Austria has a quite small cooperative sector, only about 10 to 15% of all Austrian wine is produced by wine cooperatives. The first wine cooperative was established in 1882 (Eisenstadt-Ruster-Weinproduzentenverein). An intense wave of cooperative establishment took place in Austria and Germany at the beginning of the 20th century, lasting through the 1960s, that was due to the unfortunate general socio-economic situation of vintners.

We build on Hart and Holmstrom (2010) to analyze the strategic choice of organizational form among wine producers. They claim that a firm's organizational form, when agreed upon competitively, conditions the sense of entitlement of the involved parties. The sense of entitlement determines their feeling of grievance for the outcome of the contract and, if so, their shading efforts by partially withholding consummate performance, creating deadweight losses. We consider two main organizational forms: non-integration, where growers interact in the winemaking process and can highlight the quality of their individual contributions, and integration, where individual contributions to the process may not be explicitly acknowledged and the winemaker cannot exert quality control over the production chain. We present a formal coordination model that illustrates how cooperatives and private firms can coexist within a market. Furthermore, given the reasonable parameter constraints, it illustrates how an integrated cooperative can obtain a higher social surplus than a non-integrated private firm. (JEL Classifications: C72, L22, L66)

In comparison with other organizational forms, cooperatives have been found to offer poor product quality and suffer from low reputation. The main reasons discussed in the literature are information asymmetries, which leads to adverse selection and moral hazard, as well as the absence of profit orientation due to poorly specified and diluted property rights. However, although, in reality, many cooperatives indeed perform poorly, and some are apparently able to completely avoid or at least reduce the problems that are considered prototypical for this hybrid organizational form. Therefore, the purpose of this study is to identify the characteristics required to reduce the problems resulting from poorly specified property rights and information asymmetries and, hence, to successfully compete in the market. The data we use to identify the characteristics that separate “good” and “bad” cooperatives encompass 136 organizations in Austria, Germany, and northern Italy. Our logistic regression estimations show that older and larger cooperatives (in terms of acreage) have a significantly higher probability to be listed in at least one of two highly respected wine guides. Moreover, German cooperatives have a significantly lower probability of being listed than either Austrian or northern Italian cooperatives. The findings suggest that differences in performance can be explained by the management of cooperatives. (JEL Classifications: D23, D82, D86, J54, L22, L25, L66, P13, Q13)

In this article, we investigate a possible conflict between two core objectives of cooperatives, members’ income, and continuity, by examining the link between debt and the price paid to producers for Bordeaux wine cooperatives, according to their downstream strategies: (1) the traditional strategy, which is to sell wine in bulk to négociants; (2) joining a federation of cooperatives which blends and puts the wine in the retail market; and (3) vertical integration. We show that downstream strategies are related to different lending regimes, making the relationship between banks and cooperatives a key issue for the lifecycle of cooperatives. (JEL Classifications: D230, G320, Q130)

This article examines the survival rates of cooperatives in the French wine industry. Traditional theory claims that cooperatives are inefficient and consequently are prone to failure, but recent literature suggests a higher resilience. Can cooperatives cope better? We find that French wine cooperatives survive longer than corporations. This result is robust in semi-parametric and parametric models, even when we control for mergers and acquisitions. The higher survival rate of wine cooperatives seems to be associated with their ability to pass changes in their business environments on to their members. (JEL Classifications: C41, G30, Q13)