Organizational costs in agricultural cooperatives: comparison of European and US approaches

Agricultural cooperatives incur organizational costs both when they are founded and later on as they grow and mature. The current chapter reviews extant scholarly literature on this fascinating topic and proffers a new framework for studying organizational costs. The innovativeness of the suggested approach lies in the introduction of a temporal dimension to organizational costs. When a new cooperative is founded member-patrons are usually aware only of the formation organizational costs involved in setting up their cooperative. Later on, however, they come to realize that maintenance organizational costs are also important; they need to design and implement effective solutions to such costs in order to improve their cooperative’s longevity. A comparison of solutions in European and U.S. agricultural cooperatives reveals that generic solutions to organizational costs in both continents share the same underlying economic principles, while specific solution instruments may differ.