Communication and Innovation in Cooperatives
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Communication and Innovation in Cooperatives Xiao Peng 1,2 & George Hendrikse 1 & Wendong Deng 1
Received: 27 November 2015 / Accepted: 1 August 2016 # The Author(s) 2016. This article is published with open access at Springerlink.com
Abstract Cooperatives differ in their intensity of horizontal and vertical communications, their innovation policies, and their centralization of decision-making power. We aim to establish relationships between these communication, innovation, and decision-making aspects of cooperatives, and to identify the circumstances when a particular configuration adds most value. Horizontal and vertical communications are analyzed in a decentralized and centralized cooperative. Horizontal communication (HC) is characterized as the exchange of information between farmers in the society of members. It is associated with process innovation. Vertical communication (VC) is the exchange of information between a member and the CEO of the cooperative enterprise. It is associated with product innovation. The CEO decides regarding the deliveries of the member and the level of vertical communication in the centralized cooperative, while these decisions are taken by the members in the decentralized cooperative. We establish that the decentralized cooperative is efficient at an intermediate level of the VC cost coefficient and when the HC cost coefficient is above a certain level, while the centralized cooperative is efficient in the other cases. Keywords Agricultural cooperatives . Communication . Innovation . Decentralization
* Xiao Peng [email protected] George Hendrikse [email protected] Wendong Deng [email protected]
1
Rotterdam School of Management, Erasmus University, Rotterdam, Netherlands
2
Department of Organization and Personnel Management, Burgemeester Oudlaan 50, 3062PA Rotterdam, Netherlands
J Knowl Econ
Introduction The organizational communication literature establishes that communication is one crucial element of organizational governance (Christensen and Cornelissen 2011; Jablin and Putnam 2001). White (1997) states that organizations can themselves be regarded as communication structures. Organizations cannot exist without communication, i.e., they come into existence in the interaction that takes place between organizational members and as a result of the communication between them. The wholeness of an organization shows a consistent and coherent image of what the organization is. Communication brings every part of the organization to the same level of understanding and therefore allows the organization to achieve consistency and coherence (Schultz et al. 1994). This paper analyses communication in cooperatives. A cooperative is an enterprise collectively owned by a society of members having a transaction relationship with it (Helmberger and Hoos 1962; Hendrikse and Feng 2013; Robotka, 1947). The cooperative’s main function is to process the products from its members and then sell them to the customers. However, members are themselves business enterprises and economic units. An agricultur
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