Governance in Estonian Agricultural Cooperatives : Structures and Processes

Governance of agricultural cooperatives has emerged as a research topic during the last decade. It led to the realization that corporate governance recommendations tailored to the needs of investor-oriented firms do not always apply to cooperatives. However, most of the extant research focuses on representation systems, and the definition and allocation of residual control rights among cooperative stakeholders. As a result, little is known about governance structures and processes adopted by agricultural cooperatives, particularly in Eastern European countries. The current paper addresses both of these knowledge gaps by focusing on Estonian agricultural cooperatives. Building on and expanding research recently reported in the Journal of Cooperative Organization and Management , the paper identifies governance structures and processes, as well as measures of performance, adopted by studied organizations. We conclude that there exists considerable room for improvement through the introduction of a more flexible legal framework, and the adoption of professional governance practices, including director orientation training, inclusion of additional financial expertise, and board evaluation routines. We also identify an emerging member preference heterogeneity issue, which demands the immediate attention of cooperative leaders in Estonia