Structure, organization and a vision: Reasons for the success of wine cooperatives?

Free University of Bozen-Bolzano, Faculty of Economics and Management, 39100 Bozen-Bolzano, Italy

Abstract

Several studies have found that wine cooperatives struggle to produce high quality grapes allowing them to produce better quality wines and to receive higher retail prices. In contrast, cooperatives in South Tyrol perform well and receive price premiums for wine quality relative to privately-owned local competitors. We identify the structural, organizational and social factors (i.e., elements of social capital) that may contribute to the economic success of a cooperative enterprise, surveying individual members of 13 wine cooperatives in South Tyrol. Relative payment per kg of grapes (pay-out) delivered measures the economic success of member growers. We propose that “the strength of common vision among cooperative members” is an important element identifying the “working social capital” of cooperatives and examine whether it depends on specific social and organizational variables such as commitment, trust or the strengths of personal relationships, participation in training activities and/or the presence of specific grape quality assessment criteria. Moreover, we examine if the pay-out or economic success of cooperative members can be explained by a set of structural variables and working social capital. We estimate two regression models to explain both the working social capital (i.e., strength of a common vision among cooperative members), and pay-out or economic success that cooperative members receive for delivering grapes. Results indicate that specific social factors such as member commitment, trust, personal member-winemaker relations and gender as well as organizational factors (e.g., training activities, quality assessment criteria) help to explain working social capital while physical production capital (farm size), working social capital (common vision) and indicators of human capital (involvement, vineyard consulting) are important factors to explain the economic success of cooperative members.