The Influence of Formal and Relational Governance on Perceived Cooperative Success in Spanish Agrifood Cooperatives

ABSTRACT

This study examines how formal and relational governance mechanisms are associated with perceived cooperative success in agrifood cooperatives. We argue that, because cooperatives are user‐owned and user‐controlled organizations with multiple objectives, their overarching goal is member welfare, which requires balancing long‐run viability with member‐oriented outcomes. Drawing on the cooperative governance and social capital literatures, we develop hypotheses that link different governance mechanisms to two complementary outcomes: perceived financial‐economic performance and perceived member satisfaction. We test them on a unique primary dataset of 117 Spanish agrifood cooperatives using survey responses from knowledgeable organizational informants (e.g., CEOs, member‐managers, and management‐involved technical staff). The results show three main findings. First, among property‐rights innovations, only mild forms of hybridization are positively associated with perceived financial‐economic performance while their use is not significantly related to perceived member satisfaction. Second, among decision‐rights innovations, neither hiring a professional CEO nor appointing external professionals to the Board of Directors is sufficient on its own; only their joint presence—organization‐wide professionalization—is associated with both perceived outcomes. Third, relational governance is associated with both perceived outcomes through different mechanisms: social capital is robustly associated with higher perceived member satisfaction, whereas a more proactive and engaged board is more closely associated with stronger perceived financial‐economic performance. Overall, the findings suggest that a portfolio of complementary formal and relational governance mechanisms is associated with perceived cooperative success by addressing different organizational outcomes relevant to member welfare.