Alone as a drop, together as an ocean: Corporate political activity in cooperatives

Abstract

Cooperatives are formed by the collective efforts of various actors pursuing common goals, enabling competition with stronger rivals. In Brazil, there is a strong relationship between agricultural cooperatives and politics, with their involvement focused on competing for regulations, information, and access to capital. However, little is known about the effects of this involvement. In this paper, we draw on collective action theory to investigate the individual and collective corporate political activities adopted by Brazilian agricultural cooperatives. Corporate political activity (CPAs) are a subfield of nonmarket strategy (NMS) that addresses actions firms develop outside the market arena to improve their outcomes and achieve competitive advantage. This study focuses on CPAs of Brazilian agricultural cooperatives, which account for over 48% of national agricultural production. We argue that collective CPAs are more effective for these cooperatives, as they enhance their representativeness and legitimacy, facilitating access to capital. To support our argument, we conducted a quantitative study using panel data from 394 Brazilian agricultural cooperatives. The results demonstrate the significance of collective CPA for accessing financing from the Brazilian Development Bank (BNDES) and contributing to collective action theory by offering a political perspective. Moreover, the study enriches CPA literature by identifying two innovative collective CPA tactics: affiliation with central cooperatives and the Organization of Brazilian Cooperatives (OCB). Lastly, the study highlights the importance of cooperation for individual and collective outcomes in practical settings.