Communication, principal–agent alignment and performance: Evidence from Brazilian agricultural co-operatives

Abstract

In response to increasing demands for decision-making expertise in the global business environment, agricultural co-operatives face the challenge of balancing governance adaptations with the risk of agency costs. While various mechanisms exist to align the interests of principals and agents within these organizations, communication – particularly digital – appears to hold the greatest potential. However, empirical evidence on its effectiveness remains limited. This study addresses this gap by examining the relation between both digital and non-digital communication on principal–agent alignment and overall performance in agricultural co-operatives. The empirical basis consists of a survey conducted in 2023 with 41 agricultural co-operatives in Brazil. The results of a structural equation model show that (1) digital communication is related positively to principal–agent alignment, (2) non-digital communication is not related significantly to principal–agent alignment and (3) principal–agent alignment is related positively to performance. These findings offer important insights for the governance of agricultural co-operatives, which are further explored in the conclusion.