The Life Cycle Framework Macro – Meso – Micro – Micro/Micro View Michael L. Cook University of Missouri

The Journey A Very Brief Overview of Micro Life Cycle Some Basics A Brief Overview of Micro Cycle (Introduction of Ownership Costs) Evolution of the Framework Finally – An Overview of the Micro Life Cycle A Brief Summary of the Life Cycle Framework

A Very Brief Overview The Micro Life Cycle Framework

FOB Health Health of Cooperative Time

FOB Health How do you measure cooperative health? How do you measure performance? Is there a difference?

FOB Lifecycle

FOB Lifecycle Health of Cooperative Time

FOB Lifecycle Health of Cooperative Time Phase 1 = Economic Justification Health of Cooperative Time

FOB Lifecycle Why formed?

Phase 1: Economic Justification Market failure? Scale economics? Social capital? Multiple rent extraction?

FOB Lifecycle Health of Cooperative Time Phase 2 = Organizational Design Health of Cooperative Time

Phase 2: Organizational Design Who can be a member? Who/how is risk capital acquired? Who has residual claim rights? Who has residual control rights? Sanctions - Enforcement

FOB Lifecycle Health of Cooperative Time Phase 3 = Growth–Glory–Heterogeneity Health of Cooperative Time

Phase 3: Growth—Glory—Heterogeneity Over time do we observe: Disproportionate equity allocations? Patron drift? Patron-membership growth?

Phase 3: Growth—Glory—Heterogeneity Cont. Substitution temptation? Diversification exacerbating differences? Cross subsidization?

FOB Lifecycle Health of Cooperative Time Phase 4 = Recognition and Introspection Health of Cooperative Time

Phase 4: Recognition and Introspection Factions? Apathy? Crisis? Identification? Introspection?

FOB Lifecycle Health of Cooperative Tinker Reinvent Spawn Exit Time Phase 5 = Choice Health of Cooperative Time Spawn

Phase 5: Choices Tinker? Reinvent? Spawn? Exit?

Iterative Life Cycle Hypothesis Health of Cooperative Time

Some Basics

Concepts of Interest Framework Diagnosis Path Dependency Transformation Collective Goods Anti Commons

Ostrom’s Classification of Collective Goods Samuelson’s Classification (1954) Musgrave’s Classification (1959) One Person’s Consumption Subtracts from Total Available to Others One Person’s Consumption Does Not Subtract from Total Available to Others (Jointness of Consumption) Exclusion is Feasible Private Goods Club Goods (toll goods) Exclusion in Not Feasible Common Pool Resources Public Goods Ostrom, Elinor (2003) ‘How Types of Goods and Property Rights Jointly Affect Collective Action’, Journal of Theoretical Politics 15(3): 239-270

Important Differences / Similarities Starting vs. Maintaining Marketing vs. Supply vs. Service Multipurpose vs. Single Purpose Spatial (Local – Regional – National) Patron Controlled (PCB) Farmer Owned Business (FOB) Producer Owned Business (POB) Cooperative (Patron Owned and Controlled)

Framework Extension of the Farm? A Separate Firm?

Cooperative Health Financial Non-Cooperative Financial, but H.H. Financial Leaders Perception Community Social Capital

Cooperative Health (Recent Survey) Financial Return on Equity Return on Investment minus Member Opportunity Cost of Capital Return on Assets Non-Financial (Reduced from Industry) Competitive Position in Industry Overall Profitability (cooperative to member) Member Satisfaction Ability to Achieve Vision Overall Performance

Graduate Institute of Cooperative Leadership (GICL) A Collaborative Research / Outreach Experience

Life Cycle Typology Macro Meso Micro Micro/Micro Micro/Micro Micro Links Human Dimension Organizational Dimension Enabling Environment

Life Cycle Typology Macro Meso All famer owned business Macro Forces – Political, Social, Institutional To Inform Implications of Institutional Change Inform Policy Meso Group of Farmer Owned Entities (Type or Industry) Shared Characteristics of Interest To Inform Comparable Sample (Evolution, Functions, Structure, Policy Reactions) Detect Generalizable Threats Analyze Integrated System

Life Cycle Typology Micro Micro/Micro Single Entity Constitutional – Governance Operational – Strategy Detect Heterogeneity – Vaguely Defined “Property” Rights Detect Ownership Cost Evasion Inform Policy Micro/Micro Individual Member (Household) Demographics / Patron Characteristics Organization Related Preferences Detect Loyalty and Leadership Attributes Related to Collective Action Inform Policies