THE EXTENDED GOVERNANCE OF COOPERATIVE FIRMS: INTER-FIRM COORDINATION AND CONSISTENCY OF VALUES

Silvia Sacchetti and Ermanno Tortia

Annals of Public and Cooperative Economics, 2016, vol. 87, issue 1, 93-116

Abstract: This work aims at providing a framework for the analysis of governance in networks of cooperative firms. It builds on four bodies of literature: cooperation, transaction costs, monopoly capitalism, production networks. The framework associates the specific principles that define the identity of cooperative organizations (self-help, member ownership, democratic control, financial participation, limited capital remuneration) alongside more general governance levels (embodied values, property rights, control, resource allocation). We then apply the same dimensions to production networks and propose a stylized networking model for cooperatives. We introduce market power, and identify two polarized types of networks: (1) heterarchical forms of coordination based on cooperation and mutual help, (2) hierarchical coordination based on exclusive direction. We compare both types with our normative framework providing examples and brief case studies for each network type. Recommendations to scholars and practitioners point at the opportunity to discriminate inter-firm relations and production development strategy in terms of the values of cooperation, at all governance levels.

Date: 2016
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