolo POLIDORI & Desiree TEOBALDELLI & Alberto ZEVI, 2015. "Welfare Enhancing Coordination In Consumer Cooperatives Under Mixed Oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 505-527, September.
    17. Iiro Jussila & Sanjay Goel & Heidi Tuominen, 2012. "Member Commitment in Co-operatives: The Utilitarian Approach," Business and Management Research, Business and Management Research, Sciedu Press, vol. 1(3), pages 9-16, September.
    18. Michael Kopel & Marco A. Marini, 2012. "Optimal Compensation Structure in Consumer Cooperatives under Mixed Oligopoly," DIS Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    19. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    20. Michael Kopel & Marco A. Marini, 2012. "Optimal Compensation Structure in Consumer Cooperatives under Mixed Oligopoly," DIS Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    21. Iliopoulos, Constantine & Valentinov, Vladislav, 2018. "Member heterogeneity in agricultural cooperatives: A systems-theoretic perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 10(4), pages 1-22.
    22. Achilleas Kontogeorgos & Panagiota Sergaki & Fotios Chatzitheodoridis, 2017. "An Assessment Of New Farmers’ Perceptions About Agricultural Cooperatives," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(01), pages 1-13, March.
    23. Ortmann, Gerald F. & King, Robert P., 2006. "Small-Scale Farmers in South Africa: Can Agricultural Cooperatives Facilitate Access to Input and Product Markets?," Staff Papers 13930, University of Minnesota, Department of Applied Economics.
    24. Zieseniss, Roland, 2012. "Anreizorientierte Entlohnung In Bezugsgenossenschaften: Eine Theoretische Analyse Einer Leistungsorientierten Entlohnung Zur Maximierung Des Monetären Mitgliedernutzens," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137177, German Association of Agricultural Economists (GEWISOLA).
    25. Nillson, J. & Hendrikse, G.W.J., 2009. "Gemeinschaft and Gesellschaft in Cooperatives," ERIM Report Series Research in Management ERS-2009-059-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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    Keywords

    Agribusiness;

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