Members' choice of production co-operatives in Russian agriculture

Governance of Production Co‐operatives in Russian Agriculture

“…The possibility that the leaders of the Soviet farms had some social concerns when they advocated the formation of production cooperatives cannot be fully excluded. However, this is countered by Golovina et al (2013;2014), who show that there is a discernible amount of group-level social capital within parts of the co-operative memberships, while the amount of individual-level social capital in the relationship between the members and the managers is very limited (Valentinov, 2004). The members do not have much trust in the management.…”

“…The co-operatives are not dependent on higher state authorities while the Soviet farms belonged to a governmental hierarchy. (Pugachov and Atta, 2000, p. 535) An indicator of strong managerial power may be that the average membership of the Russian production co-operatives is declining and the standard of living is comparatively low (Golovina et al, 2013). This development would be less likely if the members were to decide by themselves, but it may be the result of powerful managers trying to improve the financial status of their co-operative.…”

“…Hence the decision by agricultural workers to establish a co-operative and to remain as members can be understood with the help of transaction cost theory. Golovina et al (2013) used this theory in an analysis of data obtained from a survey of members of production co-operatives in the Kurgan Region of Russia. The study found that the workers of the large agricultural enterprises were in reality locked into large-scale farms and into their villages.…”

“…While transaction cost theory may explain why the members prefer agricultural production co-operatives (Golovina et al, 2013), it does not explain why these firms are strong in certain regions and some agricultural production branches. Their collective structure could be expected to create high governance costs, so the co-operatives would be inefficient and unable to survive.…”

“…Nevertheless, production co-operatives are important in Russian agriculture and are also fairly strong (Golovina et al, 2013). According to federal public statistics, there were 11,850 co-operatives in Russia on 1 January 2014 (Rosstat, 2015), a rise from 7,939 in 1995 and 10,319 in 2012 (Maslova, 2013, p. 706).…”