Helmberger's Organizational Theory

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In their work “Cooperative Enterprise and Organization Theory”, Helmberger and Hoos (1962) demonstrate important role of the cooperative in the decision making process, which is justified by the organization theory. Helmberger and Hoos proposed to have zero-profit objectives and to maximize average surplus received by the cooperative members. They developed short-run and long-run models of cooperation. Specifically, they used marginal analysis of the cooperative’s objective, which is to maximize benefits of all its members.
In the short-run model, Helmberger and Hoos (1962) make the following assumptions: First, the cooperative is composed of a number of firms, with some commodity M and each aiming to maximize its profit with a fixed plant. Second, Output …show more content…

Level of endowment is sometimes determined by the policy of restricted membership.
In the latter case, the authors suggest that M is independently determined and it corresponds to open-membership type cooperatives. Relevant function to be maximized is the following: L=(P_y ) ̅Y- ∑_(i=1)^k▒(P_i ) ̅ X_i (13)

Where, L=P_m M ̅. Difference between (12) and (13) equations is only that in the first case a cooperative should determine the optimal value of M and in the second case, a cooperative takes M as a given.
Soboh et al. (2009) discuss a cooperative as vertically integrated firm, which is defined as a “single profit maximizing entity, in which a number of units, each performing different functions in the production and/or marketing of similar commodities on successive levels, are brought under a single managerial control”. Assuming perfect competition in the market, the authors define optimal objective function for agricultural marketing cooperatives as follows: Max {π_i=p_i Q_i (q_i )-μ_i q_i-C_i (Q_i)
Q_i,μ_i
(14)

s.t.μ_i>μ_j for all j,j≠i

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