The role of second order cooperatives in the financial behaviour of agri-food cooperatives

TOPIC 14- STAGE 4- MICRO This paper analyses the financial behaviour in agri-food cooperatives taking into account the interconnections between cooperatives of different orders. In particular, we focus on the role played by... [ view full abstract ]

TOPIC 14- STAGE 4- MICRO

This paper analyses the financial behaviour in agri-food cooperatives taking into account the interconnections between cooperatives of different orders. In particular, we focus on the role played by the second order cooperatives on the financial results of their peer associated cooperatives. We hypothesize that financial behaviour of second order cooperatives and its associated are not independent but there is an interconnection between them. To get this purpose, we develop an empirical application based on the Partial Adjustment Model. This specification allows us to examine firms’ financial behaviour through the behaviour of their different dimensions. In addition, a multi-equational Seemingly Unrelated Regression with Spatial Econometrics techniques is applied to our sample. Our findings show that financial behaviour of second order cooperatives conditions the financial behaviour of their associated. In addition, the intensity of this effect depends on the own companies characteristics (size, age, subsector). This study is an important contribution in the cooperatives literature when policies are designed to promote cooperatives growth. In this sense, to take as reference the second order cooperative is a good strategy to influence on the financial results of the others.

Key words: Second order cooperatives, Seemingly Unrelated Regression, interaction effect, financial behaviour, Partial Adjustment Model.