Members of Cooperatives: More Heterogeneous, Less Satisfied?

Abstract

The ability to successfully engage in collective action is often related to group heterogeneity. In the case of farmer cooperatives, member heterogeneity is often assumed to relate negatively to long-term performance. However, applied research is lacking in part because of the difficulty in measuring and matching farm-level and firm-level constructs. Using 1,061 survey responses from members of an organic food and beverage marketing cooperative, we develop a solution by measuring heterogeneity in age, education, farm experience, farm size, and membership length as the absolute difference from the median, which is interpreted as the base case with zero heterogeneity. A structural equation model is developed to relate our measurement of member heterogeneity to membership satisfaction. The latent factor of member heterogeneity is manifested significantly by each measure of individual heterogeneity (except age). Furthermore, as expected, member heterogeneity has a negative relationship to the latent factor of membership satisfaction. Our study demonstrates an ability to measure heterogeneity in continuous as opposed to binary form (e.g. small or large, young or old), and to explore the heterogeneity-performance relationship with farm-level observations.