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Principal-Agent Relationships in Agricultural Cooperatives: An Empirical Analysis from Rural Alberta


  • Richards, Timothy J.
  • Klein, Kurt K.
  • Walburger, Allan M.


Cooperatives throughout North America are consolidating at an increasing rate and for a variety of reasons. While many cooperatives merge with others or are acquired to achieve greater economies of scale, several fail due to changes in the external economy, which make them redundant. Often, such redundancy is reflected in a heightened sense of member dissatisfaction. Many argue that such dissatisfaction is likely to arise in cooperatives as a result of principal-agent problems. In order to determine whether or not cooperative managers maintain the same goals as their owners, this study uses data from a member-survey to compare Alberta cooperative members' objectives with those they believe to be held by their cooperatives' managers. An econometric model of the difference between members' expectations and perceptions shows how various socioeconomic variables affect the extent to which these objectives are aligned. The results of this analysis can help cooperative boards design managerial incentive programs to better align their goals with those of the cooperative membership.

Suggested Citation

  • Richards, Timothy J. & Klein, Kurt K. & Walburger, Allan M., 1998. "Principal-Agent Relationships in Agricultural Cooperatives: An Empirical Analysis from Rural Alberta," Journal of Cooperatives, NCERA-210, vol. 13.
  • Handle: RePEc:ags:jlcoop:46223

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    References listed on IDEAS

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    5. Rogers, Richard T. & Marion, Bruce W., 1990. "Food Manufacturing Activities of the Largest Agricultural Cooperatives: Market Power and Strategic Behavior Implications," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5.
    6. Royer, Jeffrey S. & Bhuyan, Sanjib, 1995. "Forward Integration by Farmer Cooperatives: Comparative Incentives and Impacts," Journal of Cooperatives, NCERA-210, vol. 10.
    7. Ronald W. Cotterill & Lawrence E. Haller, 1994. "Market Strategies in Branded Dairy Product Markets," Food Marketing Policy Center Research Reports 023, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    8. E. V. Jesse & B. W. Marion & A. C. Manchester & Aaron. C. Johnson, 1982. "Interpreting and Enforcing Section 2 of the Capper-Volstead Act," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(3), pages 431-443.
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    Cited by:

    1. Peter Österberg & Jerker Nilsson, 2009. "Members' perception of their participation in the governance of cooperatives: the key to trust and commitment in agricultural cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 181-197.
    2. Michael Kopel & Marco Marini, 2012. "Optimal Compensation Structure In Consumer Cooperatives Under Mixed Oligopoly," Working Papers 0512, CREI Università degli Studi Roma Tre, revised 2012.
    3. Marco A. MARINI & Paolo POLIDORI & Desiree TEOBALDELLI & Alberto ZEVI, 2015. "Welfare Enhancing Coordination In Consumer Cooperatives Under Mixed Oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 505-527, September.
    4. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    5. Fulton, Murray E. & Gibbings, Julie, 2000. "Response And Adaption: Canadian Agricultural Co-Operatives In The 21st Century," Miscellaneous Publications 31768, University of Saskatchewan, Centre for the Study of Co-operatives.
    6. Zieseniss, Roland & Kuehl, Rainer, 2013. "Relative Performance Payment in Cooperatives – A Model-Theoretical Analysis," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152162, Australian Agricultural and Resource Economics Society.
    7. Michael KOPEL & Marco A. MARINI, 2016. "Organization And Governance In Social Economy Enterprises: An Introduction," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 309-313, December.
    8. repec:wsi:jdexxx:v:22:y:2017:i:01:n:s1084946717500030 is not listed on IDEAS
    9. Ortmann, Gerald F. & King, Robert P., 2006. "Small-Scale Farmers in South Africa: Can Agricultural Cooperatives Facilitate Access to Input and Product Markets?," Staff Papers 13930, University of Minnesota, Department of Applied Economics.
    10. Lang, K.A. & Fulton, Murray E., 2004. "Member Commitment and the Market and Financial Performance of the Saskatchewan Wheat Pool," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 05.
    11. repec:gam:jlands:v:7:y:2018:i:1:p:18-:d:128854 is not listed on IDEAS
    12. Zieseniss, Roland, 2012. "Anreizorientierte Entlohnung In Bezugsgenossenschaften: Eine Theoretische Analyse Einer Leistungsorientierten Entlohnung Zur Maximierung Des Monetären Mitgliedernutzens," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137177, German Association of Agricultural Economists (GEWISOLA).

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