Why Do Agricultural Cooperative Mergers Not Cross the Finishing Line?
Abstract
:1. Introduction
1.1. Objectives and Structure
1.2. Theoretical Framework
- (A)
- Quantitative or hard factor analysis. These are largely anchored in the analysis of tangible and therefore measurable factors such as economic and financial aspects [24,25,26,27]. Briefly, since they are not the subject of this paper, the most recurrent factors examined include (1) the initial size of the participating undertakings [25] and the difference in size between the merging firms [9,28] and the impact of size on merger outcomes; (2) pre-merger economic and financial situation [29,30]; (3) financial health of the acquired firm and how the deal was financed [31,32]; and (4) restructuring and adjustments made in merger processes [33,34].
- (B)
1.2.1. Common Qualitative Factors (Not Specific to Cooperatives) Which Have a Major Influence on the Success of a Merger
1.2.2. Specific Factors Influencing the Outcome of a Merger of Cooperatives
2. Materials and Methods
2.1. Study Population
- (a)
- During the initial analysis or assessment stage, the boards of directors or negotiating teams decided not to press ahead with the negotiation and did not submit it to the members for approval at the General Meeting.
- (b)
- The merger plan was submitted to the General Meetings for approval and was turned down by the members.
2.2. Sample Selection
2.3. Survey
2.4. Conducting the Questionnaire
3. Results and Discussion
3.1. Descriptive Analysis of the Results
3.2. Principal Component Analysis
3.3. Discriminant Analysis
4. Conclusions
5. Study Limitations
Supplementary Materials
Author Contributions
Funding
Informed Consent Statement
Acknowledgments
Conflicts of Interest
References
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Common Qualitative Factors | |
---|---|
Stakeholder management | BenDaniel and Rosenbloom, 1998; Child et al., 2001. |
Commitment to the process/resistance to change | Child et al., 2001; Cho et al., 2017; Gomes et al., 2017. |
Communication | BenDaniel and Rosenbloom, 1998; Denisi and Shin, 2005, in Stahl and Mendenhall, 2005; Daber, 2013; Davenport and Barrow, 2017. |
Existence of a merger team | BenDaniel and Rosenbloom, 1998; Rodríguez-Sánchez et al., 2019. |
Previous experience | Schuler and Jackson, 2001; Hopkins, 2008; Cuypers et al., 2017. |
Leadership ability | Teerikangas, Véry and Pisano 2011; Daber, 2013; Rodríguez-Sánchez et al., 2019. |
Merger speed | Budden et al., 2002; Stahl and Mendenhall, 2005; Oh and Johnston, 2020. |
Cultural factors | Buono et al., 1985; BenDanieland Rosenbloom, 1998; Budden et al., 2002; Cartwright and McCarthy, 2005; Sarala et al., 2019. |
Qualitative factors specific to cooperatives | |
Human relations | Swanson, 1985; Reynolds, 1997; Senise, 2007; Saisset et al., 2017. |
Local level characteristics and actors | Giagnocavo and Vargas-Vasserot, 2012 |
Confidence Interval | 94% |
Margin of error for a sample proportion | 6% |
Population | 104 (finite) |
Sample size | 44 |
Fieldwork | 29/01/2015 to 01/03/2016 |
Type of interview | Electronic survey via email |
Scope of action | National (Spain) |
Type | |
First tier | 95% |
Federated cooperative | 5% |
Main activity | |
Olive oil and olives | 39% |
Wine | 14% |
Fruit and vegetables | 19% |
Sheep and goats | 7% |
Supplies | 5% |
Other or a combination of the above | 16% |
Number of Cooperatives Involved in the Merger Process | % of the Sample |
---|---|
Two | 75% |
More than two | 25% |
Were the cooperatives in the same sector? | |
Yes | 93% |
No | 7% |
Had there been any previous relationship between the organisations prior to the merger process? | |
Yes | 68% |
No | 32% |
The cooperatives involved in the merger were located in the same municipality | |
In the same municipality | 43% |
In neighbouring or nearby municipalities | 39% |
In different and not so close municipalities, albeit in the same province | 11% |
In different provinces, albeit in the same autonomous region | 5% |
In different autonomous regions | 2% |
Type of integration envisaged | |
Merger by setting up a new company | 45% |
Merger by acquisition | 55% |
Stage of the process in which the merger was halted | |
Initial analysis or assessment | 27% |
Negotiation (not approved by boards of directors) | 25% |
Approval by the General Meeting | 48% |
Mean | Median | SD | % of Respondents Rating 4 or 5 | |
---|---|---|---|---|
Lack of members’ commitment to and motivation for the merger | 3.32 | 3 | 1.46 | 46% |
Entirely due to localism | 3.22 | 3 | 1.65 | 51% |
Failure of communication and information management for members, managing directors and employees | 3.21 | 3 | 1.39 | 44% |
On the board of directors | ||||
Lack of support for and confidence in the merger process | 3.09 | 3 | 1.52 | 45% |
Lack of commitment to and motivation for the merger | 3 | 3 | 1.53 | 42% |
Differences between corporate cultures (ways of interacting with members, working methods, etc.) | 2.88 | 3 | 1.53 | 37% |
The chair’s lack of commitment to and motivation for the merger | 2,84 | 2 | 1,63 | 37% |
Members’ fear of restructuring or relocation of assets | 2.84 | 3 | 1.58 | 40% |
Lack of leadership from chairs and directors to deal with the process | 2.81 | 3 | 1.38 | 30% |
Employees’ lack of commitment to and motivation for the merger | 2.76 | 3 | 1.36 | 28% |
Lack of confidence in the viability of the common business project of the resulting cooperative | 2.7 | 2 | 1.61 | 37% |
Members putting personal interests before the cooperative’s | 2.67 | 2 | 1.43 | 30% |
Disagreement on the equity valuation | 2.6 | 2 | 1.68 | 35% |
Lack of chairs’ and directors’ previous experience in dealing with the process | 2.55 | 3 | 1.39 | 25% |
The board putting personal interests before the cooperative’s | 2.52 | 2.5 | 1.42 | 34% |
Lack of managerial leadership in dealing with the process | 2.51 | 3 | 1.35 | 26% |
Disagreement on the layout of the new workforce organisation chart | 2.45 | 2 | 1.45 | 24% |
Lack of training of chairs and directors to cope with the process | 2.44 | 2 | 1.37 | 21% |
The chair putting personal interests before the cooperative’s | 2.41 | 2 | 1.54 | 32% |
Dissatisfaction with the makeup of the new board or its election system | 2,41 | 2 | 1.37 | 23% |
Staff or members’ fear of workforce restructuring | 2.40 | 2 | 1.4 | 24% |
Managing director’s lack of commitment to and motivation for the merger | 2.38 | 2 | 1.36 | 19% |
Member reluctance due to potential reduction in their payments after the merger | 2.34 | 1 | 1.61 | 27% |
Poor planning in process delivery | 2.33 | 2 | 1.34 | 18% |
Problems arising from slow decision-making in moving the process forward | 2.33 | 2 | 1.39 | 21% |
Employees putting personal interests before the cooperative’s | 2.28 | 2 | 1.14 | 12% |
Underestimation of the costs of the merger process | 2.25 | 1 | 1.59 | 30% |
Lack of managing director’s prior experience in dealing with the process | 2.23 | 2 | 1.19 | 16% |
Lack of support from government and/or financial institutions | 2.16 | 2 | 1.45 | 21% |
Member reluctance to make extra cash contributions to the merger so as to offset equity imbalances | 2.09 | 1 | 1.43 | 20% |
Dissatisfaction with the type of merger chosen | 2.02 | 1 | 1.24 | 14% |
Members’ fear of losing services provided by the cooperative | 2.02 | 1 | 1.32 | 21% |
Lack of managerial training to cope with the process | 2.02 | 2 | 1.16 | 10% |
Lack of previous experience in mergers | 2 | 2 | 1.44 | 24% |
Managing director putting personal interests before the cooperative’s | 1.98 | 1.5 | 1.22 | 15% |
Lack of pre-merger relations with the other cooperative | 1.93 | 1 | 1.28 | 11% |
Expected staff cost overruns due to the need to standardise salaries | 1.84 | 1 | 1.15 | 11% |
Please State in your View and in Order of Importance the Three Main Reasons for the Failure of the Merger out of the Following | % of Total Respondents |
---|---|
Reluctance of the members, entirely due to localism | 15% |
Lack of support and confidence in the merger process from the boards of directors | 12% |
Lack of confidence in the viability of the common business plan of the resulting cooperative | 11% |
After the failure of the merger, is there any kind of business activity between the cooperatives involved? | |
Yes | 82.5% |
No | 17.5% |
Do you think that your cooperative would be in a better business position if the merger had been completed? | |
Yes | 82.5% |
No | 17.5% |
Have you started or considered other merger processes with other cooperatives? | |
Yes | 53% |
No | 47% |
Variables: Reasons Why the Merger Did Not Succeed | Identified Factors | ||||
---|---|---|---|---|---|
F1 Team ability | F2 BD and managing director involvement | F3 Communication; non-involvement/opportunism of employees and members | F4 Localism, organisation chart and fear of change | F5 Merger plan/contract | |
Lack of capacity of the managing director in terms of training | 0.751 | −0.059 | 0.198 | 0.042 | 0.034 |
Lack of capacity of the managing director in terms of experience | 0.893 | 0.001 | 0.208 | 0.181 | −0.062 |
Lack of capacity of the managing director in terms of leadership | 0.745 | 0.229 | 0.133 | 0.216 | −0.339 |
Lack of capacity of the board of directors in terms of training | 0.715 | 0.275 | −0.241 | 0.227 | 0.183 |
Lack of capacity of the board of directors in terms of experience | 0.779 | 0.241 | −0.212 | 0.115 | 0.286 |
Lack of capacity of the board of directors in terms of leadership | 0.764 | 0.389 | −0.353 | −0.060 | 0.040 |
Lack of support from the board of directors | 0.192 | 0.624 | −0.098 | −0.335 | −0.106 |
Lack of commitment and motivation of the board of directors | 0.170 | 0.809 | −0.064 | −0.153 | 0.189 |
Lack of commitment and motivation of the chair | −0.046 | 0.705 | −0.171 | −0.135 | 0.334 |
Lack of commitment and motivation of the managing director | −0.150 | 0.768 | −0.139 | 0.165 | 0.333 |
Chair putting personal interests first | 0.173 | 0.570 | 0.043 | −0.105 | 0.058 |
Managing director putting personal interests first | 0.069 | 0.797 | 0.161 | 0.308 | −0.067 |
Board of directors putting personal interests first | 0.427 | 0.701 | 0.157 | −0.111 | −0.097 |
Failures in communication and information management | 0.036 | −0.250 | 0.464 | 0.380 | −0.305 |
Lack of confidence in the business plan | 0.046 | −0.171 | −0.532 | 0.234 | 0.323 |
Fear of workforce restructuring | −0.020 | 0.070 | 0.570 | 0.347 | 0.346 |
Members’ lack of commitment | −0.037 | −0.115 | 0.889 | 0.095 | 0.022 |
Employees’ lack of commitment | −0.146 | 0.107 | 0.822 | 0.259 | 0.167 |
Members putting personal interests first | 0.418 | −0.249 | 0.606 | −0.041 | −0.230 |
Employees putting personal interests first | 0.384 | −0.120 | 0.525 | 0.297 | 0.242 |
Members’ fear of having their payments diminished | −0.002 | −0.331 | 0.020 | 0.427 | −0.223 |
Members’ fear of relocation | 0.202 | −0.384 | 0.169 | 0.658 | −0.075 |
Members’ fear of loss of services | 0.214 | −0.071 | 0.040 | 0.655 | 0.061 |
Due to localisms | −0.121 | 0.021 | 0.206 | 0.724 | −0.281 |
Disagreement on the new workforce structure | 0.103 | 0.193 | 0.446 | 0.658 | 0.278 |
Expected staff cost overruns to integrate workforces | 0.344 | 0.036 | −0.059 | 0.772 | 0.211 |
Divergences in corporate cultures | 0.126 | 0.057 | 0.339 | 0.011 | 0.575 |
Disagreement with the type of merger chosen | −0.048 | 0.197 | 0.053 | 0.052 | 0.538 |
Disagreement on the valuation of cooperative equity | 0.056 | 0.086 | −0.133 | −0.119 | 0.802 |
Function 1 | |
---|---|
Existing business relationship | 0.738 |
Previous merger experience | 0.854 |
F2 (involvement of the BD and managing director) | 0.736 |
F3 (involvement of members and employees) | −0.869 |
F4 (localisms and fear of change) | 0.498 |
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Meliá-Martí, E.; Lajara-Camilleri, N.; Martínez-García, A.; Juliá-Igual, J.F. Why Do Agricultural Cooperative Mergers Not Cross the Finishing Line? Agriculture 2021, 11, 1173. https://doi.org/10.3390/agriculture11111173
Meliá-Martí E, Lajara-Camilleri N, Martínez-García A, Juliá-Igual JF. Why Do Agricultural Cooperative Mergers Not Cross the Finishing Line? Agriculture. 2021; 11(11):1173. https://doi.org/10.3390/agriculture11111173
Chicago/Turabian StyleMeliá-Martí, Elena, Natalia Lajara-Camilleri, Ana Martínez-García, and Juan F. Juliá-Igual. 2021. "Why Do Agricultural Cooperative Mergers Not Cross the Finishing Line?" Agriculture 11, no. 11: 1173. https://doi.org/10.3390/agriculture11111173