Is the transformation of cooperatives into investor owned firms unavoidable?

Kispál-Vitai, Zsuzsanna

Keywords: New Institutional Economics, transaction cost theory, property rights theory, agency theory, cooperative advantage

Transformation of cooperatives into investor owned firms is an important question not just from a theoretical point of view but also because of the member/owners. Is it an unavoidable necessity when the cooperative achieves a certain level of development; does it have to transform to ensure secure operations, or is it a conscious choice of the owners? The article examines this problem and those transformations that were de-scribed in the literature: why did they occur, because of the inherent characteristics of the cooperative form or for other reasons? Based on hypotheses checking it can be said that transformation of the cooperative is not an absolute necessity, solving the effi-ciency problems can be done with other measures. The second hypothesis, that the cause of cooperative transformation is not the inherent inefficiency of the cooperative form, but for other reasons, can be only partially verified. It is questionable for how long the cooperative advantage can support business activities and aid in eliminating the problems caused by structural characteristics.

Full article