The Logic behind the Internal Governance of Sweden’s Largest Agricultural Cooperatives

Abstract

This study comprises a qualitative analysis of the governance structures within the two largest agricultural cooperatives in Sweden, both of which have large and heterogeneous memberships, as well as sizeable and complex business operations. Interviews were conducted with district council members and representatives from the boards of directors. The data from both case cooperatives indicate a genuinely traditional democratic member governance structure. There is a great deal of social capital in the governance system. A tentative explanation of the member involvement is that the cooperatives’ equity capital is owned by the individual members, and the members are free to sell and buy their shares at a market rate. The members are satisfied with the return on the capital they have invested in the cooperatives. They receive bonus shares and dividends above what most members would get in other investments. A conclusion is that very large cooperatives may succeed well with a member-democratic governance system of the traditional cooperative type, which in this case is probably due to the members’ satisfaction with the individualized ownership of the cooperatives.