Cooperative Enterprise and Organization Theory

Abstract

Traditional microeconomic theory envisages three types of economic agents-consumers, firms (entrepreneurs), and resource holders. This classification, however, fails to accommodate numerous decision-making units, such as governments, political parties, and labor unions, that can- not be ignored in explaining and predicting economic phenomena. In agricultural economics, the cooperative association is such an institution. At first blush one might be inclined to view it as a firm of perhaps a special type. Several students of cooperation, however-particularly Ivan Emelianoffand Richard Phillips-have evolved a theory in which the coop- erative association is not viewed as a firm. 1 Another student, in reply, has called for a "broader interpretation of the definition of a firm in accord with actualities" which would encompass a cooperative association as a firm and as a "going concern."2 The purpose of this paper is to show that organization theory provides a broader interpretation of the firm that is useful for empirical research on cooperative decision making. It will also be shown that by making certain assumptions within an organizational framework, the marginal analysis can be used in deriving hypotheses about cooperative perfor- mance in much the same way as it has been used in traditional theory.