Structural change of cooperative federations: The role of economic justification and asset specificity

Since the 1960s, agricultural cooperatives have pursued strategic growth through federations, yet this model has come under increasing pressure since the 1990s. Building on the lifecycle approach of cooperatives and recent insights from corporate governance and new institutional economics, a common combination grounded in the dual nature of cooperative members as both users and owners, we examine the trade-off between the governance advantages of federations of local cooperatives and those of centralised cooperatives. In federation, local cooperatives have the capacity and the incentive to engage in cooperative governance. In centralised cooperatives, potential internal conflicts related to the use and returns of specific assets are more readily solved. Consequently, while federation is an effective governance structure, investment in specific assets tends to drive centralisation. From this logic, we propose a framework based on the interplay of the economic justification to cooperate and asset specificity to analyse cooperative structural changes. Applied to six French cases, it reveals mechanisms that sustain federation stability or drive their evolution through centralisation, dissociation, or defensive mergers.