10 CHAPTER 1
tribution to product aggregation (and hence to reducing transaction costs) relative to the management costs of including an additional member. Because per-member management costs are fixed, selection is likely to be biased toward larger producers. Although one rarely finds explicit versions of this argument in the field, there are various types of membership criteria (including finan- cial contribution) that can be implicitly interpreted as reflecting such cost considerations.
Finally, in spite of the above, there is some evidence to suggest that the poorest of the poor may still benefit from market-oriented RPOs—even when they are excluded from membership. Such benefits may be termed spillovers that extend beyond the RPO’s membership base and are often linked to the RPO’s everyday activities: for example, an RPO may provide a service that can be rendered to members and nonmembers alike that cannot be delivered in a way that excludes nonmembers.6
Issue 3: Marketing Performance May Be Constrained by a Wide Portfolio of Activities
Collective action is not without its costs. The time and effort needed to gov- ern and manage the organization—to coordinate meetings among members, collect their membership fees or other contributions, resolve conflicts and dis- putes, monitor compliance with the organization’s rules, organize the orga- nization’s activities, and so on—are transaction costs internal to the RPO. Quite naturally, these coordination costs tend to increase with the size of the organization. Further, they increase with the heterogeneity of prefer- ences among members, as intergroup agreement becomes more difficult to reach. Another type of cost relates to the scope of the organization’s activi- ties: RPOs typically have lower management costs when performing several related activities than when simultaneously engaged in several entirely inde- pendent endeavors.
And indeed, an important feature of RPOs is their frequent engagement in wide varieties of activities. For instance, Bernard et al. (2008) find that 55 percent of market-oriented RPOs in Senegal were also engaged in provid- ing social activities, as were nearly 70 percent in Burkina Faso. Although it seems reasonable that successful organizations contribute to their communi- ties’ development, several case studies argue that a broad scope of activities often comes at the expense of economic performance (see, for example, Lele 1981; Stringfellow et al. 1997; Coulter et al. 1999; Delion 2000; Collion and Rondot 2001; Chirwa et al. 2005; Bernard et al. 2008). Further, the engage-
6 As documented in Bernard, de Janvry, and Sadoulet (2010), exclusive RPOs may also engage in public-good services to gain social acceptability in their communities.
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