Theory of cooperatives

Recent developments

Authored by: Michael L. Cook , Jasper Grashuis

The Routledge Handbook of Agricultural Economics

Print publication date:  July  2018
Online publication date:  July  2018

Print ISBN: 9781138654235
eBook ISBN: 9781315623351
Adobe ISBN:


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Theoreticians have made recent advances to our collective understanding of cooperative performance, governance, management, and finance. As before, formal analyses invariably find a positive impact of supply and marketing cooperatives on the welfare of farm producers and food consumers, yet there is increasing recognition of numerous constraints and inefficiencies. For example, theoreticians have been modeling the negative consequences of organizational growth in terms of heterogeneous utility functions of members, directors, and managers to inform agency decisions. When the principal–agent relationship is given, management behavior is often analyzed in relation to risk or vertical integration. As cooperatives face pressure to grow further, there is also growing attention to the debt or equity decision to inform solutions to the tension between patronizing and capitalizing the cooperative. Altogether, the theoretical literature is thus evolving in its conceptualization of cooperatives as flawed, complex, and diverse business organizations that nonetheless remain able to positively impact both farm producers and food consumers.

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