Situation features and governance structure of farmer cooperatives in China: Does initial situation matter?

Abstract

The paper explores the effects of situation features on the governance structure types (GSTs) of farmer cooperatives in China. The “Situation–Structure” analytical framework is used to understand the relationship between situation features and governance structures in the field of industry economics. Four categories of GSTs of cooperatives are identified, i.e., common farmer-led, rural elite-led, enterprise-led, and related organization-led. The sample comprises 266 farmer cooperatives collected via a field survey in three provinces in China. A logit probability model is applied to address the effects of various situation features on GSTs. The results reveal that both technical and institutional environments have significant effects on the governance structure of cooperatives.

Keywords:

• Farmer cooperatives
• Situation features
• Governance structure
• China

Acknowledgements

The authors are very grateful to the Editor Prof. Scott Alan Carson and three anonymous reviewers for their valuable comments and suggestions to the earlier version of this manuscript. We are also grateful to the financial support provided by the National Natural Science Foundation of China (71333011, 71373063), the National Social Science Foundation of China (14CJY042), and the Philosophy and Social Science Foundation of Zhejiang Province, China (15NDJC034YB).

Notes

1 Source of data: SAIC. See http://www.saic.gov.cn/zwgk/tjzl/zhtj/xxzx/201412/P020141208606569816792.pdf (accessed 02.12.14).

2 The complete analytical framework is “Situation–Structure–Performance (SSP)” (Schmid, 1987, p. 39).

3 In China, constrained by the Hukou (household registration) system, a person is called a “farmer” not because he/she engages in agriculture but because he/she lives in the countryside. For more details, see http://en.wikipedia.org/wiki/Hukou_system, (accessed 20.09.13).

4 The New Generation Cooperatives (NGCs) model vertically integrates and provides producers with larger earnings by selling processed products instead of raw products (Nilsson, 1997). In other words, NGCs have been established by producers to increase their share of the consumer dollar and to add value to their basic commodities through processing and forward linking to the market place by selling processed products instead of raw commodities.

5 Limited Cooperative Association (LCA) refers to the cooperatives that comprise a patron member and an investment member. However, Nilsson (1999) mentioned that the limited cooperative association is the New Generation Cooperative.