Explaining Cooperative Enterprises through Knowledge Acquisition Outcomes

This paper develops a model of a cooperative enterprise and compares it to a vertically separated market. In our model of a multi-stage production process, agents can acquire costly knowledge to decrease production costs. Our model shows that the cooperative acquires less non-generalizable knowledge...

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Bibliographic Details
Published in:Managerial and decision economics 2013-04, Vol.34 (3-5), p.258-271
Main Authors: Dietl, Helmut M., Duschl, Tobias, Grossmann, Martin, Lang, Markus
Format: Article
Language:English
Subjects:
Acquisition costs
Acquisitions
Agency theory
Aggregate surplus
Aggregates
Agricultural economics
Business structures
Capital costs
Co-operative sector
Comparative studies
Cooperatives
Cost efficiency
Cost engineering
Decision analysis
Economic knowledge
Economic theory
Economics
Enterprises
Financial investments
Financial management
GOVERNANCE OF COOPERATIVES AND ALLIANCES: PART II
Industrial engineering
Knowledge
Knowledge acquisition
Knowledge management
Manufacturing engineering
Market share
Markets
Production costs
Production functions
Profit
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Summary:This paper develops a model of a cooperative enterprise and compares it to a vertically separated market. In our model of a multi-stage production process, agents can acquire costly knowledge to decrease production costs. Our model shows that the cooperative acquires less non-generalizable knowledge than the market, but more generalizable knowledge if the large member in the cooperative receives a sufficiently large share of the cooperative's profits. Additionally, we derive that the cooperative generates larger aggregate surplus than the market if the influence of generalizable knowledge on production costs is large.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.2588