What affects institutional and organizational transitions of sales cooperatives in the Dutch horticultural sector?

Diverse individual producers are crucial to resilient agricultural and food systems worldwide, yet they face global competition. Sales cooperatives have been established to strengthen the producers’ competitive position, often utilizing an auction system to distribute perishable products. In the Netherlands, such auctions facilitated by sales cooperatives have been pivotal in setting the prices for the fruit and vegetable (F&V) and flowers and plants (F&P) sectors since the 19th century. Although the similar shift in member heterogeneity occurs in both sectors, the historical development of these Dutch sales cooperatives and the use of auctions have differed. Research relying on transaction cost economics (TCE) has yet to identify social factors, such as embeddedness, that could explain this difference. We investigate how embeddedness can add to the TCE explanation. A qualitative content analysis of two major sales cooperatives in F&V and F&P revealed that whereas membership heterogeneity was comparable, embeddedness, consisting of internal governance and psychological ownership, differed. Internal governance exhibited differences in the extent of the distance between management and producer members. Psychological ownership differed in the extent of a sense of ownership, resulting in distinct practice transitions. In addition to minimizing transaction costs, enhancing psychological ownership by creating internal governance that reflects members' needs also affects the development of institutions and the organization of sales cooperatives.