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What Makes Cooperatives Successful? Identifying the Determinants of Their Organizational Performance

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  • Fanasch, Patrizia
  • Frick, Bernd

Abstract

In comparison with other organizational forms, cooperatives have been found to offer poor product quality and suffer from low reputation. The main reasons discussed in the literature are information asymmetries, which leads to adverse selection and moral hazard, as well as the absence of profit orientation due to poorly specified and diluted property rights. However, although, in reality, many cooperatives indeed perform poorly, and some are apparently able to completely avoid or at least reduce the problems that are considered prototypical for this hybrid organizational form. Therefore, the purpose of this study is to identify the characteristics required to reduce the problems resulting from poorly specified property rights and information asymmetries and, hence, to successfully compete in the market. The data we use to identify the characteristics that separate “good” and “bad” cooperatives encompass 136 organizations in Austria, Germany, and northern Italy. Our logistic regression estimations show that older and larger cooperatives (in terms of acreage) have a significantly higher probability to be listed in at least one of two highly respected wine guides. Moreover, German cooperatives have a significantly lower probability of being listed than either Austrian or northern Italian cooperatives. The findings suggest that differences in performance can be explained by the management of cooperatives. (JEL Classifications: D23, D82, D86, J54, L22, L25, L66, P13, Q13)

Suggested Citation

  • Fanasch, Patrizia & Frick, Bernd, 2018. "What Makes Cooperatives Successful? Identifying the Determinants of Their Organizational Performance," Journal of Wine Economics, Cambridge University Press, vol. 13(3), pages 282-308, August.
  • Handle: RePEc:cup:jwecon:v:13:y:2018:i:03:p:282-308_00
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    Cited by:

    1. Juan Ramón Ferrer & María‐Carmen García‐Cortijo & Juan‐Sebastián Castillo Valero & Vicente Pinilla & Raúl Serrano, 2024. "Cooperatives and sustainability drivers in the Spanish wine sector. What differences do we find with investor owner firms?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(2), pages 505-526, June.
    2. Donald M. Houessou & Ben G. J. S. Sonneveld & Augustin K. N. Aoudji & Frejus S. Thoto & Smith A. R. Dossou & Denyse J. R. M. Snelder & Anselme A. Adegbidi & Tjard De Cock Buning, 2019. "How to Transition from Cooperations to Cooperatives: A Case Study of the Factors Impacting the Organization of Urban Gardeners in Benin," Sustainability, MDPI, vol. 11(17), pages 1-25, August.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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