Vertical coordination and cooperative member benefits: Case studies of four dairy farmers' cooperatives in China

Agricultural cooperatives have grown exponentially in the past few decades. There is anecdotal evidence showing that vertical coordination of cooperatives with upstream and downstream supply chain bring benefits to cooperative members; however this relationship is far from clear. In particular, the common measurements for member benefits may not accurately represent cooperative practice in the literature. To fill this gap and using an ethnographic multiple case study method, 32 interviews were carried out with four dairy cooperatives in China. It is found that (1) there is a linear relationship between vertical coordination and cooperative performance; (2) Vertical coordination is associated with benefits distribution within the dairy cooperative, showing an inverted U-shaped relationship; (3) Member benefits are a function of both cooperative performance and benefits distribution.