The relationship between the financial structure of a marketing cooperative (MC) and the requirement of the domination of control by the members is analysed from a transaction costs perspective. A MC receives less favorable 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 efficient investments are characterized by an increasing level of asset specificity at the processing stage of production. A MC is predicted to be an efficient organizational form when the level of asset specificity at the processing stage of production is at a low or immediate level compared to the level of asset specificity at the farming stage of production.

finance, marketing cooperative, transaction costs economics
Production and Organizations (jel D2), Corporate Finance and Governance (jel G3), Firm Objectives, Organization, and Behavior (jel L2), Business Administration and Business Economics; Marketing; Accounting (jel M), Business Administration: General (jel M10)
Erasmus Research Institute of Management
hdl.handle.net/1765/19
ERIM Report Series Research in Management
Copyright 2000, G.W.J. Hendrikse, C.P. Veerman, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

Hendrikse, G.W.J, & Veerman, C.P. (2000). Marketing Cooperatives and Financial Structure (No. ERS-2000-09-ORG). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/19