# Democracy and innovative governance in French agricultural cooperatives

Louis-Antoine Saïsset

► To cite this version:

Louis-Antoine Saïsset. Democracy and innovative governance in French agricultural cooperatives. Jerome Nikolai Warren; Kemi Ogunyemi; Asia Guerreschi; Maciej Szulc. Global Cooperative Economics and Movements: A Research Companion, Routledge, pp.311 - 331, 2026, 9781003534006. 10.4324/9781003534006-20. hal-05525593

HAL Id: hal-05525593

https://hal.inrae.fr/hal-05525593v1

Submitted on 24 Feb 2026

HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entific research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.

L'archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diffusion de documents
scientifiques de niveau recherche, publiés ou non,
émanant des établissements d'enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.

<figure><img src="image_1.png" /></figure>

Distributed under a Creative Commons CC BY-SA 4.0 - Attribution - ShareAlike - International
License
# 16 Democracy and innovative governance in French agricultural cooperatives

An exploratory study

Louis-Antoine Saïssel

## 1 Introduction

Agricultural cooperatives have undergone major changes for more than 30 years, including very significant regrouping movements to be more competitive, described as a means to face globalization (Bijman & Hanish, 2012). Since World War II, they have moved from “unicellular” and very territorialized forms, with very close relationships with their members, to more extensive and larger organizations, often resulting from mergers, which has led, in certain cases, to very large cooperative groups, with multiple subsidiaries, increasingly questioning the cooperative-members’ link (Saïssel, 2016).

The multiple economic, health and financial crises and societal and environmental developments have influenced the evolution of these organizations in terms of governance and management. Well beyond the legal principles governing the status of agricultural cooperatives, the democratic aspirations of their members have undergone profound changes. These aspirations, oriented towards a more horizontal and participative system, can call into question the “classic” functioning of cooperative companies, which is essentially based on the model of representative democracy (Kaswan, 2014). A more horizontal organization does not necessarily prevent co-op degeneration, as shown by Pastier (2024).

Facing this reality, we wish to address the question of the evolution of democratic-oriented governance in agricultural co-ops: can co-op democratic governance also be innovative to cope with members’ expectations? Indeed, farmers can feel very far from their collective organization because of its size and complexity (Mauget, 2005). This may lead to a distance between members and the Board of Directors (BoD), as analyzed by Nilsson (2023). This issue should be addressed through a more democratic system thanks to governance innovation, namely based on participative and partnership devices. But member involvement is also linked to other drivers, such as economic motivations (Cechin et al., 2013). In the French agricultural co-op sector, studied in this chapter, co-op governance models are very diverse (Chomel et al., 2013), and external as well as internal governance drivers are likely to influence democratic practices. Mergers, which have affected numerous agrifood co-ops in Europe for a long time (Mauget & Declerck, 1996), are part of the key factors.
In order to answer this question, the chapter is organized in four parts: first, we expose our theoretical framework; second, we detail the qualitative methodology based on four case studies; third, we analyse these cases; and fourth, we synthetize and conclude.

## 2 Theoretical framework: democratic and innovative governance

We based our theoretical framework on the concepts of democracy, governance, and innovation in corporate governance, applied to cooperatives, more particularly in the agricultural sector. In the following pages, we will define and develop these concepts, showing that a few studies deal with them and their interactions, proposing a conceptual framework to deal with drivers of governance innovation in terms of democracy.

### 2.1 *Democracy and governance: from capitalistic firms to cooperatives*

Company is an organization with many faces that has been approached in different ways. From the neoclassical conception, according to which the company was considered as a “black box”, to the company seen as a system, it is still difficult to grasp its complex reality (Tosi, 2009). Organization theory studies all types of organizations with very diverse points of view, as underlined by Tosi (2009): rational/natural models, closed/open system approaches, and considering single- or double-way relationships between environment and structure.

According to Pfeffer (1991), this research field frequently took the individual and its behaviour as the unique unit of analysis and did not really consider social structure as relevant, denying the effects of social and mutual interactions among individuals on the firm's management. On the contrary, for Pfeffer (1991, p 801), “organizations are social settings”. Social relations are therefore essential and can influence the firm’s performance. Some authors went further and considered organization as an open system model where structure and environment are linked, sometimes following an interactive process, dealing with institutions and ecology, and leading to *open system natural models* (Tosi, 2009).

In this perspective, the pervasive power of shareholders, stressed by Jensen and Meckling (1976), is counterbalanced or, at least, influenced by the open system of interactions between internal and external stakeholders, taking into account the commitment to society of the firm, analysed by the stakeholder theory (ST; Freeman, 1984). Democracy is also more concerned, directly or indirectly, considering the firm as an institution where democracy gains ground thanks to increasing openness, activist shareholders (Gomez, 2001) and citizen requirements (Grandori, 2017). This phenomenon led Andreani (1994, p 184) to state, “it is much more difficult to initiate democracy in a party than in a firm”. In fact, behind stakeholder and democratic issues, governance is at the heart of operations.

Democratic governance (Cornforth, 2004) concerns the essence of agricultural cooperatives as social economy organizations. Since their origin, they have been
based on the democratic member control principle (Saïsset, 2014), the second cooperative principle, which is supported by the ICA (1995).¹ Therefore, democracy is part of co-op specificities and can spread both inside and outside co-ops. They can also be affected by tensions depending namely on co-op type and size (Kaswan, 2014). Moreover, these tensions, involving sometimes deviations, can develop due to the existing dilemma between the need for the cooperative enterprise to be efficient and the desire to maintain equality between members and to have a satisfactory level of transparency (Gwiriri & Benett, 2020). These issues lead to democratic costs at different levels, as analysed by Pozzabon et al. (2012), and are likely to slow down decision-making. These costs depend in particular on oscillations between delegative, representative and participatory democracy, three democratic modes detailed by Andréani (1994).

Social responsibility also directly concerns cooperatives, and more particularly agricultural cooperatives, considering the seventh cooperative principle of ICA (1995): *Cooperatives work for the sustainable development of their communities through policies approved by their members*. In this perspective, from the quadrangle of Desroche (1976), dealing with internal stakeholder interactions (members, employees, directors, and managers), cooperative governance can be seen more broadly, influenced by exchanges and partnerships with external stakeholders, such as customers, advisers, other enterprises, bankers, and others. It was shown by Turnbull (1997) for the Mondragon multipurpose cooperative and Saïsset (2020) in wine cooperatives. However, these types of relationships, even when stakeholders are also shareholders, as in agricultural cooperatives where farmer members are suppliers and shareholders of their collective tool (double commitment, see De Charrin, 1989), do not prevent tensions and bargaining in the co-op governance. This can come from heterogeneity, cognitive limits, and bounded rationality of members or employees (Saïsset et al., 2017).

Furthermore, joining a cooperative is a way for members, and especially farmers, to reduce uncertainty and transaction costs (Nilsson, 1996). In transaction cost economics (TCE), cooperatives are often seen as an intermediary way of contractual governance, a solution to counterbalance opportunistic behaviours and to solve problems of bounded rationality (Ménard, 2007). Its place is often in-between markets and hierarchies, which Williamson (1985) called “hybrid”. Ménard (2018) characterized this hybrid form in the agrifood industry in light of the theory of relational contracts (informal contracts), according to the degree of decentralization of coordination and centralization of strategic resources. He showed that different kinds of hybrid forms of cooperatives could exist, namely depending on their activities.

Going further, some authors connected ST and TCE through cooperative examples like Mondragon, for which Turnbull (1997) described the governance of transactions by stakeholder relationships. More recently, Chollet and Saïsset (2023) proposed a theoretical governance model of a cooperative bank, assembling ST and TCE, to analyse the implementation of sustainable development goals. Going deeper into the content of TCE, Valentinov and Iliopoulos (2024) analysed the economic adaptation described by Williamson (1996) via the markets (autonomous
adaptation) and the hierarchies (cooperative adaptation). They showed how TCE and ST are intertwined and particularly how ST informs TCE: stakeholder relations enable corporations to economize on transaction costs through different mechanisms of adaptation.

## 2.2 *Innovative governance: a key aspect of organizational innovation*

Innovation is a complex concept, which is not easy to define, as underlined by Read (2000), who worked on the determinants of organizational innovation, and by Pou tanen et al. (2016). Baum (2004) insisted on the marketing aspect of innovation, whereas Baregheh et al. (2009) proposed a new scientific definition coming from a literature review. Several authors dealt with innovative enterprises (O'Sullivan, 2000; Palladino, 2022). They insisted on the wrong primacy of shareholders and the importance of stakeholders to create a climate of innovation, leading to value creation, namely thanks to human assets and skills.

Nevertheless, the broader definition of innovation comes from the Organisation for Economic Co-operation and Development (OECD, 2018). This one deals with product innovation as well as business process innovation, of which organizational innovation is a part. The latter has been gathered by the OECD with marketing innovation, so that we must refer to the Oslo Manual of 2005 for its definition: *an organisational innovation is the implementation of a new organisational method in the firm's business practices, workplace organisation or external relations* (OECD, 2005, p 51).

This kind of innovation has ill-defined areas and is intangible, contrary to prod uct or technological innovation. It embraces management and governance inno vation. Its first part has been rather broadly studied, namely by the Managerial Innovation Lab (London Business School). Hamel (2006) pointed out the crucial role of management innovation in firm performance. The second part of organi zational innovation, related to governance, has been much less analysed. Regard ing this aspect of innovation and the digital revolution, Filatotchev et al. (2020, p 7) stated, *there is almost a blank canvas of areas that require our scholarly attention as we enter new territories in the virtual governance world and its cyber risks*. They also pointed out the central role of regulations and institutional settings. Firms can innovate within or outside their regulatory bodies, as well as when they expand internationally.

Furthermore, ethical considerations paved the way for the development of “for-purpose” organizations with new forms of governance (Filatotchev et al., 2020). Their openness to external stakeholders can be considered as an innovation in governance, avoiding the isolation of the firm and its withdrawal, which is detri mental to the future. In ANECCOP, a second-tier citrus cooperative, Gallego-Bono and Chaves-Avila (2016) underlined that providers and researchers helped to increase innovation by their knowledge and their links with the cooperative. Mon dragon is another very relevant case detailed by Turnbull (1995). He analysed the innovative governance as starting from the beginning of this multipurpose coop erative by a *hybrid governance structure*, mixing farmers and workers (Turnbull,
1995, p 171). Moreover, innovation in governance covers non-mandatory, even informal, and original bodies, specific to the Mondragon cooperative. In this case, participative democracy is enhanced. Borgen and Aarset (2016) found a participatory innovation process involving members in two breeding cooperatives. Specific bodies allowed farmers to discuss their production data in an interactive and democratic way.

Facing changing markets, European agricultural cooperatives adapt their governance model in different ways, leading to more complex organization, including more employees or external stakeholders. These evolutions influenced democratic rules and practices (Bijman et al., 2014). Changes in the internal governance mechanisms, according to Bijman et al. (2014), come from the need to improve members-cooperative relationships, to cope with market orientation, and to be more efficient by attracting professional managers. So, these innovations in governance can be either positive or negative for democracy, depending on the cooperative strategy and on its dynamics.

## 2.3 Proposition for a model concerning innovation in cooperative democratic governance

In light of our literature review, we propose a first conceptual framework to explain and analyse the evolution of democracy in agricultural cooperatives linked to governance innovation. This general model (Figure 16.1) involves internal and external actors or factors.

This figure tends to represent the different drivers of innovation in democratic governance of cooperatives, including agricultural cooperatives. It shows to what extent stakeholders can be implied in the phenomenon, and governance

<figure><img src="image_2.png" /><figcaption>Figure 16.1 Democracy and innovation in cooperative governance.</figcaption></figure>

Source: From the author.
mechanisms – seen as coordination of transactions between stakeholders – can be
centralized (internal governance) or decentralized (external governance).

3 Methodology: a qualitative study

Our survey is exploratory and partly based on the action-research approach and participant observation, as we have been consulting engineers in an agricultural co-op union in Southern France for 14 years. Our contacts and observations went on after this period, through teaching and other research projects, including INN-OGOUV,² so that we were able to study the evolutions of the concerned co-ops from 2000 to 2024. Therefore, we followed a long-term approach, allowing us to analyse co-op long-run trends and trajectories.

We choose four different agricultural co-ops in the South of France, considering their diversity in terms of history, sector, activities and size. The firms at stake are described in Box 1. We used pseudonyms to respect confidentiality. According to the EU legal framework, there is one micro-enterprise (Co-op D), one small-sized enterprise (Co-op A), one middle-sized enterprise (Co-op B), and one large enterprise forming a large Co-op Group (Co-op C). This covers a wide range of diverse situations.

In this context, our research relies on a qualitative approach and, more precisely, on a case study methodology. It follows Yin's research (2018): we carried out iterative process and data triangulation in order to achieve a hard form of research. We contributed to managerial changes and observed evolutions at the same time, collecting also precious information for our research work thanks to eight control or advising tasks (representing at least 40 working days). Moreover, we carried out 10 semi-structured interviews with executive managers, managers, chairpersons, and directors of those co-ops. They lasted 11 hours, of which those that consented to recordings (two-thirds of them) were recorded and transcribed. In all cases, we took notes during the interviews. We met more than 40 persons. We also collected internal data and external information. All these data enabled us to understand dynamics and innovative processes linked to changes in governance practices.

**Box 1 Agricultural co-op description**

Wine Co-op A

Founded in 1923

Member of a co-op federation (marketing objective)

Mergers in 2009 with 2 nearby wine co-ops and in 2022 with another
little-sized one

220 members located in 30 communities

Turnover: €14,000,000

32 employees
## Wine Co-op B

Founded in 1932

Merger in 1996 with 6 other local wine co-ops ⇒ Territorial sections

Member of a co-op federation (marketing objective)

650 members located on 4 communes

Turnover: €15,300,000

160 employees

## Multipurpose Co-op C

Founded in 1932

Merger in 1945 with 3 local co-ops to create a multipurpose agricultural co-op

⇒ Territorial sections

Merger in 1993 with another nearby multipurpose agricultural co-op ⇒ Co-op Group

Merger in 2008 with 2 important agricultural co-ops and in 2016 with a multipurpose co-op

15,000 members located in 23 departments

Turnover: €1,225,000,000

2,300 employees

## Livestock Co-op D

Founded in 1974

Merger in 2013 with another livestock co-op

140 members located in 3 departments

Ovines and bovines collection

Turnover: €9,100,000

7 employees

Sources: interviews, observations, co-op and newspaper websites, official and internal documents

# 4 Results: tensions, shifts, and innovation in cooperative governance

## 4.1 Life trajectories and key stages

Wine Co-op A is a rather big co-op; compared to the average turnover of the French wine co-ops, that is around €9,500,000 (Saïsset, 2020). It mostly sells protected denomination of origin (PDO) wines and is specialized in wines packed in bags in boxes or bottles. Being one of the most famous spearheads of
Languedoc-Roussillon viticulture, Co-op A has been for decades at the forefront of normative quality-driven initiatives, bringing rigour and professionalism inside the functionality of the firm and vis-a-vis members.

This trend led to the rationalization of the functioning of the co-op, following a continuous improvement approach. So, a highly sophisticated Quality Management System (AgriConfiance) was built and paved the way for a sustainable approach. In 2009, the merger with two other wine co-ops, one of which was located in the same village, brought changes in internal organization and resulted in a boost to the sustainable development strategy of Co-op A. It then obtained a specific label ("Sustainable Winegrowing") and elaborated a new strategic project from 2014 to 2015. However, these great changes also led to important tensions among members and between some members and the leaders of the cooperative.

Coming from a merger of six wine cooperatives, Wine Co-op B is a much-specialized cooperative in natural sweet wines (PDO). Its members are numerous and mostly little-sized producers, working on very steep slopes. Since the 1980s, it has developed short circuits thanks to canvassing. This business model has been really successful, but great evolutions in food habits, combined with the viticulture crisis and climate change, called it into question. Despite this situation, the Chief Executive Officer (CEO) and the BoD decided to invest in a single brand new winery because of the scattered and outdated old ones. From 2000 to 2024, production and turnover have been divided by two. Many grape growers stopped their activity, and Co-op B had to face great financial issues, leading to a "safeguard procedure" to avoid default of payment.

Despite high-quality wines, sustainability approaches (implementation of 3D diagnosis), strategic plans (OdyCellier), and management commitment to redress the economic situation, Co-op B declined. Its CEO left in 2017 and was replaced by an experienced general manager who looked for new markets and investors (partnership and crowdfunding).

Concerning Multipurpose Co-op C, its life trajectory is completely different. Born just after the Second World War, it evolved towards a regional co-op group during the 1990s (turnover of €250 M, 8,500 members in 2000). It has accelerated its external growth, particularly since 2008, to become nowadays a national group (€1.2 B of turnover in 2024 for 15,000 members), with 51 subsidiaries in the agrifood sector. More than 12 important and successive mergers have been run, leading to the extension of its territorial area from the South East to the South West of France. Co-op C covers a wide range of sectors, from fruit to livestock production and cereals. This agribusiness cooperative group is made of three main poles, from upstream to downstream: agricultural pole (increasing farm advisory activity), agribusiness pole, and retail pole.

This external growth significantly changed the size, the nature and the organization of the co-op: complexity increased, and the risk of distance from members rose up. A new strategic plan has been drafted. Called "Vision-Ambition 2025", it namely relies on marketing and innovation. At the same time, local production has been developed to strengthen the territorial anchorage of the cooperative: 100% durum wheat "baguette", PGI Camargue rice, lentils, and almonds, among others.
The fourth, **Co-op D**, specialized in livestock production and located in the Pyrenees Mountains, is a much smaller business, with a traditional functioning system, where farmers play a key role in the decision-making process. It came from the merger of two breeding co-ops in 2013 (Figure 16.5). They had similar sizes but different productions – ovines for one of them and bovines for the second one – and different “cultures”. One co-op was focused on social aspects (especially concerning members), although territory aspects were crucial for the other one. Both were quality-oriented and promoted territorial signs (PGI calves from Pyrenees) or local specific brands (i.e., “El Xai” lambs).

The emergence of the new **Co-op D**, after decades of coexistence of two specialized co-ops, was due to economic rationalization and competitive issues. It also came from the necessity of restructuring and rebuilding a new slaughterhouse, partly owned by the two pre-existing co-ops and a local meat industry company. The new enterprise, launched in 2015, is a cooperative gathering of industry, local authorities, associations, citizens, and employees. The creation of a single livestock co-op on a large territory, where farmer density was low, with ambitious marketing objectives, led to the setup of a global strategic plan, overturning members' and employees' working habits and well-established ways of governance.

These four cases showed us varying trends and trajectories over 25 years, coming from very different cooperatives in terms of size, sector and organizational aspects. Nevertheless, they all revealed key stages in the co-op lifecycle, which strongly drive the economic and financial evolution of these agricultural co-ops, but also their membership and their style of governance.

In this perspective, these cases present two striking commonalities concerning crucial steps and dynamics. First, these co-ops are all “pioneers” in different fields and have shown innovative capacities for quite a long time. Second, mergers and strategic plans with important investments shaped co-op history more or less recently. These two characteristics are essential to analyse and explain tensions in internal governance, leading to innovative processes concerning democratic governance. That is what we are going to study in the following parts.

## 4.2 Democratic issues and tensions in the internal governance

**Wine co-op A** merged with another local wine co-op for the first time in 1991. Alliances were natural for the two leaders (CEO and chairman), and a long-term marketing partnership with a famous regional co-op federation was set up for decades. Despite this positive orientation, the previous tandem CEO-chairman, lasting 15 years, concentrated power and was not prone to democratic discussions within the BoD. It decided strategic orientations, including two mergers with very close co-ops, without real exchanges, debates and explanations. This centralized way of governance did not fit all members, and some of them opposed the established governance. It was a *non-participatory governance* for the present CEO. He added, the tandem *communicated only the bare minimum to the BoD [...]*. *This has created a certain discontent over the years*. Consequently, tensions increased (see Figure 16.2) and called into question the leadership of the governance duo. It
<figure><img src="image_3.png" /><figcaption>Figure 16.2 Evolution of wine co-op A.</figcaption></figure>

Sources: Interviews, observations, co-op and newspaper websites, and official and internal documents.

led to a kind of “shadow BoD”, with parallel meetings and harsh criticism about
democracy and transparency. The situation was risky for the Co-op A, whereas its
economic situation was rather good. At that time, we considered that Co-op A was
a rather centralized hybrid with third-party coordination (norms and certifications)
where the stakeholder dimension was important and the participative democracy
level was rather low.

Wine Co-op B resulted from a big merger in 1996 in a PDO vineyard made of a mosaic of plots. At that period, the co-op chose to be governed thanks to 4 territorial sections, corresponding to the territorial area of each merged co-op. The objective was to evolve progressively towards a single co-op by maintaining a close relationship with the 1,000 members. This proximity governance aimed at strengthening links between grape grower members and their co-op. The CEO said, *Our goal is really to have a transparent dialogue* with producers. He added, *the more we meet the better the information flow is*. Despite these well-intentioned arguments, territorial sections reinforced differences so that members felt without any decision-making power. Indeed, this governance system gives no direct democratic power to members: they must elect section representatives who will vote for them in the plenary annual meeting. This two-tiered system led to democratic frustrations and oppositions when the building of the new winery was decided. It implied selling old wineries, symbolizing the definitive loss of each previous co-op, and appeared as a very risky decision. A territorial section concentrated many of the opponents, and 36% of its members voted against the project. At the same time, opponents formed a specific association – “All United” – to give a voice to all dissatisfied members in each territory. The President of “All United” said, *It is a dangerous financial project for our future. Why persisting in such a dead-end path?* Tensions were at their peak. This co-op could be considered, at that period, as a partly centralized hybrid with relatively weak partnership and democratic governance aspects (Figure 16.3).

Concerning Multipurpose Co-op Group C, it engaged in many merg-
ers between 2008 and 2023, with 12 operations mobilizing human and financial
<figure><img src="image_4.png" /><figcaption>Figure 16.3 Evolution of wine co-op B.</figcaption></figure>

Sources: Interviews, observations, co-op and newspaper websites, and official and internal documents.

<figure><img src="image_5.png" /><figcaption>Figure 16.4 Evolution of multipurpose co-op group C.</figcaption></figure>

Sources: Interviews, observations, co-op and newspaper websites, and official and internal documents.

means in the long run. The first key stage was the foundation of the existing Co-op Group C in 2008 by merging the two biggest multipurpose agricultural co-ops to build a regional entity. Then, merger treaties and Extraordinary General Meetings (EGM) were carried out one after another at high speed. For the historical CEO, *The advantage of building groups of regional dimension is to be able to mobilize broader skills. This world requires being more efficient, more professional. This accelerated enlargement to be more competitive was particularly difficult to face for many members because they felt they were losing power over the future of their co-op. They did not always understand the concomitant vertical integration by purchasing many agrifood companies. They felt more and more distant from Co-op Group C and even dispossessed of their collective tool* (Figure 16.4).

The governance system seemed to be reversed. This perception was strengthened by the territorial sections which were enlarged but always without having any decision-making power, in accordance with French legal rules. Table 16.1
<figure><img src="image_6.png" /><figcaption>Figure 16.5 Evolution of livestock co-op D.</figcaption></figure>

Sources: Interviews, observations, co-op and newspaper websites, official and internal documents.

shows that only 0.6% of members (delegates) decided for all the others. Even BoD was partly put on the key, and a director underlined: *little information circulates, mostly statutory information, the rest being confined to sector by sector, without cross-functionality. As soon as you protect power around a handful of individuals, it cannot work*. Participation rate at BoD was frequently around 65-70%, a sign of divestment for some directors. Moreover, feeling external to the co-op, although being a crucial part of the internal governance, was disturbing for members and led to democratic disinterest. It was like a disempowerment. Co-op Group C was, at this moment, a partially centralized hybrid with a high level of partnership governance (numerous stakeholders and subsidiaries) and big issues concerning representative and participative democracy.

**Livestock Co-op D** was touched by a democratic crisis before any merger, in 2010 (Figure 16.5). It came after a rather long period of developing marketing partnerships, especially with the more important local meat industry, Cie X, in order to create value for breeders. In fact, Cie X was the main commercial outlet of Co-op D, with common brands and very close links between managers. Breeders had difficulties getting involved in the decision-making process due to the two-tier system of territorial sections. They just met once a year during the annual section meeting, listened to the CEO and the chairman, then voted for their delegates. *It is not exciting* said a stock farmer member. *We do not decide anything* added another farmer. From 2000 to 2013, fewer than 15% of members were elected as delegates and attended the AGM (Table 16.1). Moreover, it was very tedious to organize this system and to keep it alive, considering its administrative constraints. It represented a lot of work for animating territories without directly implying them in the strategic decision. That is why leaders decided to invite for the AGM all members and not only delegates, as specified in bylaws. This paradoxical informal arrangement aimed at avoiding member lack of interest. In this context, Co-op D was seen as a decentralized hybrid with crucial stakeholder interactions and issues of representative democracy.

In 3 cases out of 4, territory appears as extremely important through the role of territorial sections. This French legal option for agricultural co-ops is chosen when members are numerous and/or the territorial area is large. But territorial general
<table><caption>Table 16.1 Evolution of co-op governance through innovation</caption><thead><tr><th rowspan="2">Cooperative</th><th rowspan="2">Governance Type before Innovation</th><th colspan="2">Innovation in Governance</th><th rowspan="2">Effects on Democratic Governance</th><th rowspan="2">Governance Type after Innovation</th></tr><tr><th>Formal Devices</th><th>Informal Devices</th></tr></thead><tbody><tr><td>Wine Co-op A</td><td><ul><li>Rather centralized hybrid (third-party coordination)</li><li>Partnership dimension ++</li><li>Democratic governance – (participative aspects)</li></ul></td><td><ul><li>BoD: ▸ directors, regular meetings</li><li>Executive Board: effective missions, regular meetings</li></ul></td><td><ul><li>➤ Member meetings</li><li>Commissions</li></ul></td><td><strong>Fluid participative democracy</strong><br>Participative aspects +++</td><td><ul><li>Decentralized hybrid (third-party coordination)</li><li>Partnership governance +++</li><li>Democratic governance ++ (participative aspects)</li></ul></td></tr><tr><td>Wine Co-op B</td><td><ul><li>Partly centralized hybrid</li><li>Partnership governance --</li><li>Democratic governance - (representative and participative aspects)</li></ul></td><td><ul><li>End of territorial sections</li><li>BoD: ▸ directors, then replaced by MB and SB</li></ul></td><td></td><td><strong>Democratic degeneration</strong><br>Representative Participative aspects ----</td><td><ul><li>Very centralized hybrid similar to hierarchy</li><li>Partnership governance +</li><li>Democratic governance ---- (representative and participative aspects)</li></ul></td></tr><tr><td>Multipurpose Co-op group C</td><td><ul><li>Partly centralized hybrid</li><li>Partnership governance +++.</li><li>Democratic governance --- (representative and participative aspects)</li></ul></td><td>BoD: ▸ directors</td><td><ul><li>Innovation Commission</li><li>Regional Committees</li><li>Territorial sections: Agrivox</li></ul></td><td><strong>Interactive territorial democracy</strong><br>Participative aspects ++</td><td><ul><li>Partly centralized hybrid</li><li>Partnership governance +++</li><li>Democratic governance + (representative and participative aspects)</li></ul></td></tr><tr><td>Livestock Co-op D</td><td><ul><li>Decentralized hybrid</li><li>Partnership governance +++</li><li>Democratic governance -- (representative aspects)</li></ul></td><td>End of territorial sections</td><td>Territorial commissions</td><td><strong>Territorial awareness</strong><br>Representative aspects ++</td><td><ul><li>Decentralized hybrid</li><li>Partnership governance +++</li><li>Democratic governance ++ (representative aspects)</li></ul></td></tr></tbody></table>

Sources: From the author.
meetings have no other power than the one to elect delegates who will decide in the plenary general meeting. This two-tier system is very specific, represents indirect democracy, and can be a source of inertia or member frustration. Moreover, mergers and investments linked to alliances, part of the external governance, appear as a source of tensions between members, governance leaders, and executives. It created a democratic crisis, taking the form of collective disenchantment or strong oppositions, that is to say vague or high tensions between members and governance bodies, including the tandem CEO-chairman.

We are now going to analyse what were the more or less innovative solutions implemented by co-ops to overcome these issues.

## 4.3 Responses through innovative governance

Reactions of co-ops can be classified in two different groups: two co-ops set up formal solutions to simplify the decision-making process and to focus on direct democracy as well as efficiency, whereas two other co-ops chose informal solutions to improve a more participative democracy concerning members. It represents two directions for innovation in democratic co-op governance.

Wine Co-op B and Livestock Co-op D carried out formal solutions based on legal aspects. They were both concerned by the territorial dimension and decided to give up the legal but optional system of territorial sections. They were advised by the regional union of agricultural cooperatives (FRCA), one of their key stakeholders, looking for a more efficient decision-making process.

Wine Co-op B was first assisted and supported by prefectural authorities and by FRCA during the section annual meetings (SAM) in 2008–2009 for deciding to invest in the new winery. The CEO pointed out, satisfied, *a very large majority of cooperative members voted in favour of the project to build a new winery*, despite the “All United” opponents. In 2010, the CEO and the chairman decided to innovate by removing territorial sections from the bylaws to avoid any new increasing opposition in a section. They also hoped it could encourage members to attend the single AGM. At the same time, they decided to reduce the number of directors from 50 to 35 in three years, having big quorum issues (participation rate was often very close to 50%). Results are mentioned in Table 16.1: the participation rate of BoD increased a lot to reach 75%; around 33% of members attended AGM, but thanks to a second invitation (quorum was not reached for the first invitation). Leaders faced a dilemma: is it better to have several hundred members for the SAM with no decision rights or to have between 100 and 200 members for the AGM with voting rights? In fact, the new winery and the safeguard procedure scared members. The new way of governance did not attract them either. Without territorial animation and communication, democracy was down. In 2017, a new CEO was hired, and he proposed to move from a BoD to a Management Board (MB) and Supervisory Board (SB). With five persons, MB could decide faster than BoD, with SB playing a supervision role. Participation in SB was quasi the same as BoD, but MB met more frequently, and decisions were easier. In this innovative system, the role of directors was very restricted, and there were fewer exchanges
between elected leaders and managers. The co-op spirit was neglected, and a kind of slow “democratic degeneration” began. But Co-op B took initiatives to mobilize members thanks to external stakeholders: implementation of 3D (sustainability approach) and building of a new strategic plan in 2012, joining a big national wine federation in 2016, and attempting to attract investors via crowdfunding in 2018 (Miimosa platform: €100,000). External governance was unable to restore a lively internal democracy.

**Livestock Co-op D**, advised by FRCA when merging with its neighbouring ovine co-op, took a similar decision, followed by more practical governance devices. There was no problem of BoD participation (see Table 16.1). During the preparation of the merger, directors from the two co-ops decided to remove territorial sections in order to be more efficient, to have greater consistency, and to avoid member lack of motivation. The chairman declared: *We want to be more flexible and realistic. We cannot lose time with additional administrative constraints. That is why the Co-op D decided to innovate with territorial groups and new informal governance devices to maintain dialogue and interactions in each little region. They were mentioned in the rules of procedure but were not an unavoidable point of passage to vote in AGM. In this perspective, the new chairman, elected in 2023, declared, *I will embark on a tour of the department, small region by small region, to present my project for the cooperative*. Moreover, the strategic partnership with the local meat industry Cie X and the launch of the new slaughtering house cooperative were two strengths for implementing a stable governance. There has been much discussion about striking a balance between directors who represent their territory and directors who are active and involved. It was a key question to determine the relevant number of directors in the future BoD and its composition. A compromise was found. Finally, PGI Rosée and Vedell of Pyrénées were approved in 2016, becoming the first cross-border cooperatives (Spain and France) in Europe. These terroir-based productions helped to develop a “territorial awareness” in the internal governance.*

Wine Co-op A and Co-op Group C carried out informal solutions to find innovative modes of governance, including more democratic and partnership dimensions. They were partially advised by their cooperative union and found resources by themselves thanks to their leaders and staff.

**Wine Co-op A** faced a kind of cognitive problem: some directors and co-operators did not understand the strategic orientation of their leaders. This led to a rising opposition and important tensions inside and outside the BoD (see 4.2), whereas the CEO stated: *Cooperators place their trust in the co-op's BoD and management team*. The first innovative solution was to ask for a risk-prevention audit (PREVENCOOP) carried out by FRCA to defuse the situation. This external means brought objective facts and figures, strengths, and weaknesses to the directors on different topics: legal aspects, governance, vineyard production, marketing, and finance. Thanks to this diagnosis, they noticed that no particular risk threatened their co-op, member remuneration was rather good compared to the average regional level, and strategy was clear. But this audit underlined the critical lack of discussion for exchanging ideas and for sharing the cooperative project. These
findings questioned the two leaders so that they proposed to improve information and knowledge flow by organizing longer BoD meetings. They also decided to reactivate several commissions concerning vineyards, investments, human resources, communication, and finance. They possibly mixed directors, members, and employees. This open partnership attitude was really appreciated by directors. They progressively recovered trust after doubt and suspicion. The annual member satisfaction surveys carried out thanks to AgriConfiance and Sustainable WineGrowers facilitated this evolution. However, progress was emphasized after the change of the duo CEO-chairman in 2018. The CEO explained, *Our aim was to meet the expectations of the BoD and move towards a much more participative vision*. Innovation came from their way of seeing governance linked to co-op values. The new chairman said, *Mutual aid, fairness, solidarity, and conviviality constitute our values*. He added, *Solidarity is symbolized, on the bottles, by a Merovingian sign of shaking hands*. With this state of mind, they developed many informal devices: more frequent member information meetings, more regular commission meetings, software and digital tools for technical exchanges, and communication with members. They also improved the functioning of formal devices: reduction of the number of directors to be more efficient, inclusion of young members in the BoD, and more frequent Executive Board meetings with precise roles.

**Co-op Group C** dealt with a “growth crisis”: a significant part of members felt external to the co-op, very far from the downstream and diversification subsidiaries acquired over more than 12 years. They did not understand any more the functioning of their local co-op that had become gigantic. Many supply technicians now called members “customers” and saw them as clients to retain and not as user-owner farmers. In this perspective, the new chairman and CEO decided to improve the decision-making process at different levels: BoD, territorial sections, and activities. When a new chairman was elected in 2015, he declared:

> Our role is to create a state of mind in line with our values: it is mutualism, it is an economic and human adventure. It works better when people have their place within the company, and when relations with members are close and peaceful.

A will to be more interactive with members and more active with BoD emerged. And it was followed up by several actions.

First, the role of BoD was reinforced. In 2019, the new chairman said, *we are going to professionalize the role of director through training and involvement, and encourage exchanges between the BoD, operational staff and management* (annual report 2018/2019, p 4). In this perspective, the number of directors decreased from 41 in 2012 to 23 in 2024. The aim was to have a streamlined BoD to ease the decision-making process and to empower each director. It led to an increase of the participation rate from 80% to 90%. Second, innovation was put at the heart of the territories. An innovation commission was created after 2012, including some farmer members, to take their needs and their opinion into account because innovation must concern farms as much as the co-op level. The innovation manager
underlined, we need to boost innovation in our businesses, and bring projects to fruition. Members are more and more interested in and concerned by the innovation projects. In turn, in 2022, Co-op C wanted to study how to improve farmer performance and revenues thanks to a digital decision-making tool. Third, territorial issues were taken into consideration. It was absolutely crucial to respond to member fear of distance with Group Co-op C. In the context of its CSR approach, Co-op C set up a commission of territory animation and young farmers in 2017. It was really successful: farmer members were able to propose some actions, namely for revitalizing territorial sections. To improve the participation rate, which was rather low, it was proposed to change the meeting format. Beyond legal aspects, often boring for members, news from the Co-op C and interactivity were favoured. In 2022, 5 Agrivox were launched during the period of section annual meetings. They replaced them and gathered some of them. The goal was to revitalize the co-op's democratic life and to maintain strong ties with members (integrated report 2023/2024, p 13). During these meetings, group strategy was discussed with members, key figures and facts were exposed, and specialists/experts gave lectures on specific topics. Moreover, 11 regional committees were used as drive belts with territorial sections and their members. It is a kind of "interactive territorial democracy" which has a positive effect: the attendance number was multiplied by 4 between 2021 and 2023, but the road to make democracy alive in such a large group is still long.

## 5 Synthesis and conclusion

To sum up, we found that factors linked to external governance were likely to be triggers of democratic crises leading to diverse internal co-op governance issues. Mergers and restructurations can be essential drivers, as we found in 3 cases of 4. They exacerbate fears, bring up old oppositions or stories, and question collective action, co-op purpose and its future. It partially corresponds to our conceptual model proposed in part 2. This kind of reaction is addressed by researchers (Saïsset et al., 2017), but this impact on governance innovation has not been studied before to this extent. However, other aspects of external governance can ease internal governance, as happened with the close alliance between Cie X and Co-op D. They can be part of the solution when they support their co-op partners in case of important trouble, as professional unions or networks. This sheds light on the relevance of the vertical integration strategy, which has been analysed as a driver of co-op performance or member benefits (Zhong et al., 2018), but not in this way.

Concerning internal governance, it is frequently a source of innovation thanks to the changes of essential actors like the CEO or the chairperson, or even both. The role of this tandem is crucial and is pointed out by our study. It is confirmed by the existing literature that underlines the specific role of the duo CEO-chairperson in agricultural co-ops (Chaddad & Iliopoulos, 2013; Hakelius, 2018). Members can be drivers, but it is much more difficult for them because of their dispersion. That is why they sometimes join forces through new associations or "shadow cabinets" to oppose leaders and create a power balance (i.e. "All United" for Co-op B).
Furthermore, Table 16.1 goes beyond these general results by comparing gov-
ernance characteristics of each co-op before and after innovations, as well as the
effects of these innovations on democratic aspects. We can stress that formal
devices are used or removed, most of the time, to increase governance performance
and not to solve democratic issues. They are, of course, essential, but it is more dif-
ficult to innovate only with them. Wine Co-op B is revealing of this point, leading
to a kind of hierarchy characterized by a progressive democratic degeneration. This
is in line with Pastier (2024), who worked on the degeneration in food co-ops. On
the other hand, informal devices are more flexible and are indicative of creativity
in finding adapted solutions in co-op governance in relation to size, activities, and
co-op history. In this perspective, our exploratory study shows that medium- or
small-sized co-ops are prone to find simple innovations to improve democratic
governance. In addition, in the case of Co-op Group B, several innovative practices
are jointly implemented to reactivate territorial democracy. It is certainly a matter
of innovation path dependency, as for Co-op A, but in a stronger manner.

Finally, we can point out that two co-ops evolved in their transactional govern-
ance framework: Co-op A moved towards a more decentralized governance when
the leader duo changed, whereas Co-op B sloped towards hierarchical model,
according to its financial issues.

Our qualitative study is rich in information and in promising explanations of gov-
ernance evolution, so that it leads us to ask ourselves about the interactions between
ST, TCE and democratic governance to explain governance innovation. We also have
questions on the short-term and long-term effects of these innovations on agricul-
tural co-op democracy. So, these results open up prospects for future research in other
regions or countries, maybe with a broader sample. Indeed, it could be very interest-
ing to analyse democratic innovations in agricultural co-ops through different French
regions to explore the scope of the geographical and sociological diversity. A qualita-
tive comparison of co-ops from different European countries may also be relevant
to understanding the relative importance of contingency (namely legal framework)
and of more specific mechanisms. Finally, a quantitative approach could enable us to
verify the influence of mergers, external partnerships, member relationships and the
CEO-chairperson tandem on governance innovation from a democratic point of view.

Notes

1 International Cooperative Alliance: https://ica.coop/en/cooperatives/cooperative-identity.

2 Research project funded by ANR (French National Research Agency) about govern-
ance, innovation and sustainability in French wine co-ops. For more details, see https://
umr-moisa.cirad.fr/en/the-unit/research-projects/current-projects/anr-innogouv-project.

References

Andreani, T. (1994). Démocratie représentative, démocratie délégative, démocratie directe. In Bidet, J., (Ed.), *Les paradigmes de la démocratie* (pp. 181–199), Paris, Presses Universitaires de France.
Baregheh, A., Rowley, J., & Sambrook, S. (2009). Towards a multidisciplinary definition of innovation. *Management Decision, 47*(8), 1323–1339.

Baum, H. (2004). Leapfroggin R&D. *Harvard Business Review, 82*(10), 30–30.

Bijman, J., Iliopoulos, C., Poppe, K. J., Gijselinckx, C., Hagedorn, K., Hanish, M., Hendersikse, G.W.J, Kühl, R, Ollila, P, Pyykkönen, P, & van der Sangen, G. (2012). Support for Farmers’ Co-operatives. Final report

Bijman, J., Hanisch, M., & van der Sangen, G. (2014). Shifting control? The changes of internal governance in agricultural cooperatives in the EU. *Annals of Public and Cooperative Economics, 85*(4), 641–661.

Borgen, S. O., & Aarset, B. (2016). Participatory innovation: Lessons from breeding cooperatives. *Agricultural Systems, 145*, 99–105.

Cechin, A., Bijman, J., Pascucci, S., Zylbersztajn, D., & Omta, O. (2013). Drivers of proactive member participation in agricultural cooperatives: Evidence from Brazil. *Annals of Public and Cooperative Economics, 84*(4), 443–468.

Chaddad, F., & Iliopoulos, C. (2013). Control rights, governance, and the costs of ownership in agricultural cooperatives. *Agribusiness, 29*(1), 3–22.

Chollet, P., & Saïsset, L. A. (2023). La prise en compte des objectifs de développement durable par les banques coopératives: une étude de cas internationale. *Revue Française de Gouvernance d'Entreprise*, (28-29), 187-224.

Chomel, C., Declerck, F., Filippi, M., Frey, O., & Mauget, R. (2013). *Les coopératives agri-coles: identité, gouvernance et stratégies*. Bruxelles, Larcier.

Cornforth, C. (2004). The governance of cooperatives and mutual associations: A paradox perspective. *Annals of Public and Cooperative Economics, 75*(1), 11–32.

De Charrin, G. (1989). Les coopératives agricoles à l’heure du marché unique. *Revue Purpan n°151– et n°152*.

Desroche, H. (1976). *Le projet coopératif. Son utopie et sa pratique, ses appareils et ses réseaux, ses espérances et ses déconvenues*. Les éditions ouvrières, Paris.

Filatotchev, I., Aguilera, R. V., & Wright, M. (2020). From governance of innovation to innovations in governance. *Academy of Management Perspectives, 34*(2), 173–181.

Freeman, R. E. (1984). *Strategic management: A stakeholder approach*. Boston, Pitman.

Gallego-Bono, J. R., & Chaves-Avila, R. (2016). Innovation cooperative systems and structural change: An evolutionary analysis of Anecoop and Mondragon cases. *Journal of Business Research, 69*(11), 4907–4911.

Gomez, P.-Y. (2001). *La République des actionnaires. Le gouvernement des entreprises, entre démocratie et démagogie*. La Découverte et Syros, Paris.

Grandori, A. (2017). Democratic governance and the firm. *Revista de Administração (São Paulo)*, 52, 353–356.

Gwiriri, L. C., & Bennett, J. E. (2020). Balancing democracy with service delivery. *International Journal of the Commons, 14*(1), 123–138.

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.

Hamel, G. (2006). The why, what, and how of management innovation. *Harvard Business Review, 84*(2), 72–84.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. *Journal of Financial Economics, 3*(4), 305–360.

Kaswan, M. J. (2014). Developing democracy: Cooperatives and democratic theory. *International Journal of Urban Sustainable Development, 6*(2), 190–205.
Mauget, R. (2005). Les coopératives agroalimentaires face aux enjeux de la mondialisation: L'internationalisation des coopératives constitue-t-elle une solution? *Revue internationale de l'économie sociale*, (297), 42-59.

Mauget, R., & Declerck, F. (1996). Structures, strategies, and performance of EC agricultural cooperatives. *Agribusiness: An International Journal*, 12(3), 265-275.

Ménard, C. (2007). Cooperatives: Hierarchies or hybrids?. In *Vertical markets and cooperative hierarchies: The role of cooperatives in the agri-food industry* (pp. 1-18), Dordrecht, Springer.

Ménard, C. (2018). Organization and governance in the agrifood sector: How can we capture their variety? *Agribusiness*, 34(1), 142-160.

Nilsson, J. (1996). The nature of cooperative values and principles: Transaction cost theoretical explanations. *Annals of Public and Cooperative Economics*, 67(4), 633-653.

Nilsson, J. (2023). Social capital and governance of agricultural cooperatives. In Elliott, M. S, and Boland, M., A. (eds) *Handbook of research on cooperatives and mutual* (pp. 116-134). Cheltenham, Edward Elgar Publishing.

OECD. (2005). *Oslo Manual. Proposed guidelines for the collection and interpretation of innovation data*, 3rd edition.

OECD. (2018). *Oslo Manual. Measuring science, technology and innovation activities. Guidelines for collecting, reporting and using innovation data*, 4th edition.

O'Sullivan, M. (2000). The innovative enterprise and corporate governance. *Cambridge Journal of Economics*, 24(4), 393-416.

Palladino, L. (2022). Economic policies for innovative enterprises: Implementing multi-stakeholder corporate governance. *Review of Radical Political Economics*, 54(1), 5-25.

Pastier, K. (2024). Beyond democratic degeneration, horizontal and liberated organization? The agonistic approach of a Belgian food co-op. *Economic and Industrial Democracy*, 45(4), 1325-1349.

Pfeffer, J. (1991). Organization theory and structural perspectives on management. *Journal of Management*, 17(4), 789-803.

Poutanen, P., Soliman, W., & Ståhle, P. (2016). The complexity of innovation: An assessment and review of the complexity perspective. *European Journal of Innovation Management*, 19(2), 189-213.

Pozzabon, D. M., Zylbersztajn, D., & Bijman, J. (2012). How can cooperatives reduce democratic costs without incurring excessive agency costs?. *Journal of Rural Cooperation*, 40(2), 119-144.

Read, A. (2000). Determinants of successful organisational innovation: A review of current research. *Journal of Management Practice*, 3(1), 95-119.

Saïsset, L.-A. (2014). *Gouvernance, investissements immatériels et performance des entreprises coopératives agricoles : le cas des coopératives vinicoles du Languedoc-Roussillon*. Thèse de doctorat en Sciences de Gestion, Montpellier SupAgro, Directeur de thèse: Professeur J.-P. Couderc.

Saïsset, L.-A. (2020). Governance and performance of wine cooperatives: The case of Languedoc-Roussillon. In F. Cheriet, C. Maurel, P. Amadieu & H. Hannin (Eds.), *Wine management and marketing: Opportunities for companies and challenges for the industry* (pp. 161-182). London, Wiley-ISTE.

Saïsset, L.-A. (2016). La gouvernance des entreprises coopératives agricoles: fondements et mutations profondes. In P. Lubello, A. Falque & L. Temri (Eds.), *Systèmes agroalimentaires en transition* (pp. 35-50). Ed. Quae, Versailles (FRA).
Saïsset, L. A., Cheriet, F., & Couderc, J. P. (2017). Cognitive and partnership dimensions in merger processes in agricultural cooperatives: The case of winery cooperatives in Languedoc-Roussillon. *International Journal of Entrepreneurship and Small Business*, 32(1–2), 181–207.

Tosi, H. L. (2009). *Theories of organization*. Cheltenham, Sage.

Turnbull, S. (1995). Case study: Innovations in corporate governance: The Mondragón experience. *Corporate Governance: An International Review*, 3(3), 167–180.

Turnbull, S. (1997). Stakeholder cooperation. *Journal of Cooperative Studies*, 29(3), 18–52.

Valentinov, V., & Iliopoulos, C. (2024). The idea of adaptation in transaction cost economics: An application to stakeholder theory. *Society and Business Review*, 19(3), 473–495.

Williamson, O. E. (1996). *The mechanisms of governance*. Oxford University Press, New York.

Williamson, O. E. (1985). *Firms, markets, relational contracting. The economic institutions of capitalism*. The Free Press, New-York.

Yin, R. K. (2018). *Case study research and application: Design and methods*, 6th edition, Los Angeles, Sage.

Zhong, Z., Zhang, C., Jia, F., & Bijman, J. (2018). Vertical coordination and cooperative member benefits: Case studies of four dairy farmers’ cooperatives in China. *Journal of Cleaner Production*, 172, 2266–2277.