Social interactions and product quality: the value of pooling in cooperative entrepreneurial networks
Wendong Deng () and
George Hendrikse ()
Additional contact information
Wendong Deng: NHTV Breda University of Applied Sciences
George Hendrikse: Erasmus University
Small Business Economics, 2018, vol. 50, issue 4, 749-761
Abstract Why do cooperatives often pay a pooled price, despite the free-riding incentives it entails? In this paper, we highlight that a cooperative is an enterprise owned by a network of entrepreneurial members. By taking explicitly into account the social interactions among entrepreneurial members and the impact of social ties on members’ product quality provisions, we identify the circumstances when pooling is efficient. It is shown that social interactions mitigate the free-riding effect of pooling and that the amount of members’ social interactions depends upon, and increases with, the cooperative’s pooling ratio. We show that the complete pooling policy is not only economically efficient but also socially advantageous when the context of the cooperative is conducive to frequent social interactions among members.
Keywords: Social capital; Social interaction; Cooperatives; Pooling policy (search for similar items in EconPapers)
JEL-codes: D21 L23 Q13 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11187-017-9893-3 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:50:y:2018:i:4:d:10.1007_s11187-017-9893-3
Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2
Access Statistics for this article
Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch
More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().