Adjusting organizational structure for cooperative longevity : Missouri farmers association, 1920 - 1950

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT REQUEST OF AUTHOR.] The objective of this qualitative exploratory study is to analyze the process which led Missouri Farmer Association (MFA) to dramatically change its organizational structure in 1940 from a quasi-hybrid federation of local farm clubs, county exchanges, regional processing cooperatives, multipurpose ownership set of entities to a centralized cooperative organizational form. The study selects secondary data from archives, collections, and press for the period 1920-1950 to describe the historical path and trace factors that led to this decision. The results suggest that MFA was formed as a result of personal and trust relationships and facing market failures. Members being neighbors and farmers combined their similar experiences and grievance. They achieved coordination by informal communication. As increasingly more buying clubs were formed, better coordination among them obtained by standardization process. Finally, MFA by attempting to reduce transaction costs and achieve optimization of operations of regional cooperatives, it evolved managerial discretion as a coordination mechanism. Over time organizational inefficiencies emerged: agency costs increased at the local level, coordination costs and failures emerged and the central information for transactions ought to be used more efficiently. The cooperative performance was decreasing. Consequently, survivability of MFA was threatened. MFA addressed these issues by changing organizational structure. In this study, survivability is defined as the minimization of ownership costs. Assuming that production costs remain constant relative to rivals, the main hypothesis of the thesis is supported: adjusting organizational structure minimizes ownership costs for cooperative survival.