Impact of the relationship between managers and the board of directors on economic performance of agricultural cooperatives

Cooperatives operate under a business model that creates unique challenges in financial management, governance, strategy, and communication. There have been a number of efforts to identify challenges, critical issues and success factors for agricultural cooperatives. One of the issues agricultural cooperatives are facing is the relationship between managers and the board of directors. Directors in a cooperative occupy a crucial position between members and hired management. Acting as a group, directors set the objectives for the cooperative and decide what the cooperative will do while the general manager decides how it can best be done, subject to board review. Success of a cooperative mainly depends on good board/ manager relationships. This study was focused on evaluation of impact of the relationship between the board of directors and managers on performance of agricultural cooperatives. That data originated from a mail survey and personal interviews among managers and chairmen of agricultural cooperatives in Texas. The results showed that size of the cooperative had negative impact on performance while more frequent engagement of the managers in strategic planning, higher level of managers’ job satisfaction, and organizational commitment positively affect the profitability of a cooperative.