Exploring the Sustainability of the Cooperative Model in Dairy: The Case of the Netherlands

Abstract

Dairy cooperatives have existed in the Netherlands for more than 130 years. They hold a joint market share of more than 80% since the 1950s. This suggests that cooperatives are durable organizations in the dairy industry of the Netherlands. However, the number of dairy cooperatives has declined tremendously, with only five processing cooperatives left in 2015. The paper explores the paradox of high cooperative market share over a long period of time with a steady decline in the number of cooperatives. This historical account of the Dutch dairy industry distinguishes four periods of cooperative evolution. Classical theoretical explanations for the existence of cooperatives, such as bargaining power and transaction costs economics, can explain the rise of dairy cooperatives. However, they cannot sufficiently explain the long term success of the cooperative model in the Dutch dairy industry. Additional explanations can be found in institutional theory, including the impact of an enabling institutional environment.

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