The Significance of Market Power in the Financial Sustainability of Emerging Agricultural Cooperatives in the Central Free State of South Africa: A Resource-based View

Abstract

Introduction: Despite the accessibility of institutional support mechanisms to cooperative firms in South Africa, many emerging agricultural cooperatives in the Central Free State remain underrepresented in the mainstream market, thereby undermining their long-term financial sustainability. Yet, business sustainability literature on cooperative firms foregrounds the theoretical assertion that the existence of market power significantly influences financial sustainability. Purpose: The study set out to debunk the assertion that emerging cooperative firms in the Central Free State have market power that they can exert to increase their financial sustainability. Methodology: Drawing on the resource-based view theory and a review of literature, the study sought to establish whether market dynamics have a direct influence on the financial sustainability of emerging agricultural cooperative firms. Findings: The findings suggest that competition intensity and market concentration undermine the ability of the market power of cooperatives to positively predict long-term financial sustainability. Originality: The study links various indicators of financial sustainability to market power and establishes the influence of each of them on market power—an approach underexplored in entrepreneurial literature.