Cooperative Enterprise: An Alternative Conceptual Basis for Analyzing a Complex Institution

Abstract

A recent review of the theoretical literature on cooperative enterprise in agriculture concludes: formal treatment of agricultural co-operation is currently impoverished by a long period of neglect (LeVay, p. 40). The years between the early 1940s and the early 1960s were a period of creative ferment among cooperative theorists, the most durable products of which were several variants of the model of the profit-seeking firm from neoclassical price theory, with the profit maximization objective replaced by other simple maximizing criteria (e.g., Enke, Helmberger and Hoos). Such models are capable of generating hypotheses about cooperative price and output levels, but more comprehensive theoretical analogues are necessary to investigate other important aspects of the modern, complex cooperative corporation in agriculture. It is the development of these latter that has suffered neglect. While the past two decades may have generated little progress in the futher development of cooperative theory, they have been productive years for the development of more comprehensive alternatives to the simple profitmaximization model to explain the behavior of the modem, complex investor-owned corporation. This development began with the ad hoc theorizing of the various managerial theories of the firm, proceeded with the creation of a new institutional economics based on the concepts of transactions costs, property rights, and agency relationships, and is currently at the stage of integrating these previous developments into a generalized neoclassical theory of organizations (De Alessi). This paper is motivated by the belief that the evolving concepts of neoclassical organization theory hold considerable promise for the further productive development of cooperative theory. The purpose of the paper is to apply some of these concepts in cursory fashion to cooperative organizations and thereby suggest a framework for the eventual development of a more comprehensive organization theory of cooperatives.