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Chain Interdependencies, Measurement Problems, and Efficient Governance Structure: Cooperatives versus Publicly Listed Firms

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  • Feng, L.
  • Hendrikse, G.W.J.

Abstract

We determine the circumstances when the absence of public listing, often believed to be a disadvantage, makes a cooperative the unique efficient governance structure. This is established in a multi-task principal-agent model, capturing that cooperatives are not publicly listed and their CEOs have to bring the downstream enterprise to value as well as to serve upstream member interests. Not having a public listing prevents the CEO from choosing the level of the downstream activities too high. Cooperatives are uniquely efficient when the upstream marginal product multiplied with a function increasing in the strength of the chain complementarities is higher than the downstream marginal product.

Suggested Citation

  • Feng, L. & Hendrikse, G.W.J., 2011. "Chain Interdependencies, Measurement Problems, and Efficient Governance Structure: Cooperatives versus Publicly Listed Firms," ERIM Report Series Research in Management ERS-2011-001-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:22720
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    Cited by:

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    3. Poizat, Axelle & Duvaleix-Treguer, Sabine & Bonnet-Beaugrand, Florence, 2018. "Vertical integration and health control measures in the French young bull sector," Working Papers 273145, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    4. Axelle Poizat & Sabine Duvaleix-Treguer & Florence Bonnet-Beaugrand, 2018. "Vertical integration and health control measures in the French young beef bull sector," Working Papers SMART 18-04, INRAE UMR SMART.
    5. Liang, Q.X. & Hendrikse, G.W.J. & Huang, Z. & Xu, X., 2012. "Core and Common Members in Chinese Farmer Cooperatives," ERIM Report Series Research in Management ERS-2012-002-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    6. Marco A. MARINI & Paolo POLIDORI & Desiree TEOBALDELLI & Alberto ZEVI, 2015. "Welfare Enhancing Coordination In Consumer Cooperatives Under Mixed Oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 505-527, September.

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    More about this item

    Keywords

    chains; cooperatives; governance; measurement;
    All these keywords.

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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