The Logic behind the Internal Governance of Sweden’s Largest Agricultural Cooperatives

Abstract

This study comprises a qualitative analysis of the governance structures within the two largest agricultural cooperatives in Sweden, both of which have large and heterogeneous memberships, as well as sizeable and complex business operations. Interviews were conducted with district council members and representatives from the boards of directors. The data from both case cooperatives indicate a genuinely traditional democratic member governance structure. There is a great deal of social capital in the governance system. A tentative explanation of the member involvement is that the cooperatives’ equity capital is owned by the individual members, and the members are free to sell and buy their shares at a market rate. The members are satisfied with the return on the capital they have invested in the cooperatives. They receive bonus shares and dividends above what most members would get in other investments. A conclusion is that very large cooperatives may succeed well with a member-democratic governance system of the traditional cooperative type, which in this case is probably due to the members’ satisfaction with the individualized ownership of the cooperatives.

Board Structure Variety in Cooperatives

“…Other studies present cases where the Traditional model has been substituted by a Managerial board model. Intensified competition has induced cooperatives to develop value-added strategies to be orchestrated jointly by the Management and the Board (Nilsson and Gunnarsson 2000;Bijman and Hendrikse 2004;Nilsson et al 2009;Ollila et al 2014;Hakelius and Nilsson 2020).…”

Board Structure Variety in Cooperatives

“…For example, the Management may have considerable influence in a traditional cooperative. Likewise, Management has an interest in satisfying member interests, because it wants to ensure that sufficiently large volumes of products are delivered (Hakelius and Nilsson 2020;Morfi et al 2021).…”

Co-operative Governance: A Systematic Review of Member Participation

“…The member's "passive" participation is considered the lowest level of member participation, in which according to Cechin et al (2013) their participation is simply an economic connection with the co-operative and they are not keen in becoming engage in decision-making. Resulted of the review procedure, two of the twelve studies (Boone & Özcan, 2016;Hakelius & Nilsson, 2020) were discovered to be discussing the passive participation of the members. In their study, Boone and Özcan (2016) found that the initial monetary involvement at founding would encourage commitment of the members to contribute to the co-operative's effective daily operations, and this is especially true when the initial contributed money is substantial.…”

“…In their study, Boone and Özcan (2016) found that the initial monetary involvement at founding would encourage commitment of the members to contribute to the co-operative's effective daily operations, and this is especially true when the initial contributed money is substantial. Nonetheless, as the co-operative approached maturity, which is typical of a large cooperative, Hakelius and Nilsson (2020) discovered that members were not actively involved in co-operative governance. In this scenario, members' passivity in co-operative governance is explained as a result of their satisfaction and trust in their elected representatives.…”

“…A general assembly, which typically occurs once a year, is a gathering of the cooperative's members to address strategic problems (Hakelius & Nilsson, 2020). The "one member, one vote" principle (Liang et al, 2015), which co-operatives often use, is a critical component of the democratic character of co-operative decision-making (Cechin et al, 2013).…”