When less is not more: Restraining internal opportunistic behavior in cooperatives

Abstract

In the European Union’s agri-food sector, where most farm businesses are small and the opportunistic behavior of powerful chain actors is a major market challenge, cooperatives substantially reinforce their members’ bargaining position. However, opportunism is also common within cooperatives, a dominant form of which surfaces when members side-sell to competing chain actors. As side-selling jeopardizes cooperatives’ viability and persists, we aim to explore novel antecedents that might also inform solutions. Motivated by the dual nature of cooperatives as a social group and a business enterprise, we examine the restraining influence of two social phenomena that explain why humans cooperate - trust and gossip - on members’ illegal side-selling behavior. With survey data from 170 members in 48 cooperatives, we find that perceived negative gossip curbs illegal side-selling, and trust has an indirect preventive effect through perceived member benefits. Taken together, our study’s findings advance the knowledge of internal opportunism in cooperatives and may prove valuable to crucial stakeholders for the development of the European Union’s agri-food sector.