First-order marketing cooperatives' intention of remaining in second-order marketing cooperatives: The effect of governance mechanisms, performance and satisfaction

TOPIC 7- STAGE 3 –MICRO For many cooperatives, being associated with a second-order cooperative means a way to improve their efficiency, through economies of scale, and ultimately, their competitiveness. Specifically,... [ view full abstract ]

TOPIC 7- STAGE 3 –MICRO
For many cooperatives, being associated with a second-order cooperative means a way to improve their efficiency, through economies of scale, and ultimately, their competitiveness. Specifically, second-order cooperatives allow offer concentration, product diversification, access to new markets, and provision of services, supplies and professional management that are out of the reach of small cooperatives. From a public policy standpoint public institutions have taken special attention to promote the integration of cooperatives in second-order ones in order to improve the whole agricultural sector competitiveness. Therefore, it is relevant to study how relationships between first-order cooperatives and second-order cooperatives are managed and which are the factors that can explain the success of this relationship. The aim of this work is to determine how some governance mechanisms, performance and satisfaction with the second-order cooperative determines first-order cooperatives’ intention to remain. We rely on Resource-based View Theory to develop our research hypotheses. 108 first-order cooperatives are sampled and hypotheses are tested with structural equation modelling. Results show how some of such governance mechanisms as socialisation and those known as "hostages" can explain the performance and satisfaction of first-order cooperatives with their relationships with second-order cooperatives and how satisfaction and performance also influence their intention to remain in the relationship.