THE EFFECT OF MARKETING COOPERATIVES ON COST-REDUCING PROCESS INNOVATION ACTIVITY

20

Before concluding this paper it is important to note that our key findings on the effects of the
involvement of marketing co-ops in process innovation activity are consistent with the results of G&F on
the effects of input-supplying co-ops. While the nature of innovation activity considered in our study is
the same as the innovation activity in G&F (both studies focus on process innovation activity), the types
of cooperative organizations considered in the two studies are different in that marketing co-ops constitute
a forward integration of their members (i.e., they are formed by groups that are part of the supply side of
these co-ops), while input-supplying co-ops constitute a backward integration of their members (i.e., they
are formed by groups who are part of the demand side of these co-ops). An important implication of this
is that, when considering the effect of cooperative involvement in process innovation activity, the type of
the co-op does not seem to matter. Regardless of whether they are a backward or a forward integration of
their members, the involvement of cooperatives in cost-reducing innovation activity can increase the
innovation activity in the market, is welfare enhancing and, thus, socially desirable.

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