THE GROWTH OF LARGE COOPERATIVE AND PROPRIETARY FIRMS IN THE U.S. FOOD SECTOR (UNITED STATES)

KWO-SHIN CHEN, Purdue University

Abstract

Agricultural cooperatives are an important part of the U.S. food and agricultural industries. They provide countervailing power in the marketing of farm inputs and commodities and help to improve the welfare of farmers. During 1950-1980, the total sales of agricultural cooperatives increased but the total number of cooperatives declined. Therefore, many concerns about the real sources of the limitation to the growth of agricultural cooperatives have been expressed. This study had four objectives: (1) to develop a model for cooperative and proprietary firm growth; (2) to measure and compare the growth of large cooperative and proprietary firms; (3) to identify and measure the relationship between growth and growth-influencing factors; and (4) to compare strategies used to achieve growth among marketing cooperatives and proprietary firms. Both total sales and total assets were adopted as measures of firm size and growth. The primary framework was the strategic model. Three types of variables were central to the notion of strategy: the organizational goals, the means, and the constraints. The growth was determined to be one of the most important goals for both types of firms. The means and constraints to growth were considered as independent variables in the model. The independent variables included firm profitability, diversification, advertising, mergers and acquisitions, leverage, initial size, and primary industry growth. To analyze the influence of specific factors on firm growth, multiple regression analysis was used. Forty-four marketing cooperatives and 35 proprietary firms in the areas of dairy products, grain, and fruit and vegetables were selected. The regressional analysis revealed that strategies for firm growth were different between these two types of firms. Mergers or acquisitions, diversification, and primary industry growth were important to the growth of marketing cooperatives. On the other hand, firm profitability, leverage, and advertising were the factors which were strongly associated with growth of proprietary firms.

Degree

Ph.D.

Subject Area

Agricultural economics

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