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Free Riding or Trust? Why Members (do not) Monitor their Cooperatives

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  • NILSSON, JERKER
  • SVENDSEN, GERT TINGGAARD

Abstract

It is often observed that members have little interest in monitoring their cooperatives. One explanation is that the members are free riders, hoping that others will perform the task. Another explanation is that the weak member interest is a consequence of members having trust in the leadership. These competing explanations refer to the theory of collective action and the social capital paradigm, respectively, and may be linked to the classical Gesellschaft and Gemeinschaft concepts. Hence, one may expect free-rider behavior when conditions of Gesellschaft exist and trustful behavior when Gemeinschaft conditions rule. These propositions get support from five previous studies of members’ readership of the annual reports of their cooperative. In large and heterogeneous memberships there is free-riding behavior, which explains the members’ low interest in governing their cooperatives. To a limited extent a membership may have a subset of members who trust the leadership so they do not read the annual reports.

Suggested Citation

  • Nilsson, Jerker & Svendsen, Gert Tinggaard, 2011. "Free Riding or Trust? Why Members (do not) Monitor their Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 39(2), pages 1-20.
    • Handle: RePEc:ags:jlorco:163923
    DOI: 10.22004/ag.econ.163923
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    References listed on IDEAS

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    1. Dimitris N. Chryssochoou, 1997. "New Challenges to the Study of European Integration: Implications for Theory‐Building," Journal of Common Market Studies, Wiley Blackwell, vol. 35(4), pages 521-542, December.
    2. Shanahan, Yvonne P. & Lord, Beverley R. & Robb, Alan J., 2007. "Annual Report Readership: A Study of an Agricultural Supply Cooperative," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 35(2), pages 1-24.
    3. Dirk van der Krogt & Jerker Nilsson & Viggo Høst, 2007. "The impact of cooperatives' risk aversion and equity capital constraints on their inter-firm consolidation and collaboration strategies-with an empirical study of the European dairy industry," Agribusiness, John Wiley & Sons, Ltd., vol. 23(4), pages 453-472.
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    Cited by:

    1. Hakelius, Karin & Hansson, Helena, 2016. "Members’ attitudes towards cooperatives and their perception of agency problems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), October.
    2. Li Feng & Anna Friis & Jerker Nilsson, 2016. "Social Capital among Members in Grain Marketing Cooperatives of Different Sizes," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 113-126, January.
    3. Grashuis, Jasper & Cook, Michael Lee, 2021. "Members of cooperatives: more heterogeneous, less satisfied?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(5), April.
    4. Chrysoula MORFI & Jerker NILSSON & Hanna ÖSTERBERG, 2018. "Why Farmers Involve Themselves In Co‐Operative District Councils," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(4), pages 581-598, December.
    5. Smaïl Amghrous & Damien Rousselière, 2019. "L’implication des agriculteurs dans les coopératives dans un pays en transition vers une économie de marché : Une application aux coopératives agricoles de services algériennes," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 724-749, September.
    6. Justine Valette & Paul Amadieu & Patrick Sentis, 2018. "Les coopératives résistent-elles mieux ? Une analyse de survie des coopératives agricoles françaises," Post-Print hal-01990418, HAL.
    7. Karin Hakelius & Jerker Nilsson, 2020. "The Logic behind the Internal Governance of Sweden’s Largest Agricultural Cooperatives," Sustainability, MDPI, vol. 12(21), pages 1-19, October.
    8. Andreea Preluca & Karin Hakelius & Cecilia Mark-Herbert, 2022. "Sustainability of Worker Co-Operatives," Sustainability, MDPI, vol. 14(18), pages 1-20, September.
    9. Chrysoula Morfi & Jerker Nilsson & Karin Hakelius & Kostas Karantininis, 2021. "Social networks and member participation in cooperative governance," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 264-285, April.

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