Coping with side-selling in cooperatives: A members’ perspective

Abstract

A central collective action issue in agricultural cooperatives is the free-rider problem, a prevalent form of which arises when members systematically side-sell to competing chain actors. Despite the plethora of studies on side-selling's antecedents, little is known about side-selling's actual consequences, particularly from the standpoint of cooperative members. In two studies, we aim to deliver a member-based assessment of side-selling's influence on critical cooperative benefits and explore possible solutions. In the first study, with survey data from 128 members of four fruit cooperatives in Greece, we show that side-selling has a negative effect on perceived cooperative benefits, even in the presence of other collective action issues (e.g., the influence costs problem). In the same study, we posit and demonstrate that side-selling's aversive impact on cooperative benefits can be appeased when members think that their cooperative's transparency regarding cooperative activities is high. In the second study, with interview data from 20 members, we find that different punitive (e.g., expelling members) and collaborative (e.g., fostering trust) solutions are considered effective. Accordingly, our article advances extant knowledge of an issue that strikes at the heart of cooperative activity and offers valuable insights to cooperative decision-makers seeking to confront it.