When Services Matter: Rethinking Farmer Cooperation in an Export-Oriented Smallholder Setting

Abstract

Why does agricultural cooperation remain fragile in post-socialist settings, despite its potential to reduce transaction costs and improve market access? Explanations usually stress institutional voids and the legacy of distrust. This paper advances a different view: farmers cooperate when the services offered are economically salient. Adapting Ostrom’s SES framework, we reinterpret “resource importance” for club goods, specifically cooperation services such as marketing, certification, and input procurement. Using survey data from Albanian farmers in a context-specific export-oriented smallholder setting, we develop validated measures of service salience and buyer power. Logistic regression indicate that perceived benefits, compliance costs, and buyer dominance all increase cooperation, while satisfaction with buyers reduces it. Socio-demographics have little effect. The study contributes by extending SES theory to club goods, providing robust constructs for empirical research, and identifying a mechanism through which cooperation emerges as a rational response to market imperfections in similar value-chain contexts. JEL Codes: C38; D7; J54; P32; P2