The Internal and External Governance of Cooperatives: Membership and Consistency of Values

29 Pages Posted: 17 Dec 2013

See all articles by Silvia Sacchetti

Silvia Sacchetti

University of Trento; European Research Institute on Cooperative & Social Enterprises (EURICSE)

Ermanno C. Tortia

University of Trento - Department of Economics and Management; Euricse

Date Written: September 17, 2013

Abstract

Cooperatives are characterised by mutual-benefit coordination mechanisms aimed at the fulfilment of members’ participation rights. This ideal situation may find, in practice, obstacles within the internal characteristics of the cooperative as well as in the nature of relationship with other actors in the socio-economic environment. Building on evidence from the literature, the paper systematises and highlights some of the potential problems in the governance of cooperative firms concerning the accomplishment of cooperative mutualistic aims. In exploring the internal conditions that may affect cooperative performance, we focus in particular on the role of rules and incentives towards such aims. In synergy, when analysing the external conditions that may affect cooperative performance, the paper addresses possible sources of external control, such as those related to the nature of the business relationships between the cooperative and its production network. In taking into account both internal and external conditions, we consider an extended notion of governance, whereby those who impact on strategic decision-making are not to be searched only within the internal governance bodies, typically the board of directors or managers, but also outside the cooperative, as in the extended network of production relationships in which the organisation is embedded.

Keywords: cooperative firms, governance, incentives, motivations, production networks

JEL Classification: L21, L23, L26

Suggested Citation

Sacchetti, Silvia and Tortia, Ermanno C., The Internal and External Governance of Cooperatives: Membership and Consistency of Values (September 17, 2013). Euricse Working Paper No. 62 | 13, Available at SSRN: https://ssrn.com/abstract=2326938 or http://dx.doi.org/10.2139/ssrn.2326938

Silvia Sacchetti

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

European Research Institute on Cooperative & Social Enterprises (EURICSE)

Via S. Giovanni 36
38122 Trento (TN)
Italy

Ermanno C. Tortia (Contact Author)

University of Trento - Department of Economics and Management ( email )

Via Inama, 5
Trento, TN Trento 38122
Italy
00390461882383 (Phone)
00390461882222 (Fax)

HOME PAGE: http://www.unitn.it

Euricse ( email )

Via Torre Verde, 5
38122 Trento (TN), TN 38122
Italy

HOME PAGE: http://www.europee.eu

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