Large-and-strong or Small-and-beautiful? Exploring the Relationship Between Organization Size and Performance of Farmer Cooperatives Qiao Liang China Academy for Rural Development, School of Public Affairs, Zhejiang University, China Email:
[email protected] Rongrong Bai China Academy for Rural Development, School of Public Affairs, Zhejiang University, China Email:
[email protected] Selected Paper prepared for presentation at the 2021 Agricultural & Applied Economics Association Annual Meeting, Austin, TX, August 1 – August 3 Copyright 2021 by Qiao Liang and Rongrong Bai. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Large-and-strong or Small-and-beautiful? Exploring the Relationship Between Organization Size and Performance of Farmer Cooperatives Abstract: This paper explores the relationship between the size and performance of cooperatives. Panel data containing the census of farmer cooperatives from 2014 to 2019 are applied in the empirical analyses. The membership size, as well as its evolution, of cooperatives is mapped. Then a dynamic panel data model is constructed to study the impact of membership size on the performance of cooperatives which is indicated by profit per member. The results show that the effects of membership size on profit per member displays an inverted “U” shape. And the optimal membership size is 19 members, which is “Small and Beautiful”. The effects are heterogeneous across ages, subsidies and geographical regions. The robustness of these results is confirmed by both alternative key explanatory variable indicators and estimation methods. Key Words: Farmer cooperative; organization size; performance; dynamic panel data model; SYS-GMM 1 Introduction Among all of the organizations in the agricultural sectors, farmer cooperatives have a dominant position in many countries.