The impact of cooperatives' risk aversion and equity capital constraints on their inter-firm consolidation and collaboration strategies-with an empirical study of the European dairy industry

This article concludes that cooperative firms' choice of interfirm consolidation and collaboration strategies can be explained by two attributes, inherent in the cooperative business form, namely, risk aversion and equity capital constraints. Empirical data originate from the 15 largest EU dairy firms during a 5-year period (1998-2002). In total 198 activities are identified. They are classified into six categories: (a) mergers, (b) acquisitions, (c) strategic share holdings, (d) joint ventures, (e) licensing, and (f) general collaboration agreements. It is shown that cooperative firms prefer mergers, collaboration agreements, joint ventures, and licensing. All of these are relatively low in terms of both performance risks and relational risks, and they demand limited amounts of equity capital. Investor-owned firms focus on take-over strategies-acquisitions and share holdings. Other indicators of risk aversion are that cooperatives tend to collaborate with other cooperatives and that they prefer partners in their own home market. [EconLit: Q130; P130; L200.] (c) 2007 Wiley Periodicals, Inc.