Structure, organization and a vision: Reasons for the success of wine cooperatives?

Guenter Schamel

doi:10.1051/bioconf/20191203018

Abstract

Several studies have found that wine cooperatives struggle to produce high quality grapes allowing them to produce better quality wines and to receive higher retail prices. In contrast, cooperatives in South Tyrol perform well and receive price premiums for wine quality relative to privately-owned local competitors. We identify the structural, organizational and social factors (i.e., elements of social capital) that may contribute to the economic success of a cooperative enterprise, surveying individual members of 13 wine cooperatives in South Tyrol. Relative payment per kg of grapes (pay-out) delivered measures the economic success of member growers. We propose that “the strength of common vision among cooperative members” is an important element identifying the “working social capital” of cooperatives and examine whether it depends on specific social and organizational variables such as commitment, trust or the strengths of personal relationships, participation in training activities and/or the presence of specific grape quality assessment criteria. Moreover, we examine if the pay-out or economic success of cooperative members can be explained by a set of structural variables and working social capital. We estimate two regression models to explain both the working social capital (i.e., strength of a common vision among cooperative members), and pay-out or economic success that cooperative members receive for delivering grapes. Results indicate that specific social factors such as member commitment, trust, personal member-winemaker relations and gender as well as organizational factors (e.g., training activities, quality assessment criteria) help to explain working social capital while physical production capital (farm size), working social capital (common vision) and indicators of human capital (involvement, vineyard consulting) are important factors to explain the economic success of cooperative members.

Highlights

Wine cooperatives often struggle to produce higher quality grapes allowing them to receive better retail prices for their wines in the market
We propose that “the strength of common vision among cooperative members” is an important element identifying the working social capital of cooperatives
We examine whether the working social capital of cooperatives as measured by the strength of common vision among cooperative members depends on specific social factors, gender, and specific organizational control variables: Common V ision = α + β1 Member Commitment

Summary

Introduction

Wine cooperatives often struggle to produce higher quality grapes allowing them to receive better retail prices for their wines in the market. Schamel [4] shows that wine cooperatives in South Tyrol perform well relative to their local competitors, receiving a price premium for wine quality as well as a collective reputation premium for their wines This result is attributed to the presence of price incentives tied to grape quality, but it warrants further examination as to why these cooperatives are relatively successful and what are the contributing factors. There is an emerging literature on cooperative success in the wine industry ([3, 8, 10]) This literature focusses mainly on the performance of cooperatives and only a few papers relate to the contributing factors of individual member performance including social capital (e.g., [6]).

Brief literature review

Data and analysis

Estimation results

Findings

Summary and conclusion