Influence Costs in Agribusiness Cooperatives: Evidence from Case Studies

Constantine Iliopoulos and George Hendrikse

ERIM Report Series Research in Management from 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

Abstract: This article addresses the influence costs problem in the governance structure ‘agribusiness cooperative.’ Influence costs are higher in cooperatives than in investor-oriented firms due to the unique governance structure of the former. Hypotheses are formulated and tested regarding the relationship between influence costs and seven variables: membership size, member heterogeneity, average member age, singleness of purpose, managerial power over members, level of managerial compensation, and professional versus inside management. The main results are that heterogeneous member preferences, older average member age, and investment in multiple product lines all contribute to higher influence costs. At the same time, cooperatives with well-paid, powerful and professional managers incur lower influence costs. The impact of membership size on the level of influence costs is undetermined.

Keywords: agribusiness cooperative; governance structure; influence costs (search for similar items in EconPapers)
JEL-codes: M M13 O32 Q13 (search for similar items in EconPapers)
Date: 2008-07-15
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Persistent link: https://EconPapers.repec.org/RePEc:ems:eureri:12872

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