Analyzing Impact of Management Structure on Value Chain in Cooperative Organization

Posted: 20 Jun 2010

Date Written: June 17, 2010

Abstract

Co-operative business organizations have unique and distinctive ownership structure as well as management structure compared to other type of organizations like companies. Cooperative principles, cooperative law and local political environment drive the management structure. Ownerships rights in cooperatives are vested in members and strategic decision rights are vested in elected members. Routine and managerial business decision rights are delegated to hired professionals. These distinct features influence the value chain of the business inter alia. Our study encompasses three types of cooperatives: (i) members supplies input/raw material to the cooperative (ii) members are involved in the process to convert input into output and (iii) members are consumers of the cooperative’s output. We argue that a cooperative business sustains only if there is sufficient ‘value creation’ and ‘value addition’ as well as equitable ‘value distribution’ amongst the stakeholders. We analyze and compare impact of management structure on value chain of the cooperatives under study.

Objectives: 1. To study impact of typical management structure of selected cooperatives on value chain. 2. To compare management structure and its impact on value chain amongst three types of cooperatives.

Keywords: Cooperatives, Value Creation, Value Addition, Value Distribution, Management Style

JEL Classification: J5, P1, Q1

Suggested Citation

Sapovadia, Vrajlal K., Analyzing Impact of Management Structure on Value Chain in Cooperative Organization (June 17, 2010). Available at SSRN: https://ssrn.com/abstract=1626204 or http://dx.doi.org/10.2139/ssrn.1626204

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