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INFORMATION TO USERS This manuscript has been reproduced from the microShn master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in ^pewriter face, while others may be from any type of conq)uter printer. Hie quality of this reproduction is dependent upon the qualiQr of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margin»;, and ingroper alignment can adverse^ affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand comer and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the back of the book. Photographs included in the original manuscript have beer reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for aiy photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. UMI A Bell & Howell Information Company 300 North Zeeb Road. Ann Arbor. Ml 48106-1346 USA 313/761-4700 800/521-0600 BUSINESS BEHAVIOR AS A FUNCTION OF BUSINESS STRUCTURE: A TRANSACTION THEORY OF COOPERATIVE FIRMS DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Peter Daniel Goldsmith, B.A., B.S., M.B.A., M.A. ***** The Ohio State University 1995 Dissertation Committee: Approved by T.L. Sporleder D.E. Hahn Advisor D.S. Reitman Department of Agricultural Economics ÜMI Number; 9533976 DMI Microform 9533976 Copyright 1995, by DMI Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. UMI 300 North Zeeb Road Ann Arbor, MI 48103 To Wild I ACKNOWLEDGEMENTS A project such as this covers several years and touches many people. The staff and faculty of The Ohio State University not only provided a tremendous resource on which to draw but were so accessible and giving. I would first like to thank the members of my committee, Drs. Sporleder, Hahn and Reitman. I am indebted to Dr. Sporleder who five years ago offered me a research appointment though I was directly out of industry and had a non-traditional academic background for an agricultural economist. His guidance and lucid foresight provided the framework for success. I am grateful to Dr. Hahn for his unending support and kindness which made an arduous task much more pleasant and human. I am indebted to Dr. Reitman of the Economics Department. Whether in the classroom or as a committee member, he always maintained an "open door" and offered astute analysis in support of my research. There are several other faculty members who contributed valuable backing throughout the process of this research. Dr. William Greene of New York University, not only as the author of the econometrics software utilized in this study, but too as an informal consultant, made himself available to answer software and econometrics- related questions that arose in my work. Thanks to electronic mail and his thoughtfulness, the task of empirical modeling proceeded smoothly. Dr. Cosslett of Ohio State’s Economics Department, though not a committee member, unselfishly was iii always available in support of my work. He exemplified the altruism of academic life transferring some of the econometric tradition and knowledge of his Ph.D. advisor, Daniel McFadden, to me, a member of the next generation of economists. He set a fine example of academic generosity. I would like to thank the faculty members of the Department of Agricultural Economics at The Ohio State University, especially Drs. Sheldon, Zulauf, Schnitkey and Miranda. They always maintained an interest, a kind word, and especially helpful consultation on various aspects of my research. I need to give special thanks to my editor, Pam Brown, graduate studies secretary, Judy Petticord, and departmental researcher, Maurice Klein, who helped me wind my way through the maze of not only a Ph.D. dissertation but administrative issues of a doctoral program. Two dear friends who started and will end this program together with me, Michael Thomas and Damitha Dezoysa, made the job of a Ph.D. program not only survivable but so memorable. These friendships I will cherish and carry with me throughout the subsequent phases of my life. Finally, there of course is the support of my family, without whom I would not have been able to continue to rebound in order to face each additional level of challenge my doctoral studies and research offered. My parents contributed in so many ways of which they are unaware. 1 cannot begin to thank my wife, to whom I dedicate this research, for her patience. She will now realize that marriage and graduate student life are not synonymous. There is life after graduate school. IV VITA August 16, 1959 ....................................... Born - Stamford, Connecticut 1981 ............................................................... B.A, Kenyon College, Ganbier, Ohio 1981 ............................................................... Herdsman, Kildal Avloserring, Nordreisa, Norway 1982-1984 .................................................. Herdsman, Bendmead Farms, Hilliard, Ohio 1983 ............................................................... B.S., The Ohio State University, Columbus, Ohio 1984-1986 .................................................. Cattle Extensionist, Peace Corps, Ecuador, South America 1986-1988 .................................................. Dairy Records Specialist, Dairy Herd Improvement Cooperative, Powell, Ohio 1988-1990 .................................................. Assistant General Manager, Dairy Herd Improvement Cooperative, Powell, Ohio 1990 ............................................................... M.B.A., Xavier University, Cincinnati, Ohio 1990-1994 .................................................. Graduate Assistant, The Ohio State University, Columbus, Ohio 1993 ............................................................... M.A., The Ohio State University, Columbus, Ohio 1994-Present ................................................ Assistant Professor, Agricultural Economics, McGill University, Quebec, Canada PUBLICATIONS Hoblet, K.H., M.L. Eastridge, C.S. Hayhow, P.D. Goldsmith, J.R. Staubus. "Use of Dairy Herd Improvement Monthly Summary Data to Monitor Intervention Strategies in a Dairy Herd Experiencing Sub Optimal Reproductive Performance and Reduced Milk Production." Journal o f the American Veterinary Medical Association, March 15, 1991, Vol. 198(6), p. 1028-1034. FIELDS OF STUDY Major Field: Agricultural Economics Studies in Business Management, Dr. Thomas Sporleder VI TABLE OF CONTENTS DEDICATION .....................................................................................................................ii ACKNOWLEDGEMENTS ............................................................................................ iii VITA ...................................................................................................................................... V LIST OF TABLES ...........................................................................................................xii LIST OF FIG U RES..........................................................................................................xiii CHAPTER PAGE I. INTRODUCTION ................................................................................................... 1 Introduction and Background .........................................................................1 Behavioral Constructs .....................................................................................4 Empirical Aspects ............................................................................................ 4 Cooperative Enterprises in the Economy ....................................................... 5 Theoretical Constraints .....................................................................................8 Non-Stationarity ....................................................................................... 8 Dynamics ............................................................................................... 10 Conditionality ....................................................................................... 10 Member Objective Function ............................................................... 11 Methodology and Structure ........................................................................ 12 Transaction Theory ............................................................................. 12 Dissertation Organization ................................................................... 13 II. UNDERSTANDING THE COOPERATIVE’S PROBLEM.......................... 16 Introduction .................................................................................................... 16 Cooperative Existence ................................................................................ 17 Section 1; Neoclassical M odel ................................................................... 18 Introduction