Research On The Relationship Between Internal Governance Structure And Operational Performance Of Rural Cooperative Economic Organization

With the development of economic globalization and marketization of agricultural products, it is increasingly difficult for decentralized management farmers to adapt to the needs of market competition at home and abroad and the development of modern agriculture productivity. To decrease market risk and ease the conflicts between families’ decentralized management and the market, numerous farmers spontaneously form various types of rural cooperative economic organizations. As a special form of business organization under market economy, rural cooperative economic organization has played an important role in improving farmers’organization degree and bargaining position in market, eliminating the drawbacks of decentralized management and achieving the docking between "small farmers" and "big market". However, in the process of rapid development, China’s rural cooperative economic organization also presents many problems, of which internal governance is one of the most prominent problem that largely reduces the operating performance of cooperative organizations.Therefore, studying the internal governance structure of rural cooperative economic organization and clarifying the relationship between internal governance structure and operational performance in different participating ways are of important significance for promoting sustainable and healthy development of China’s rural cooperative economic organizations. However, there are relatively few academic studies about the impact of the internal governance structure on operational performance of economic cooperation. Even though some scholars have set foot on the relationship of the two, the researchers are usually based on perspective of main responsible person, not the perspective of ordinary farmers. Also, their studies do not consider the different relationship between internal governance structure and operational performance under different participating ways. Based on this, this paper, regarding ordinary members of the rural cooperative economic organizations as respondents, reveals the relationship between internal governance structure and operational performance of rural cooperative economic organization by using corporate governance theory and explores the impact of famers’participating ways on the both. The details are as follows:Firstly, combining with the actual development of rural cooperative economic organization, this study describes the background, purpose, significance of the research and reviews the research trends of rural cooperative economic organizations at home and abroad. Secondly, it analyzes the theoretical basis of this study and reviews relevant literature of internal governance structure and operational performance. Thirdly, according to the existing literature, it deduces specific dimensions of internal governance structure and operational performance and builds a theoretical model of the two dimensions and designs the measurement according to the theoretical model. Fourthly, it makes reliability test, validity test and correlation analysis based on the sample data of farmers. By descriptive statistical analysis, multivariate regression analysis, case studies and other methods, it empirically analyzes and explores the role and relationship between the internal governance structure and the operational performance under different farmers’ participating approaches.The results showed that:(1) in the spontaneously formed cooperatives, organization’s operational performance is influenced extremely significantly and positively by profit distribution mechanism and leaders influence; members’revenue performance is significantly and positively influenced by decision-making mechanism, internal supervisory mechanism, leaders influence and members exit right; services performance is extremely significantly and positively influenced by decision-making mechanism, leaders influence and members exit right. It showed that in the spontaneous formed cooperatives, operational performance is most influenced by leaders influence, followed by members exit right and decision-making mechanism.(2) In the cooperatives that farmers are driven to participate by enterprise, organization’s operational performance is extremely significantly and positively influenced by decision-making mechanism and members exit right, while significantly and negatively influenced by internal supervisory mechanism and leaders influence; members’revenue performance is significantly and positively influenced by internal supervisory mechanism and profit distribution mechanism; services performance is extremely significantly and positively influenced by decision-making mechanism and leaders influence. It showed that in the spontaneous formed cooperatives led by enterprise, operational performance is most positively influenced by decision-making mechanism, followed by profit distribution mechanism and members exit right.(3) In farmers cooperatives guided by the non-profit organization, organization’s operational performance is extremely significantly and positively influenced by decision-making mechanism and internal supervisory mechanism, and significantly and positively influenced by members’exit right; members’revenue performance is significantly and positively influenced by internal supervisory mechanism and profit distribution mechanism, and extremely significantly and positively influenced by decision-making mechanism and leaders influence; services performance is extremely significantly and positively influenced by profit distribution mechanism, leaders influence and members’exit right. It shows that in farmers cooperatives guided by the non-profit organization, organization’s operating performance is greatly significantly and positively influenced by internal supervisory mechanism and profit distribution mechanism.Based on those results, it comes to the corresponding conclusions:(1) Cooperative economic organizations that farmers participated in different ways have reasonable existence and development.(2) The internal governance structure of China’s rural cooperative economic organizations should be standardized urgently.(3) Internal governance structure of rural cooperative economic organization is closely related to its operational performance. Therefore, improving internal governance structure helps to enhance the operational performance.(4) Different participating approaches will lead to different impact of internal governance structure of rural cooperative economic organizations on operational performance.Finally, this paper puts forward policies and recommendations from two levels:to properly regard and handle the differences of internal governance structure of cooperative economic organizations that farmers participating in different approaches and to establish and improve farmers’ self-service and self-management internal governance structure. Limitations and research prospects of the study are also presented.