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Organisational principles for co-operative firms

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  • Nilsson, Jerker

Abstract

Co-operative firms have been the subject of criticism by many economists, who base their arguments on property rights and agency theory: members do not control management, investments are short term, accumulated investments are below the economic optimum, etc. Nevertheless, many co-operative organisations do function well for their members. An analysis of the assumptions underlying the criticism reveals that this is not generally justified. As it focuses mainly on the functioning of capital markets, it disregards the vertically integrated character of the co-operatives, i.e. that their purpose is to counteract market failures on product markets. For many co-operatives, however, the critique is valid. Individual ownership in the form of tradable residual rights is thus motivated in many co-operatives.

Suggested Citation

  • Nilsson, Jerker, 2001. "Organisational principles for co-operative firms," Scandinavian Journal of Management, Elsevier, vol. 17(3), pages 329-356, September.
  • Handle: RePEc:eee:scaman:v:17:y:2001:i:3:p:329-356
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