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Product differentiation and cooperative governance

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  • Borgen, Svein Ole

Abstract

The increasing demand for more differentiated consumer products is a challenge for agri-food sales cooperatives. Many cooperatives try to adapt to novel consumer demands by engaging more in product development, with the aim of manufacturing and selling more differentiated products. The article discusses which governance problems that are likely to unfold as cooperatives engage more in the development, production and sales of differentiated end-products. The idea to be advanced is that the nature of the governance problems is contingent on where in the cooperative's production chain the main sources of uniqueness and product differentiation have their origin. When the uniqueness of the end-product is created at the raw-commodity level (on-farm), haggling over appropriable quasi-rent between members and the cooperative is likely to emerge, leading to a hold-up situation. When the uniqueness of the differentiated end-product is created at the cooperative level, the cooperative community is likely to be exposed to consequential incentive problems related to motivation and control.

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  • Borgen, Svein Ole, 2011. "Product differentiation and cooperative governance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 327-333, May.
    • Handle: RePEc:eee:soceco:v:40:y:2011:i:3:p:327-333
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    Cited by:

    1. Walter Perpétuo Ribas & Bruno Pedroso & Leandro Martinez Vargas & Claudia Tania Picinin & Miguel Archanjo de Freitas Júnior, 2022. "Cooperative Organization and Its Characteristics in Economic and Social Development (1995 to 2020)," Sustainability, MDPI, vol. 14(14), pages 1-22, July.
    2. Theo Benos & Nikos Kalogeras & Frans J.H.M. Verhees & Panagiota Sergaki & Joost M.E. Pennings, 2016. "Cooperatives’ Organizational Restructuring, Strategic Attributes, and Performance: The Case of Agribusiness Cooperatives in Greece," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 127-150, January.
    3. Achilleas Kontogeorgos & Panagiota Sergaki & Anastasia Kosma & Vassiliki Semou, 2018. "Organizational Models for Agricultural Cooperatives: Empirical Evidence for their Performance," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1123-1137, December.
    4. Marcelo Ferreira & Clea Macagnan & Daniel Vancin & Ana Toaldo, 2021. "Technical assistance: A determinant of cooperative member loyalty," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(4), pages 649-668, December.

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