Chain Interdependencies, Measurement Problems, and Efficient Governance Structure: Cooperatives Versus Publicly Listed Firms
George W.J. Hendrikse
Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)
January 17, 2011
ERIM Report Series Reference No. ERS-2011-001-ORG
We determine the circumstances when the absence of public listing, often believed to be a disadvantage, makes a cooperative the unique efficient governance structure. This is established in a multi-task principal-agent model, capturing that cooperatives are not publicly listed and their CEOs have to bring the downstream enterprise to value as well as to serve upstream member interests. Not having a public listing prevents the CEO from choosing the level of the downstream activities too high. Cooperatives are uniquely efficient when the upstream marginal product multiplied with a function increasing in the strength of the chain complementarities is higher than the downstream marginal product.
Number of Pages in PDF File: 18
Keywords: chains, measurement, governance, cooperatives
JEL Classification: M13, O32, Mworking papers series
Date posted: March 28, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.500 seconds