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Styrelsens roll och uppgifter i det lantbrukskooperativa företaget

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  • Heimbrandt, Andreas
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    Abstract

    As the modern firm has continued to grow and its owner base has widened, the owners' opportunities to exert influence has diminished. While the board of directors is a strategic resource available to management it is also the owners' primary tool for exercising control. To a large extent research on the role of the board of directors has focused on the relationship between various characteristics of the board and the firm's financial result. Research literature within the field of corporate governance has established three primary roles for the board of directors; setting strategy, controlling management and being a resource available to management. The vast majority of research within the field is primarily based on investor owned firms. This study focuses on the cooperative firm. The board of directors in cooperative firms is somewhat uncharted territory, yet there are reasons for asking how, if at all, a firm's cooperative basis might influence the roles and tasks of the board of directors. In a cooperative context, questions such as; "To what extent is the job of the board of directors affected by not profit maximising operations?" and "How does a board handle the fact that the owners themselves are also suppliers and customers?" are acutely relevant yet relatively unexplored. The overall aim of this licentiate thesis is to further the knowledge and understanding of the composition, roles and functions of the board of directors in a producer cooperative firm. The purpose is pursued by posing questions concerning the board of directors and its roles and functions as described in the general corporate governance literature, while considering the board in a cooperative firm model. The frame of reference rests on previous research and relevant models concerning the roles and functions of the board of directors. Empirically, the thesis builds on a case study of a large Swedish producer cooperative firm, Lantmännen. Findings show that the board of directors in a cooperative firm may differ from those of investor owned firms on several important points: When there are many owners of a firm, the owners are often considered weak, even to the extent that we begin to speak of "the ownerless firm". The producer cooperative firm Lantmännen uses an ownership model where every member has one vote, which potentially could lead to weak owners. The members have, by their numerous points of contact with the firm and other owners, created a number of compensatory mechanisms that increase their power. Thus, Lantmännen's members are powerful. The owners interact with the firm as customers, suppliers and elected representatives on various levels in the firm. Moreover, there is a well structured member organisation that facilitates the organisation of members. Regarding the composition of the board of directors, it is evident that member representation is very strong. The firm has no external members on the board, and the composition clearly reflects the various interests of the owners. The competence of the board of directors is particularly strong in matters related to the members' exchanges with the firm as suppliers or customers. In spite of the fact that the firm has significant operations abroad, Lantmännen has refrained from bringing in more external competence on the board to develop its international profile. In regard to the roles and functions of the board, the case shows a particularly advanced control function. Lantmännen can be said to constitute an anomaly in the agency theory perspective, in that it does not actively employ managerial incentive programmes but rather relies on monitoring and control of the CEO. The board of directors has good knowledge of what goes on at all levels of the firm, thanks to its presence on the divisional boards of directors. At the same time, however, there is evidence that the development of the strategic role of the board of directors has been held back for the benefit of a stronger control function. As this study includes only a single firm, we should be cautious in drawing any general conclusions about the cooperative business model with regard to the roles and functions of the board of directors. However, the findings in this study clearly indicate that the boards of directors in a producer cooperative firm may develop their roles and function and have different priorities than those suggested in the traditional corporate governance literature. Only additional studies of other producer cooperative firms can establish the transferability of the results of this study to other cooperative contexts, but this study raises issues that can contribute to our understanding of both boards of directors and cooperative firms.

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    Bibliographic Info

    Paper provided by Swedish University of Agricultural Sciences, Department of Economics in its series Department of Economics publications with number 1473.

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    Date of creation: 2007
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    Handle: RePEc:sua:ekonwp:1473

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