Explaining Cooperative Enterprises through Knowledge Acquisition Outcomes
This paper develops a formal model of a cooperative enterprise which explains why cooperatives are present in such a large number of sectors. In our model of a multi-stage production process, we account for the possibility that producers can acquire knowledge to decrease their cost of production. We distinguish between knowledge that can be generalized among producers, and knowledge that cannot be generalized and therefore is idiosyncratic to each production site. We compare the cooperative's outcomes with simple models of a vertically separated market of autonomous producers and of a centralized hierarchy consisting of fully owned subsidiaries. To conduct a meaningful comparison, we establish equilibrium outcomes for knowledge acquisition, output, and profits generated in each organizational arrangement. From the comparison, we derive parameter constellations, under which the cooperative outperforms the market and hierarchy forms of business organization. This article contributes to the organizational economic analysis of cooperatives and provides a model that illustrates the competitive advantages of cooperatives in the market-hierarchy continuum.
|Date of creation:||Sep 2007|
|Date of revision:||Dec 2011|
|Contact details of provider:|| Postal: Plattenstrasse 14, CH-8032 Zürich|
Phone: ++41 1 634 29 27
Fax: ++41 1 634 43 48
Web page: http://www.isu.uzh.ch
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Helmberger & Sidney Hoos, 1962. "Cooperative Enterprise and Organization Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 44(2), pages 275-290.
- Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-61, October.
- Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
- Michael Higl, 2003. "Vertikale Kooperation im Oligopol Die Gestaltung der Genossenschaftsorganisation als strategischer Zug," Discussion Paper Series 243, Universitaet Augsburg, Institute for Economics.
- Hansmann, Henry, 1988. "Ownership of the Firm," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
- Richard Phillips, 1953. "Economic Nature of the Cooperative Association," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 35(1), pages 74-87.
When requesting a correction, please mention this item's handle: RePEc:iso:wpaper:0068. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IBW IT)
If references are entirely missing, you can add them using this form.