Relational capital: a double-edged sword for agricultural cooperatives

Purpose This study aims to examine agricultural cooperatives as a key enabler of sustainable short food supply chains (SFSCs) by aggregating smallholder farmers and facilitating market access. Specifically, we analyze how relational capital among cooperative members influences cooperative success, thereby shaping the strength of SFSCs. Design/methodology/approach First, a survey was used to collect data from farmers who are members of agricultural cooperatives. Second, structural equation modeling was used to test a model where relational capital moderates the relationship between cooperative operations activities and outcomes. Findings The results support the premise that engaging in collaborative operational activities positively influences the cooperatives' outcomes. Surprisingly, the moderating role of relational capital was found to be simultaneously non-significant, significant positive and significant negative depending on which operational activity it interacts with. The non-significant interaction with information and significant negative interaction with dedicated investments were counterintuitive. This could be explained by the “coopetitive” relationship between farmers and the emergence of defects such as free riding and hold-up. Practical implications This research offers significant practical implications to cooperatives and policymakers to reduce cooperation defects resulting from excessive relational capital. On the one hand, cooperatives must establish precise contribution requirements, introduce monitoring systems and utilize social norms. On the other hand, policymakers need to provide a safe legal framework for cooperatives to function. Originality/value To the best of our knowledge, this is the first study that reveals the simultaneous existence of positive and negative effects of relational capital in a cooperative setting. Acting like a prism, our study reveals the multiple facets of relational capital in agricultural cooperatives.