Marketing cooperatives and financial structure: a transaction costs economics analysis

The relationship between the financial structure of a marketing cooperative (MC) and the requirement of the domination of control by the members is an alysed from a transaction costs perspective. A MC receives less favourable terms on outside equity than a conventional firm because the decision power regarding new investments is not allocated to the providers of these funds . This is a serious threat to the survival of a MC in a market where effici ent investments are characterised by an increasing level of asset specifici ty at the processing stage of production. A MC is predicted to be an effici ent organisational form when the level of asset specificity at the processi ng stage of production is at a low or immediate level compared to the level of asset specificity at the farming stage of production. (C) 2001 Elsevier Science B.V. All rights reserved.