Abstract
Agricultural cooperatives have the main goals of meeting the economic, social and cultural needs of their members. Although they do not seek profits, they must be competitive since they compete with other cooperatives and companies in the market. In this sense, the search for technical efficiency to give cooperatives a better market position contrasts with the difficulty these organizations face in obtaining foreign capital to enable greater investments. There is little empirical evidence, however, of the relationship between financial constraints and technical efficiency in these organizations. According to theoretical assumptions, this relationship could be positive or negative. Thus, this paper analyzes the impact of financial constraints on the technical efficiency of Brazilian agricultural cooperatives. For this, we used two metrics to measure financial constraint and analyzed panel data on 68 Brazilian agricultural cooperatives for the 2005-2014 period. Despite the theoretical predictions, our main results suggest there is no evidence that financial constraints affect technical efficiency. This result can be explained by the characteristics attributed to Brazilian cooperatives, that is, the fact they deal with different commodities (multi-purpose) and do not have strong demand for investments (technology). This paper contributes to the literature both by providing new empirical evidence regarding the relationship between technical efficiency and financial constraints and by introducing a new metric for analyzing financial constraint in the context of cooperatives.
Highlights
Cooperatives are “people-centered enterprises owned, controlled and run by and for their members to realize their common economic, social, and cultural needs and aspirations” (INTERNATIONAL COOPERATIVE ALLIANCE, 2013)
Our results show there is no evidence that financial constraints affect the technical efficiency of agricultural cooperatives in Paraná
We argue that the relationship between financial constraint and technical efficiency in Brazilian agricultural cooperatives might be different from the Italian context
Summary
Cooperatives are “people-centered enterprises owned, controlled and run by and for their members to realize their common economic, social, and cultural needs and aspirations” (INTERNATIONAL COOPERATIVE ALLIANCE, 2013). The main goal of cooperatives is not profit Instead, they aim to meet members’ economic and social needs through the products and services they offer (BENOS et al, 2018). They aim to meet members’ economic and social needs through the products and services they offer (BENOS et al, 2018) This makes cooperatives able to promote the integration of communities in the dominant economy, but in order to achieve this purpose, it is important to analyze their performance, as pointed out by Xaba, Marwa and Helm (2019). Most prior findings provide evidence that cooperatives are less efficient than companies (GRASHUIS, 2018; BRANDONO, DETOTTO; VANNINI, 2019) This competition makes cooperatives search for external financing in order to invest in assets, increase efficiency and ensure market position (BIALOSKORSKI NETO, 2006, 2012)
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