Members' choice of production co-operatives in Russian agriculture

The kolkhozy and sovkhozy that operated in the former Soviet Union have been converted into other organisational forms, among them agricultural production co-operatives. In some regions of Russia and in some types of production these co-operatives are strong. Since production co-operatives constitute a type of vertical integration, the present study uses transaction cost theory to explore the worker-members' preference for production co-operatives. Our data originate from a survey of 1,401 co-operative members in Kurgan region. Findings indicate that the workers would face enormous transaction costs if they were to choose another organisational form, and are in effect locked into the co-operatives just as workers used to be locked into the kolkhozy and sovkhozy . The most reasonable explanation for this is that workers have motivational factors that link them to their co-operatives. In addition, the powerful leaders of the co-operatives have an interest in the workers remaining members of the co-operatives.