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Control Rights, Governance, and the Costs of Ownership in Agricultural Cooperatives

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ABSTRACT

Agricultural cooperatives have changed considerably in recent decades. In witnessing these structural changes, scholars have proffered analyses of nontraditional ownership models focusing on residual claim rights. However, crucial information on the allocation of control rights in cooperatives is missing. This study sheds light on alternative ownership-control models adopted by agricultural cooperatives in different regions across the world. In each of these models, we describe the allocation of formal control rights with a focus on decision management and decision control rights. We thus provide empirical evidence on the “separation of ownership and control” in agricultural cooperatives. We also analyze each of the governance models in terms of the associated ownership costs, including risk-bearing costs, the costs of controlling managers, and collective decision-making costs. In doing so, we are able to better understand the forces influencing the organizational efficiency of each cooperative model.

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