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Governance and managerial effort in consumer-owned enterprises

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  • Murray Fulton
  • Dionne Pohler

Abstract

This article develops a political economy model of the board–manager relationship in consumer-owned enterprises (COEs), illustrating how the governance structure plays a key role in determining managerial power. The key conclusion of the article is that managerial remuneration and the resources devoted to governance are strategic choices for the COE and that their determination involves a trade-off. This trade-off depends on factors external to the COE, such as the COE's time horizon (as captured in the discount rate) and the manager's opportunity cost outside the COE (e.g. the remuneration paid in investor-owned firms). The trade-off also is influenced by the degree of complementarity between remuneration and governance resources, and by the sensitivity of managerial utility to financial remuneration and to governance.

Suggested Citation

  • Murray Fulton & Dionne Pohler, 2015. "Governance and managerial effort in consumer-owned enterprises," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(5), pages 713-737.
    • Handle: RePEc:oup:erevae:v:42:y:2015:i:5:p:713-737.
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    File URL: http://hdl.handle.net/10.1093/erae/jbv026
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    Cited by:

    1. Malvido Perez Carletti Agustina & Hanisch Markus & Rommel Jens & Fulton Murray, 2018. "Farm Gate Prices for Non-Varietal Wine in Argentina: A Multilevel Comparison of the Prices Paid by Cooperatives and Investor-Oriented Firms," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-14, January.
    2. Jasper Grashuis & Alexandre Magnier, 2018. "Product differentiation by marketing and processing cooperatives: A choice experiment with cheese and cereal products," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 813-830, October.
    3. Ahmet Candemir & Sabine Duvaleix & Laure Latruffe, 2021. "Agricultural Cooperatives And Farm Sustainability – A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1118-1144, September.
    4. Xiyuan Yu & Wenli Liu & Lingli Qing & Di Zhang, 2023. "Improving Farm Cooperatives’ Performance and Sustainability: A Study of Agricultural Managers’ Competencies Based on the Grounded Theory and the fsQCA Methods," Sustainability, MDPI, vol. 15(2), pages 1-16, January.

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