Accommodating Two Worlds in One Organisation: Changing Board Models in Agricultural Cooperatives

Abstract

While most economic organisation literature on cooperatives has focused on changes in income rights, we study changes in the allocation of decision rights between board of directors (representing members) and managers. The traditional role of the board is to direct the activities of the managers. However, professional management increasingly makes most strategic decisions, pushing the board into a supervisory role. We present two groups of findings on changing board–management relationships. We identify three corporate governance models: traditional, management and corporation. And we present an empirical illustration showing a relationship between the choice of board model, and product portfolio and performance. Copyright © 2012 John Wiley & Sons, Ltd.