Equity Management Practices in Italian Agricultural Cooperatives: A Cluster Analysis Approach

In this paper, equity management practices of Italian agricultural cooperatives are described and discussed. Financial statements of 1.483 cooperatives are analyzed in order to provide empirical support to the study. Data confirm cooperative undercapitalization and disclose the existence of diversity in equity management practices even within the same business sector. Thus, in order to highlight the relations between cooperative market strategies and equity management practices a cluster analysis is proposed. Seven main strategic approaches for Italian cooperatives are identified and the emerging equity management practices are discussed. The empirical analysis supports the conclusion that a large number of Italian are implementing "perverse" approaches, such as dependence from public funding and minimization of equity and investments. Considering increasing competition, without an innovative equity management approach, the majority of the analyzed cooperative is expected to suffer of relevant competitive disadvantage.