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On the Evolution of Product Portfolio Coherence of Cooperatives versus Corporations: An Agent-Based Analysis of the Single Origin Constraint

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  • Hendrikse, G.W.J.
  • Smit, R.
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    Abstract

    Agent-based methodology is adopted to analyze the relationship between governance structure and the evolution of product portfolio. A corporation and a cooperative are distinguished by the single origin constraint. The single origin constraint entails that the product requiring the inputs of the members of a cooperative will never be divested. It is es-tablished that a concentric diversification strategy results in randomly distributed clusters of related products of the product portfolio of corporations, while the single origin constraint of a cooperative is responsible for pulling all prod-ucts together in one cluster. More general, the centripetal effect of one product with infinite lifetime on portfolio com-position dominates the centrifugal effect of products with finite lifetime, regardless the number of products with finite lifetime.

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    Bibliographic Info

    Paper provided by 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 in its series ERIM Report Series Research in Management with number ERS-2007-055-ORG.

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    Date of creation: 30 Aug 2007
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    Handle: RePEc:ems:eureri:10505

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    Related research

    Keywords: Concentric diversification; agent-based analysis; cooperatives; product lifetime;

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    1. Paul W. Dobson & Michael Waterson & Stephen W. Davies, 2003. "The Patterns and Implications of Increasing Concentration in European Food Retailing," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 111-125.
    2. Hendrikse, George W.J. & Veerman, Cees P., 2001. "Marketing cooperatives and financial structure: a transaction costs economics analysis," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 26(3), December.
    3. Hendrikse, George W. J. & Veerman, Cees P., 2001. "Marketing cooperatives and financial structure: a transaction costs economics analysis," Agricultural Economics, Blackwell, vol. 26(3), pages 205-216, December.
    4. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
    5. Yakov Amihud & Baruch Lev, 1981. "Risk Reduction as a Managerial Motive for Conglomerate Mergers," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 605-617, Autumn.
    6. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
    7. Andreas Flache & Rainer Hegselmann, 1998. "Understanding Complex Social Dynamics: a Plea for Cellular Automata Based Modelling," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 1(3), pages 1.
    8. Teece, David J. & Rumelt, Richard & Dosi, Giovanni & Winter, Sidney, 1994. "Understanding corporate coherence : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 23(1), pages 1-30, January.
    9. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
    10. Kamshad, Kimya M, 1994. "Firm Growth and Survival: Does Ownership Structure Matter?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(3), pages 521-43, Fall.
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    Cited by:
    1. Feng, Li & Hendrikse, George W.J., 2008. "On the Nature of a Cooperative: A System of Attributes Perspective," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44398, European Association of Agricultural Economists.

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