Stakeholder Participation in Co-operative Capital in Chinese Agricultural Co-operatives

Abstract

The problem of co-operative capital acquisition has long been cited in the literature (Helmberger 1966; Iliopoulos 2002). As member-driven business organizations, traditional co-operatives primarily rely on member contributions in the form of shares, fees and/or business transactions. But in today’s competitive market, capitalization is one of the most prominent challenges they face (Harris, Stefanson and Fulton 1996; Von Pischke 1993). This difficulty is receiving increasing attention as co-operatives diversify their operations to include processing activities (Cook and Iliopoulos 2000; Harris, Stefanson and Fulton 1996). According to Cook (1995); the under-capitalization problem is due to the structure of traditional co-operative property rights. In order to mobilize members to invest in their co-operatives, various innovative financial instruments have been developed, such as those adopted by the U.S. new generation co-operatives and European co-operative holding systems (Cook 1995; Iliopoulos 2002; Lang, Castanias and Cook 2001; Van Dijk 1997).