3.1. Importance of Social Capital for the Setting-Up and Functioning of POs
Social capital is an extremely popular, though not very specific and clearly operationalized, concept enabling research into social conditions favorable to better economic performance at different levels, including the state [23
], local community [24
], organization [25
], or individual [26
] levels. The works of Bourdieu [27
], Coleman [28
], Putnam [29
], and Fukuyama [31
] provide the primary inspiration for the concept of social capital. In this study, we are primarily interested in a micro perspective, therefore it is worthwhile to evoke here the definition of social capital offered by Bourdieu. It treats social capital as resources that accrue to an individual or a group by virtue of possessing a durable network of relationships of mutual acquaintance and recognition. Thus, this definition allows us to look at social capital both from the perspective of an individual (a farmer who decides to join a producer organization) and the organization (a producer organization).
Dividing the concept of social capital into two distinct aspects—bonding and bridging social capital—is popular in the literature. The former refers to fostering solidarity within the community or organization/group. In doing so, it develops trust and reciprocity of norms and simultaneously helps create mechanisms safeguarding against opportunistic behavior in breach of the rules applicable to the group. It also deepens members’ involvement in attaining collective goals and facilitates knowledge sharing [28
]. However, it is worth emphasizing that, in addition to the above-mentioned benefits, this type of social capital may generate considerable costs, causing the group’s closure to the outside world and making its development and the introduction of indispensable adaptation-related changes difficult [35
The bridging type of social capital enables the establishment of contacts outside the organization/group. It is thus responsible for enhancing the group’s adaptation possibilities, enables the maintenance of openness to diverse perspectives, and increases access to information and innovation [36
]. However, this type of social capital may distract people from attaining the group’s objectives [33
], while weak relationships may not be sufficient to build up trust and, consequently, to acquire new knowledge [38
Moreover, one may observe that an animated discussion in which these two types of social capital are compared takes place in the literature. For instance, Putnam’s [30
] position is that social bonding capital is a second-class capital relative to social bridging capital. Svendsen and Svendsen [39
], in turn, argue that it is connected with the corrosion of social capital, whereas Fukuyama associates it with “amoral familism” [31
]. It may be also assumed that the impact of social capital at the individual level is, to a considerable extent, conditioned by social capital resources at the community level. On the one hand, social capital resources at these two levels may reinforce each other, implying a positive correlation between them. On the other hand, strong social capital at the community level may weaken the motivation of individuals to form an association, by serving as a kind of producer group substitute.
Numerous studies show that the level of social capital in Poland is low, not only in rural areas but also all across the country. In studies concerning rural areas, various scholars have emphasized that rural inhabitants are characterized by a relatively low level of trust in people, including local residents [40
]. The weak status of civil society, which, if it exists at all, has a familial-egoistic nature, is likely a contributing factor to this [40
]. Furthermore, it is generally claimed, especially in the context we are interested in, that this type of social capital is determined by historical factors—more precisely, the negative legacy of communism [4
]. This refers to a possible low level of activity of citizens used to receiving support from the state, or unwillingness to establish cooperation due to bad experiences with enforced collectivization or a degenerated form of cooperatives [17
]. However, across the Central and Eastern Europe (CEE) countries, regarding the ideological pressure of being developed under communism, only in Poland did mass-collectivization fail and family farms survive until the transition [48
Furthermore, we need to emphasize the fact that cooperation, instead of being a grassroots initiative, was imposed from above. This brought about not only unwillingness to cooperate, but also degenerated forms of social capital leading to amoral familism, nepotism, or corruption. This problem is also reflected in the studies demonstrating that barriers to the development of cooperative behavior are created due to the lack of a tradition of grassroots initiatives organizing themselves into formal structures, learned passivity, and a low level of trust in the “external world”, as well as national and local authorities, among rural inhabitants [49
3.2. Systems Approach to Dynamic Complexity
As we mentioned in the previous section, the consequences of a legacy of communism in Poland is a low stock of social capital and the relative dominance of bonding capital over bridging capital. These effects are even more visible in rural areas, particularly among farmers. Consequently, an important barrier to developing the collective action of farmers and the creation of POs exists. In order to overcome this barrier, support measures aimed at the establishment of APGs have been introduced under agricultural policies (within a Rural Development Program co-financed from the national and European Union budget). The results of this support were quite promising, as measured by the number of POs established. However, the recent soaring dynamic of the growth of the number of APGs (from 8 POs in 2001 to 1391 in 2013) has started to break-down, and the number of existing POs has declined (1324 in 2015). This phenomenon is part of the rule described by Senge: “when the same action has dramatically different effects in the short run and the long, there is dynamic complexity” ([50
], p. 71).
Under the conditions of dynamic complexity, “linear” reasoning and conventional methods are not well equipped to deal with the problem ([50
], pp. 70–71). Therefore, system thinking turns out to be a more effective way of dealing with such issues, whereby the focus is on the whole rather than on its elements—in search of the interrelations in their dynamics rather than a static picture. In short, system thinking aims to identify structures that underlie complex dynamic situations ([50
], pp. 68–69). As Senge observed, “one of the most important and potentially most empowering, insights to come from (…) system thinking is that certain patterns of structure recur again and again” ([50
], p. 93). Those patterns are called “archetypes”. Therefore, to illustrate barriers restricting the development of collective action of farmers and the creation of APGs, the archetypical feedback loop diagram seems to be useful.
The previously mentioned barriers are well depicted by the “limits to growth archetype” (Figure 1
). The main mechanism of this generic structure is the interrelation between two feedback processes: the reinforcing process and the balancing process. The reinforcing process (we denote it as R) means that the growth of A leads to the growth of B, and the growth of B leads to the growth of A. Thus, starting this loop is a way of amplifying growth. The balancing process (we denote it as B) is the dynamic which aims to stabilize the outcome nearly around the goal (the explicit or implicit target). Thus, starting this loop achieves stabilization by directing a too low or too high level to the target level. Typically, the amplifying process produces the spiral of success. This process feeds on itself, resulting in accelerating growth. Then, the growth begins to slow down and eventually stops. This is due to the balancing process being approached as a limiting condition ([50
], p. 79, pp. 94–103, 390–391).
Cooperation among farmers is explained by the economies of scale and the effort of minimizing transaction costs [5
]. If one or both of these purposes is met, collective action benefits farmers. Achieving economies of scale is ceteris paribus (at a given amount of the individual farm contribution), dependent on the number of group members. Similarly, the larger size of the group arising from the greater number of members also contributes to the reduction of transaction costs due to the decreasing number of market transactions required and/or limited opportunism. A group of farmers could act as a single contractor on behalf of its members, lowering the number of transactions needed, and their costs [52
]. The costs connected with a loss of reputation are higher if the group acting as a trading partner is bigger [53
]. Consequently, the larger the group is (in terms of the membership), the easier and more sustainable the benefits achieved by its members are. Such benefits lead to higher attractiveness of the group, which, in turn, increases the likelihood of new members joining, thus reinforcing the amplifying loop. However, there can be a delay (denoted by an hourglass) in the reinforcing spiral. A larger membership allows an increment of both productive capital and stock of reputation, which produces benefits from collective action, yet it takes some time before this influence can be realized (Figure 1
As shown in Figure 1
, the size of the group influences (with some delay) the benefits for its members. This dependency can be expressed by the production function ([54
], p. 243). In this case, the production function relates to the size of the membership versus the group’s outcomes. As presented in Figure 2
, this relationship could take many forms, such as linear, general third order (S-shaped curve), or the step function ([54
], p. 245). Different shapes of this function can create different dynamics in otherwise similar contexts and, therefore, can lead to different outcomes ([55
], p. 523).
However, in limits to the growth archetype, the amplifying spiral is concatenated with a balancing loop. After approaching some level of growth, the reinforcing process slows down (or may even reverse itself and decline) by starting (by exceeding the limit condition) the stabilizing loop. Thus, in this case, the S-curve seems to be a more accurate illustration of the relevant dynamics (compare Reference [50
], p. 98).
In Figure 1
, the size of the group is related to the difficulty of coordination. Difficulties can arise both ex ante (at the forming of the group stage) and ex post (the activity of the group stage). The issue of the influence of group size on its functioning can be considered from several different points of view. In particular, this problem has been viewed as part of the sociological theory of social life forms, within the framework of group theory and management theory.
A German sociologist, Simmel, was one of the first researchers to investigate the relationship between the number of group members and the performance of the group. Looking at the group as a whole, he found that it “betrays certain qualities only below or above a definite extent” ([56
], pp. 192–193). Next, he analyzed a few historical legal recommendations related to the minimum or maximum number of members in different associations. These recommendations were established so that only above a minimum number was required or only below a maximum number was permitted, in order that the group may perform certain functions or may be held liable for certain obligations. “The special qualities which associations develop on the ground of their membership (…) would, to be sure, always be the same, attached to the same number, if there were no psychological differences between men” ([56
], p. 193). However, regarding the inevitable differences between individuals, it is difficult to establish exact numbers. Nevertheless, most of the prescriptions cited by Simmel oscillate between five and eight (we will call this Simmel’s first threshold) members, or fluctuate around 20 associates (we will call this Simmel’s second threshold) ([56
], pp. 194–195). Contemporary sociologists also emphasize the significance of the number of about 20 people for the functioning of the group ([57
], p. 201). Above this limit, intimacy and direct contact disappear, while contact mediation and formalism appear ([58
], p. 201).
A second insight into the issue of group size is offered by the theory of collective action. Olson claims that “unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational self-interested individuals will not act to achieve their common or group interests” ([59
], p. 2). Individual interests can be advanced by personal action. Collective action is expected to further the common interests of the agents who organized it. However, as the number of agents involved becomes larger, no one will notice when any one individual starts to have a free ride. Olson argues that due to the fact that the group creates collective good (for example, if any agent Xi
in the group of X1
, … Xi
, … Xn
uses or consumes this good, it cannot be inhibited by the others in that group), those who do not pay for it cannot be excluded from its consumption ([59
], pp. 14–15).
denotes the group’s gain and Vi
denotes the gain to the individual, the fraction (Fi
) of the group gain would then be equal to Vi
. According to Olson’s reasoning, collective good will be achieved if Fi
, where C denotes the total cost. Thus, Vi
has to be bigger than C ([59
], pp. 23–24). In other words, if there is some quantity of a collective good that can be gained at a cost that is sufficiently low in relation to the benefit that a member of the group would gain from providing that good all by himself, then there is a presumption that the collective good will be provided. For example, if there are five members in the group and we assume their equal share in the gain, the total cost of organizing the collective action for gaining from the collective good could not exceed 20% of the total gain from such an action. If the group consists of 20 members, a similar ratio could not go beyond 5%. This is the key point of Olson’s claim: that only small organizations of collective action are able to supply collective good without other requirements.
Such a pessimistic view of collective action offered by Olson has been argued against by Ostrom [54
] in three ways. Firstly, she pointed that Olson’s category of collective good is too broad. He based his reasoning on the Musgrave [60
] distinction between goods—whether or not some agent can be excluded from benefiting once the good is supplied. However, such a distinction does not differentiate common-pool resources (CPR) from public goods (PG). To do this, one could use the second attribute of goods, namely, jointness of consumption. The issue here is whether or not the individual consumption of any agent leads to the subtraction from any others individual’s consumption of the relevant good. True public goods are those which are both not excludable and not competitive in consumption. CPR are those for which exclusion is not feasible, but of which consumption subtracts from the total consumption available to others. In consequence, as Ostrom argues, Olson’s claims about collective action are more appropriate for a subset of collective action problems, rather than for the whole set of such issues ([54
], pp. 240–241). Additionally, Oliver et al. [55
] presented some critique of the generality of Olson’s conjectures, which conceal some differences between collective actions. The extended empirical study conducted by Ostrom in her seminal book [61
] showed that there are possible successful collective actions concerning CPR which are not very small as measured by the number of participants. Ostrom ([54
], pp. 243–245) also argued that one should take into account the production function of producing collective goods (see Figure 2
and the discussion above). The success of collective action depends, among other factors, on the particular shape of that function ([54
], pp. 243–245). Thirdly, Ostrom considered the problem of the allocation function, which assigns participants of collective action a share of gains and costs. There are possibly different allocation formulas (Olson used only one of them), which vary in the degree to which they are supportive of collective action ([54
], pp. 247–248). Regardless of Ostrom’s critique of Olson radicalism, there is still the issue of the size of the group and its influence on collective performance.
The third point of view is offered by management theory. One of the precursors of this theory, Barnard, defined the upper boundary of a basic organization as 15–20 persons [62
]. The issue of group size was then developed in the literature on teams in management theory. The size of the group affects its cohesiveness; that is, as the number of members increases, the cohesiveness of the group decreases [62
]. Empirical studies have found that the performance and productivity of employee teams were the highest close to the Simmel’s first threshold of about five members ([63
], p. 696). Small teams of employees show relatively more agreement among members, more personal contact, tend to be less formal, and make fewer demands on team leaders. On the other hand, bigger teams show more differences and disagreements among members, which leads to more demands on leaders. In such teams, subgroups are formed and conflicts occur more often, and communication becomes more difficult. Moreover, as groups increase in size, so does the tendency to engage in free riding ([63
], p. 696).
The dominant factor supporting the establishment of POs in Poland is strong family or acquaintance relations [53
]. Fałkowski et al. [64
] stressed that the reliance on personal relations may not be the first choice of means; however, in light of the stock and structure of social capital inherited from the communist dictatorship, this could be the only way not to act on one’s own. They also formulated an opinion that, if PO start-ups succeed, the farmers will learn by themselves that collective action can make them better off. Thus, this will lead to the evolution of social norms over time, and allow for family and acquaintance relationships to be replaced by a more impersonal relationship-based form of cooperation. Such an opinion may be too optimistic, however. The implicit assumption behind this idea is the proportional increase in the benefits from collective action (see Figure 2
a). If, however, the true relationships between membership and gains from cooperation are better modelled by functions like functions depicted in Figure 2
b–d, such an optimistic scenario may not be realistic. The insufficient stock and mix of components of social capital could act as the limiting factor, triggering the balancing loop which, in turn, blocks the amplifying process of the reinforcing loop (Figure 1
). Therefore, it is probable that even if many small POs are established, a lot of them would not achieve enough benefits to promote continued participation in collective action. Thus, farmers cannot learn by themselves that cooperation can make them better off and, therefore, the evolution of social norms over time will not be started.