COOPERATIVE AND THE NEOINSTITUTIONALISTS THEORIES

The article evaluates the usefulness of agency theory and property rights and Williamson’s transaction cost economics as a framework for discussing five major problems o f cooperatives. Property rights held by cooperative owners and delegation of decision-making authority from principal to agent impose a significant level o f conflict to the decision-making process, particularly involving the allocation o f resources. As a result o f this inherent conflict, the traditional cooperative exhibits five basic problems: free rider problem, horizon problem, portfolio problem, control problem and influence cost problem. This article also examines how these problems are overcome by New Generation Cooperatives