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Member and professional CEOs of cooperatives differ regarding their managerial vision toward upstream and downstream projects. We show that the managerial vision bias will cause inefficiency in the project implementation. Cooperatives with member CEOs are extremely upstream-focused because of the cascaded negative vision bias toward the downstream projects. When the downstream activities become more important, cooperatives need to replace the member CEOs by professional CEOs. However, a cooperative with a professional CEO may still be less efficient than an IOF (investor owned firm) if the member-dominated Board of Directors’ negative bias toward the downstream projects is too large. To solve this problem, the cooperative must include outside directors in the board to ease the negative bias of the Board of Directors toward the downstream projects.

Keywords: Vision Bias ; Cooperatives ; Governance

Subject(s): Institutional and Behavioral Economics

Issue Date: 2014-08

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 6

Record appears in: European Association of Agricultural Economists (EAAE) > 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia

Autor: Deng, Wendong ; Hendrikse, George


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