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Horizon and Portfolio Investment Constraints in Agricultural Cooperatives

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Design and Management of Interfirm Networks

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

Though horizon and portfolio problems are commonly thought to limit cooperatives’ ability to capitalize on investment opportunities, empirical inquiry into the existence of these constraints is sparse, and recent conceptual arguments suggest that the horizon problem in particular may be less severe than commonly believed. Using surveys of members of three cooperatives, this study investigates the extent to which indicators of potential horizon and portfolio problems influence members’ preferences for cooperative investment in value-added processing technology. The evidence points to the existence of three types of horizon problems and two types of portfolio problems influencing cooperative members’ investment preferences.

This research received funding from the USDA under Cooperative Research Agreement RBS-09-40. We also acknowledge the detailed and enthusiastic responses of survey participants and the helpful comments of an anonymous reviewer.

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Notes

  1. 1.

    See Vitaliano (1985) for a conceptual framework depicting the residual horizon problem using a graphical analysis of a two-period investment and Ellerman (1986) for a framework covering the residual horizon problems while comparing ownership rights in investor-owned and labor-managed firms.

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Author information

Authors and Affiliations

  1. School of Agriculture, Western Illinois University, Macomb, IL, USA

    Jason Franken

  2. Department of Agricultural and Applied Economics, University of Missouri, Columbia, MO, USA

    Michael Cook

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  1. Jason Franken
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  2. Michael Cook
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Correspondence to Jason Franken or Michael Cook .

Editor information

Editors and Affiliations

  1. University of Vienna, Vienna, Austria

    Josef Windsperger

  2. Institute of Management of Rennes (IAE), Université de Rennes 1, Rennes, France

    GĂ©rard Cliquet

  3. RSM, Erasmus University Rotterdam, Leiderdorp, Zuid-Holland, The Netherlands

    George Hendrikse

  4. Vienna University of Technology, Wien, Austria

    Marijana Srećković

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Franken, J., Cook, M. (2019). Horizon and Portfolio Investment Constraints in Agricultural Cooperatives. In: Windsperger, J., Cliquet, G., Hendrikse, G., Srećković, M. (eds) Design and Management of Interfirm Networks. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-29245-4_10

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