Accommodating Two Worlds in One Organisation: Changing Board Models in Agricultural Cooperatives

Abstract

While most economic organisation literature on cooperatives has focused on changes in income rights, we study changes in the allocation of decision rights between board of directors (representing members) and managers. The traditional role of the board is to direct the activities of the managers. However, professional management increasingly makes most strategic decisions, pushing the board into a supervisory role. We present two groups of findings on changing board-management relationships. We identify three corporate governance models: traditional, management and corporation. And we present an empirical illustration showing a relationship between the choice of board model, and product portfolio and performance.

An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments

“…For many hybrid ownership structures, the explicit presence of market-or investor-oriented objectives is manifested by capital-seeking subsidiaries [68]. Similarly, Bijman et al [70] and Chaddad and Iliopolous [71] advanced typologies with control delegation among members, directors, and managers as the main variable. Many modern farmer cooperatives use a corporate model in which effective control is delegated from board directors to professional decision specialists with specific business knowledge.…”

A Life Cycle Explanation of Cooperative Longevity

“…The organization designed in phase 2 entails specific property rights arrangements and incentive structures that facilitate or constrain the group's ability to realize goals [17]. The implications and consequences of the emergent organizational architecture are informed by work from organization theory, property rights theory, population ecology, and mechanism design [18][19][20][21][22][23][24][25][26][27]. Achieving constitutional adaptability and flexibility in voting mechanisms, representation districts, member qualifications, responsibilities and authority distribution, capital contribution, patronage obligations and surplus/earning distributions, requires considerable input from members.…”

The influence of market orientation on firm performance and members’ livelihood in Ethiopian seed producer cooperatives

“…This is mainly due to the presence of different strategic approaches and governing structures of cooperatives compared with IOFs (Kyriakopoulos et al, 2004;Bijman et al, 2013). The extent to which cooperatives adopt market orientation depends on the significance of human-resource development, organisational restructuring, and reallocation of resources within the cooperatives.…”