Study Of Membership Heterogeneity Cooperatives’ Governance Structure

Good governance structure is a crucial approach to solve the governance issues of membership heterogeneity cooperatives and makes contribution to cooperatives’ sustainable development. Membership heterogeneity have a significant impact on governance structure, according to governance practices of China’s cooperatives, in which Contractual Governance interact with Relational Governance. Although this issue has attracted some scholars’attention, current research did not focus on both Contractual Governance and Relational Governance in cooperatives. Not only that, scholars studied static governance structure more. This thesis is based on a case study. Author tried to analyze the formation and operating mechanism of membership heterogeneity cooperatives’ governance structure. Especially, author focused on the interaction between contractual governance and relational governance, in different stages of cooperatives development.My studies shows that membership heterogeneity, which produced by the difference of resources endowment and resources input, is the fundamental influencing factor of cooperatives’institutional arrangement. The other influencing factors include law and constitution, etc. Cooperatives’institutional arrangement is the foundation of contractual governance, which operating like this:key members of cooperatives, who run the cooperatives and distribute benefits, occupy the residual control rights and residual claiming rights. Relational Governance is also important to sustainable development of cooperatives. In the period of cooperatives establishing, Relational Governance is an effective approach to build trust, as well as to reduce risks caused by uncertainty and asset specialty. In membership heterogeneity cooperatives, effective Relational Governance mechanisms include trust, reciprocity, flexibility of trade, reputation and effective communication. What’s more, trust plays the fundamental role of Relational Governance mechanisms. The ultimate goal of Relational Governance mechanisms is to build trust.In different periods of development of cooperatives, relationship of Contractual Governance and Relational Governance is different, too. In the period of establishing, comparing with Contractual Governance, Relational Governance have an advantage. In the period of rapid expansion, Contractual Governance been reinforced.Hence it has a strong impact on cooperative governance as well as Relational Governance. In the end, we integrate all seven propositions into an experience summary.