Member preference heterogeneity and system-lifeworld dichotomy in cooperatives

Abstract

Purpose The purpose of this paper is to shed new light on the issue of preference heterogeneity in cooperatives. Design/methodology/approach Drawing on the ideas of Habermas and Luhmann, this paper interprets preference heterogeneity of cooperative members in terms of the precarious relationship between the categories of “system” and “lifeworld.” The argument is buttressed with a case study of an agricultural cooperative recently founded in Central Greece. Findings The sensitivity of cooperatives to the lifeworld contexts of their members exacts the price in the form of the member preference heterogeneity problem. If this sensitivity is taken to be the constitutive characteristic of cooperatives, then the proposed argument hammers home their fundamental ambivalence, as they are necessarily fraught with the potential for internal conflict. Research limitations/implications The paper urges for a radical rethinking of Georg Draheim’s thesis of the “double nature” of cooperatives. “Double nature” is shown to aggravate the member preference heterogeneity problem. Practical implications The results of this study inform the cooperative leaders’ quest to strike a balance between the interests of their members and the demands of the external socio-economic environment. Originality/value This research contributes significantly to the literature on collective decision-making costs incurred by cooperatives. The failure of cooperatives to balance the sensitivity to members’ interests and to the external environment is exposed as the root cause of the divergence and heterogeneity of member preferences. This heterogeneity is shown to boost collective decision-making costs.

Member Heterogeneity in Agricultural Cooperatives: A Systems-Theoretic Perspective

“…In the cooperative literature however, the understanding of membership as a systemic role stands in an interesting contrast with Draheim's thesis on the "double nature" of the cooperative enterprise [53] cf. [11,54,55]. Whether or not this thesis is acceptable today, it underscores the practical difficulties of keeping the membership as a systemic role clearly distinct from all other attributes that may pertain to members as whole personalities, with many of these difficulties being reinforced by the proclamations of the centrality of members to the cooperative business philosophy.…”

“…Symptoms of these challenges include but are not limited to, eroding member commitment, deprived social capital, member apathy, lack of incentives to invest risk capital in cooperatives, excessive agency and influence costs and so on [4][5][6][7][8]. Effective solutions to these challenges are conspicuous by their absence, while the solutions that are currently on offer fail primarily in view of the pervasive member preference heterogeneity problems for example, [9][10][11]. These problems are well known to cooperative scholars.…”

A Life Cycle Explanation of Cooperative Longevity

“…However, member heterogeneity may undermine organizational processes by affecting investment behavior, collective decision-making costs, member commitment, and contribute to cooperative demise [8,[36][37][38][39][40][41][42][43]. Unaligned preferences among members result in frictions that lead to fragmented membership, which may foster the development of distributional coalitions and institutional sclerosis [44,45].…”

“…However, internal organizational processes such as divergent proportions of allocated equity and emergent special interest groups seeking to pressure management are also recognized as sources of heterogeneity increasing over the cooperative lifespan [37,49,50]. To inform whether heterogeneity increases diachronically, we analyze the ramifications of equity allocation, patron drift, membership growth, substitution effects, and transactional impacts.…”

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

“…Also, the segmentation of critical food consumers necessitates a strong market orientation [10], but most farmer cooperatives have an inherent upstream bias [11,12]. Moreover, many farmer cooperatives see increasing heterogeneity in member attitudes and objectives [13,14].…”