ISSN: 2222-6990
Open access
Co-operatives played a critical part in the community development initiative, and its viability is reliant on the board members' ability to carry out their roles effectively. Since board members are a vital body of the cooperative's internal governance, it is important to examine how they affect the cooperative's performance. Several factors have been proposed and based on prior research inferences, the majority of which have used the concept of corporate governance to identify the factors that influence the cooperative board's effectiveness, which has also been adopted in this article. Owing to the inconsistent findings and gaps in previous research, this article has focused on the role of board members' human and social capital in affecting cooperative performance. The research also presented board participation as a mediator between human and social capital and cooperative performance. This study employs resource dependence and participation theory as underpinning theories to support its assumptions and performs a literature review to synthesize empirical findings on related factors. SmartPLS software will be used to analyze the data and explore all relationships using Structural Equation Modeling (SEM).
Aini, Y. M., Hafizah, H. A. K., & Zuraini, Y. (2012). Factors affecting cooperatives’ performance in relation to strategic planning and members’ participation. Procedia - Social and Behavioral Sciences, 65, 100–105.
Abu Samah, A., & Fariborz, A. (2011). The theoretical and conceptual framework and application of community empowerment and participation in processes of community development in Malaysia. Journal of American Science, 7(2), 186–195.
Adler, P. S., & Kwon, S.-W. (2002). Social capital: Prospects for a new concept. Academy of Management Review.
Azadi, H., Hosseininia, G., Zarafshani, K., Heydari, A., & Witlox, F. (2010). Factors influencing the success of animal husbandry cooperatives: A case study in Southwest Iran. Journal of Agriculture and Rural Development in the Tropics and Subtropics, 111(2), 89–99.
Becker, G. S. (1964). Human Capital. University Press.
Becker, G. S. (1975). Human Capital: A Theoretical and Empirical Analysis. New York: National Bureau of Economic Research.
Becker, G. S. (1993). Chicago unbound the economic way of looking at life. Economic Sciences, (12), 38–58.
Benos, T., Kalogeras, N., Wetzels, M., De Ruyter, K., & Pennings, J. M. E. (2018). Harnessing a “currency matrix” for performance measurement in cooperatives: A multi-phased study. Sustainability (Switzerland), 10(12), 1–38.
Bhuyan, S., & Leistritz, F. L. (2000). Cooperatives in non-agricultural sectors: examining a potential community development tool. Community Development Society. Journal, 31(1), 89–111.
Bijman, J., Hendrikse, G., & Van Oijen, A. (2013). Accommodating two worlds in one organisation: Changing board models in agricultural cooperatives. Managerial and Decision Economics, 34(3–5), 204–217.
Borzaga, C., Depedri, S., & Tortia, E. (2011). Organisational variety in market economies and the role of co-operative and social enterprises: A plea for economic pluralism. Journal of Co-Operative Studies, 44(1), 19–30.
Bruderl, J., Preisendorfer, P., & Ziegler, R. (1992). Survival chances of newly founded business organizations. American Sociological Review, 57(2), 227.
Burt, R. S. (1980). Cooptive corporate actor networks: A reconsideration of interlocking directorates involving American manufacturing. Administrative Science Quarterly, 557–582.
Carpenter, M. A., & Westphal, J. D. (2001). The strategic context of external network ties: Examining the impact of director appointments on board involvement in strategic decision making. Academy of Management Journal.
Chaddad, F. R. (2006). Performance measurement of user-owned organizations: an evaluative survey of the literature. EnANPAD, 1–16.
Chareonwongsak, K. (2017). Enhancing board motivation for competitive performance of Thailand’s co-operatives. Journal of Co-operative Organization and Management, 5(1), 1–13.
Chen, H. L. (2014). Board capital, CEO power and R&D investment in electronics firms. Corporate Governance: An International Review, 22(5). CHI, T. (1994). Trading in strategic resources: Necessary conditions, transaction cost problems, and choice of exchange structure. Strategic Management Journal, 15(4), 271–290.
Choi, E., Choi, W., Jang, S., & Park, S. (2014). Does the effectiveness of board of directors affect firm performance of consumer co-operatives? The case of iCOOP Korea. Annals of Public and Cooperative Economics, 85(3), 371–386.
Claridge, T. (2018). Functions of social capital–bonding, bridging, linking. Social Capital Research.
Cohen, J., & Uphoff, N. (1977). Rural Development Participation: Concepts and Measures for Project Design, Implementation, and Evaluation. Monograph Series, Rural Development Committee.
Cohen, J., & Uphoff, N. (1980). Participation’s place in rural development?: Seeking clarity through specificity. World Development, 8, 213–235.
Coleman, J. S. (1990). Foundations of social theory. Cambridge, MA: Belknap Press of Harvard University Press.
Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9(5), 371–395.
Cornforth, C. (2004). The Governance of cooperatives and mutual associations: A paradox perspective. Annals of Public and Cooperative Economics, 75(1), 11–32.
Crook, T. R., Todd, S. Y., Combs, J. G., Woehr, D. J., & Ketchen, D. J. (2011). Does human capital matter? a meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology, 96(3), 443–456.
D’amato, A., & Gallo, A. (2019). Bank institutional setting and risk-taking: the missing role of directors’ education and turnover. Corporate Governance (Bingley), 19(4), 774–805.
Dahlqvist, J., Davidsson, P., Dahlqvist, J., & Wiklund, J. (2000). Initial conditions as predictors of new venture performance: A replication and extension of the Cooper et al. study. Enterprise and Innovation Management Studis, 1(1), 1–17.
Daily, C. M., Dalton, D. R., & Cannella, A. A. (2003). Corporate governance: Decades of dialogue and data. Academy of Management Review, 28(3), 371–382. 3
Dalton, D. R., Daily, C. M., Ellstrand, A. E., & Johnson, J. L. (1998). Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 19(3), 269–290.
Dalziel, T., Gentry, R. J., & Bowerman, M. (2011). An integrated agency-resource dependence view of the influence of directors’ human and relational capital on firms’ R&D spending. Journal of Management Studies, 48(6), 1217–1242.
Duguid, F. (2017). Non-Financial Tools and Indicators for Measuring the impact of co-operatives. Journal of Co-operative Accounting and Reporting, 5(1), 40–54.
Fairbairn, B. (1991). Co-operatives and Community Development: Economics in Social Perspective. Univ of Saskatchewan.
Fiegener, M. K. (2005). Determinants of board participation in the strategic decisions of small corporations. Entrepreneurship: Theory and Practice, 29(5), 627–650.
Finkelstein, S., & Mooney, A. C. (2003). Not the usual suspects: How to use board process to make boards better. Academy of Management Perspectives, 17(2), 101–113.
Forbes, D. P., & Milliken, F. J. (1999). Cognition and corporate governance: Understanding board of directors as strategic decision-making groups. Academy of Management Review, 24(3), 489–505.
Franken, J. R. V, & Cook, M. L. (2015). Informing measurement of cooperative performance. In Interfirm networks (pp. 209–226). Springer.
Friedman, A. L., & Miles, S. (2006). Stakeholders: Theory and Practice. Oxford University Press on Demand.
Giacomini, D., Chiaf, E., & Mazzoleni, M. B. (2017). How to measure performance in cooperatives?: A multiple case study. In Handbook of Research on Managerial Solutions in Non-Profit Organizations (pp. 346–365). Hershey, PA: IGI Global.
Granovetter, M. S. (1973). The strength of weak ties. The American Journal of Sociology, 78(6), 1360–1380.
Hakelius, K. (2018). Understanding the board of Swedish farmer cooperatives – Cases focusing on board composition and interaction patterns. Journal of Co-operative Organization and Management, 6(2), 45–52.
Hayami, Y. (2009). Social capital, human capital and the community mechanism: Toward a conceptual framework for economists. Journal of Development Studies, 45(1), 96–123.
Haynes, K. T., & Hillman, A. (2010). The effect of board capital and CEO power on strategic change. Strategic Management Journal, 31(11), 1145–1163.
Hernández-Nicolás, C. M., Martín-Ugedo, J. F., & Mínguez-Vera, A. (2019). The effect of gender diversity on the board of Spanish agricultural cooperatives on returns and debt: An empirical analysis. Agribusiness, 35(4), 639–656.
Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The Resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–256.
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396.
Hillman, A. J., Keim, G. D., & Luce, R. A. (2001). Board composition and stakeholder performance: Do stakeholder directors make a difference? Business & Society, 40(3), 295–314.
Hind, A. M. (1999). Cooperative performance–Is there a dilemma? Journal of Cooperatives, 30–43.
Huse, M., Hoskisson, R., Zattoni, A., & Viganò, R. (2011). New perspectives on board research: Changing the research agenda. Journal of Management and Governance, 15(1), 5–28.
Johnson, S. G., Schnatterly, K., & Hill, A. D. (2013). Board Composition beyond independence: social capital, human capital, and demographics. Journal of Management.
Judge, W. Q., & Zeithaml, C. P. (1992, October). Institutional and strategic choice perspectives on board involvement in the strategic decision process. Academy of Management Journal. Academy of Management.
Jussila, I., Goel, S., & Tuominen, P. (2012). Governance of co-operative organizations: A social exchange perspective. Business and Management Research, 1(2).
Bond, K. J. (2009). Cooperative financial performance and board of director characteristics?: A quantitative investigation. Journal of Cooperatives, 22, 20–35.
Khanna, P., Jones, C. D., & Boivie, S. (2014). Director human capital, information processing demands, and board effectiveness. Journal of Management, 40(2), 557–585.
Kim, N., & Kim, E. (2015). Board capital and exploration: From a resource provisional perspective. Management Decision, 53(9), 2156–2174.
Kim, Y. (2005). Board Network Characteristics and Firm Performance in Korea. Corporate Governance: An International Review, 13(6), 800–808.
Kim, Y., & Cannella, A. A. (2007). Social capital among corporate upper echelons and its impacts on executive promotion in Korea. Journal of World Business, 43(1), 85–96.
Kim, Y., & Cannella, A. A. (2008). Toward a social capital theory of director selection. Corporate Governance: An International Review, 16(4), 282–293.
Kor, Y. Y., & Sundaramurthy, C. (2009). Experience-based human capital and social capital of outside directors. Journal of Management, 35(4), 981–1006.
Kusuma, I. C., Afif, N. M., Gunawan, R., Mukmin, M. N., & Humaira, M. A. (2019). Cooperative success based on entrepreneurship, capital, accounting knowledge and participation members. International Journal of Scientific and Technology Research, 8(10), 1120–1123.
Kyazze, L. M., Nkote, I. N., & Wakaisuka-Isingoma, J. (2017). Cooperative governance and social performance of cooperative societies. Cogent Business and Management, 4(1), 1284391.
Kyriakopoulos, K., Meulenberg, M., & Nilsson, J. (2004). The impact of cooperative structure and firm culture on market orientation and performance. Agribusiness, 20(4), 379–396.
Lee, J.-H., Choi, C., & Kim, J. M. (2012). Outside directors’ social capital and firm performance: A complex network approach. Social Behavior and Personality, 40(8), 1319–1331.
Lee, J.-H., Jang, Mi., & Choi, C. (2016). Social capital of corporate boards: Effects on firm growth. Social Behavior & Personality, 44(3), 453–462.
Lester, R. H., Hillman, A., Zardkoohi, A., & Cannella, A. A. (2008). Former government officials as outside directors: The role of human and social capital. Academy of Management Journal, 51(5), 999-1–13.
Liang, Q., Huang, Z., Lu, H., & Wang, X. (2015). Social Capital, member participation, and cooperative performance?: Evidence from China’s Zhejiang. International Food and Agribusiness Management Review, 18(1), 49–78.
Littlepage, G., Robison, W., & Reddington, K. (1997). Effects of task experience and group experience on group performance, member ability, and recognition of expertise. Organizational Behavior and Human Decision Processes, 69(2), 133–147.
Majee, W., & Hoyt, A. (2011). Cooperatives and Community Development: A Perspective on the use of cooperatives in development. Journal of Community Practice, 19(1), 48–61.
Marie, A. A., Ibrahim, M. E., & Al Nasser, A. D. (2014). Effects of financial and non-financial performance measures on customers’ perceptions of service quality at Islamic banks in UAE. International Journal of Economics and Finance, 6(10).
Matoussi, H., & Gharbi, I. (2011). Board independence and corporate fraud: The case of Tunisian firms. Politics and Economic Development.
Mayo, E. (2011). Co-operative performance. Sustainability Accounting, Management and Policy Journal, 2(1), 158–164.
Mcpherson, M., Smith-Lovin, L., & Cook, J. M. (2001). Birds of a feather: Homophily in social networks. Annual Review of Sociology, 27(1), 415–444.
Melkumov, D., & Khoreva, V. (2015). The effect of board capital and conflict on the tasks of the board of directors. International Studies of Management and Organization, 45(1), 60–79.
Minichilli, A., & Hansen, C. (2007). The board advisory tasks in small firms and the event of crises. Journal of Management & Governance, 11(1), 5–22.
Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242–266.
Nicholson, G. J. (2004). A framework for diagnosing board effectiveness. Corporate Governance: An International Review, 12(4), 442–460.
Nikkhah, H. A., & Redzuan, M. (2009). Participation as a medium of empowerment in community development. European Journal of Social Sciences, 11(1), 170–176.
Pérez-Calero, L., Villegas, M. Del M., & Barroso, C. (2016). A framework for board capital. Corporate Governance (Bingley), 16(3), 452–475.
Pfeffer, J., & Salancik, G. R. (1978). The External Control of Organizations: A Resource Dependence Perspective. Harper & Row.
Pugliese, A., & Wenstop, P. Z. (2007). Board members’ contribution to strategic decision-making in small firms. Journal of Management & Governance, 11(4), 383–404.
Ramón-Llorens, M. C., García-Meca, E., & Pucheta-Martínez, M. C. (2018, August). The role of human and social board capital in driving CSR reporting. Long Range Planning.
Rauch, A., & Rijsdijk, S. A. (2013). The Effects of general and specific human capital on long-term growth and failure of newly founded businesses. Entrepreneurship: Theory and Practice, 37(4), 923–941.
Reeb, D. M., & Zhao, W. (2009). Director capital and corporate disclosure quality. Journal of Accounting and Public Policy, 32(4), 191–212.
Ruef, M., Aldrich, H. E., & Carter, N. M. (2003). The structure of founding teams: homophily, strong ties, and isolation among U.S. entrepreneurs. American Sociological Review, 68(2), 195.
Sato, Y. (2013). Social Capital. Sociopedia.Isa, 174–180.
Sheikh, M. J. (2015). Farmers’ Participation, Social Capital, and Benefits in Water Management in Sindh Province of Pakistan. Selangor: Universiti Putra Malaysia
Soboh, R., Lansink, A. O., Giesen, G., & Van Dijk, G. (2009). Performance measurement of the agricultural marketing cooperatives: The gap between theory and practice. Review of Agricultural Economics.
Charas, S. (2015). Improving corporate performance by enhancing team dynamics at the board level. International Journal of Disclosure and Governance, 12(2), 107–131.
Spear, R., Cornforth, C., & Aiken, M. (2009). The governance challenges of social enterprises: evidence from a UK empirical study. Annals of Public and Cooperative Economics, 80(2), 247–273.
Stevenson, W. B., & Radin, R. F. (2009). Social capital and social influence on the board of directors. Journal of Management Studies, 46(1), 16–44.
Rajaratnam, S. D., Noordin, N., Said, M. S. A., Juhan, R., & Hanif, F. M. (2010). Success factors of cooperatives in Malaysia: An exploratory investigation. Malaysian Journal of Co-Operative Management, 5(1), 1–24.
Rajaratnam, S. D., Nordin, N., Said, M. S. A., Juhan, R., & Hanif, F. M. (2009). Factors Influencing performance of co-operatives in Malaysia: A tentative framework. Malaysian Journal of Co-Operative Management, 5, 43–63.
Tian, J., Haleblian, J., & Rajagopalan, N. (2011). The effect of board human and social capital on investor reactions to new CEO selection. Strategic Management Journal, 32(7), 731–747.
Unger, J. M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341–358.
Valentinov, V., & Iliopoulos, C. (2013). Economic theories of nonprofits and agricultural cooperatives compared: New perspectives for nonprofit scholars. Nonprofit and Voluntary Sector Quarterly, 42(1), 109–126.
Westphal, J. D. (1999). Collaboration in the boardroom: Behavioral and performance consequences of CEO-board social ties. Source: The Academy of Management Journal, 42(1), 7–24.
Westphal, J. D., & Fredrickson, J. W. (2001). Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy. Strategic Management Journal, 22(12), 1113–1137.
Wiersema, M. F., & Bantel, K. A. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35(1), 91–121.
Wilkinson, P., & Quarter, J. (1996). Building a Community-Controlled Economy: The Evangeline Co-operative Experience. University of Toronto Press.
Wincent, J., Anokhin, S., & Boter, H. (2009). Network board continuity and effectiveness of open innovation in Swedish strategic small-firm networks. R and D Management, 39(1), 55–67.
Wincent, J., Anokhin, S., & Örtqvist, D. (2010). Does network board capital matter? A study of innovative performance in strategic SME networks. Journal of Business Research, 63(3), 265–275.
Yaacob, A., Yaacob, H. A. K. Z. H., & Hussin, Z. (2014). Modelling the impact of strategic planning, structural capital, relational capital, members’ participation, governance practices and human capital development on cooperatives’ performance. Journal of Business & Management, 2(2), 249–256.
Yu, L., & Nilsson, J. (2018). Social capital and the financing performance of farmer cooperatives in Fujian Province, China. Agribusiness, 34(4), 847–864.
Zahra, S. A., & Pearce, J. A. (1989). Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15(2), 291–334.
Zeuli, K., Freshwater, D., Markley, D., & Barkley, D. (2004). Cooperatives in rural community development: A new framework for analysis. Journal of Community Development Society, 35(2), 17–35.
Zeuli, K., & Radel, J. (2005). Cooperatives as a community development strategy?: Linking theory and practice. The Journal of Regional Analysis and Policy, 35(1), 43–55.
In-Text Citation: (Buang & Samah, 2021)
To Cite this Article: Buang, M., & Samah, A. A. (2021). Understanding the Effectiveness of Co-operative Board Members from Resource Dependence and Participation Perspective: A Proposal of Conceptual Framework. International Journal of Academic Research in Business and Social Sciences, 11(8), 771–786.
Copyright: © 2021 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode