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Analysis of three factors influencing the performance of fishing cooperative organizations of Yucatan,… Torres-Lara, Ricardo 2000

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ANALYSIS OF T H R E E FACTORS I N F L U E N C I N G T H E PERFORMANCE OF FISHING COOPERATIVE ORGANIZATIONS OF Y U C A T A N , M E X I C O by RICARDO TORRES-LARA B.Sc, The National Autonomous University of Mexico, 1985 M . S c , The National Politechnical Institute, Mexico, 1987 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE F A C U L T Y OF G R A D U A T E STUDIES (Institute for Resources and Environment) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH C O L U M B I A December 2000 © Ricardo Torres-Lara, 2000 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of Resource Management and Environmental Studies The University of British Columbia Vancouver, Canada Date December 22 , 2000 DE-6 (2/88) ABSTRACT T h e purpose o f the study is to explore and understand the influence o f several factors that potentially contribute to differences in performance o f cooperative fisheries organizations i n Yucatan State, Mexico.. T h e three independent variables examined i n this study, as influences on fisheries cooperatives performance are organizational issues, market structure issues, and the ability o f cooperatives to adapt to external change. These factors were identified as potentially important for fisheries cooperatives performance i n the region based o n (1) my six-year experience working wi th these fisheries cooperatives as a fisheries manager in Yucatan State, and (2) a review o f the relevant literature on organizational and economic influences o n cooperatives performance. The performance o f fisheries cooperatives, the dependent variable i n this study, is expressed i n two alternative ways. One , based o n the judgement o f members, uses the stated satisfaction o f a cooperative's member wi th its performance. A second approach for characterizing performance is based on- the physical production o f the cooperatives i n terms o f the average catch over a five-year period. T h e central tool for data collection and analysis is a mixed-methods design that includes a survey, face-to-face interviews, personal observation, and secondary sources o f information. I calculated non-parametric correlation coefficients (Spearman's rho) between the independent and dependent variables. A l l correlations were statistically significant at the 0.01 level. These results support the predicted relationship between the variables^ that is, that cooperatives wi th more operational rules, stronger market position, and higher adaptive ability are more likely to be have members more satisfied and to report higher catches. Multivariate analyses show that the most important variable influencing cooperatives' performance is the number o f operational rules, w h i c h i n fact explain a little bit more than 70% o f the performance variability, expressed as average catch per cooperative. T h e results o f the study are discussed i n terms o f their empirical support for social science theories, their contribution o f new theoretical insights into the study o f cooperatives, and the implications for the management o f natural resources. ii T A B L E O F C O N T E N T S Abstract i i Lis t o f tables ix Lis t o f figures x 1 Acknowledgments ' xu C H A P T E R I G E N E R A L A N A L Y T I C A L F R A M E W O R K 1.1 I N T R O D U C T I O N 1 I . l .1 Importance o f studying organizations and cooperatives 1 1.1.2 Purpose and overview o f the study 2 1.1.3 Research questions 3 1.1.4 Hypotheses. . 3 1.1.5 Defini t ion o f terms 1.1.5.1. Organization ^ 4 1.1.5.2. Cooperative 4 1.2 C O N C E P T U A L F R A M E W O R K 4 1.2.1 Independent variables.... - 4 1.2.1.1. Operational rules 4 1.2.1.2. Adapt ive ability 5 1.2.1.3. Market posit ion 5 1.2.2 Reasons for using the independent variables 6 1.2.3 Dependent variables 6 1.3 T H E O R E T I C A L F R A M E W O R K 7 1.4 C O N T E X T F O R A N A L Y S I S 9 1.4.1 Overview o f the fisheries in Mexico 9 1.4.1.1. Overv iew o f the fisheries i n Yucatan . . 10 1.4.1.2. F i sh marketing i n Yucatan 10 1.4.1.3. Characteristics o f fishing communities 10 1.4.2 Development o f the cooperative sector H 1.4.2.1. Cooperatives 'organizational structure H 1.4.2.2. Inception. 13 1.4.2.3. Current situation 13 1.4.2.4. Perspectives 13 1.5 L I M I T A T I O N S A N D S I G N I F I C A N C E O F T H E S T U D Y , 14 1.6 O R G A N I Z A T I O N O F T H E T H E S I S j 5 i i i CHAPTER II METHODS I L I I N T R O D U C T I O N 16 11.2 S O U R C E S O F I N F O R M A T I O N . 16 11.3 T H E S A M P L I N G P R O C E S S = 1 7 II.3.1 T h e target and study populations 18 •II.3.2 Sampling design and size : •... 18 11.3.3 The sampling frame '. ." - 20 11.3.4 Choosing the sample 21 11.3.5 Non-response errors - — 21 11.4 P R E T E S T A N D C O D E - B O O K 21 11.4.1 Questionnaire pretest 21 11.4.2 Code-book : 22 11.5 I N S T R U M E N T A T I O N 23 11.6 D A T A A N A L Y S I S . . . . 2 3 11.6.1 Qualitative analysis • • • 11.6.2 Statistical analysis 2 ^ CHAPTER III RULES, ORGANIZATIONAL STRUCTURES AND PERFORMANCE 111.1 I N T R O D U C T I O N : 26 111.1.1 Purpose o f the chapter 27 111.1.2 Research question 27 111.1.3 Hypothesis. 27 111.1.4 Defini t ion o f terms 27 111.1.4.1. Rules. 27 111.1.4.2. Organizational structure 28 I I I . l .5 Organization o f the chapter 28 111.2 C O N C E P T U A L F R A M E W O R K 28 111.3 T H E O R E T I C A L F R A M E W O R K 29 111.4 C O N T E X T F O R A N A L Y S I S 3 0 111.5 M E T H O D O L O G Y 3 2 111.5.1 Data collection 3 2 111.5.2 Qualitative data analysis 3 2 111.5.3 Statistical data analysis 3 3 iv 111.6 R E S U L T S . . . 33 111.6.1 Data collection 33 111.6.2 Qualitative analysis 33 111.6.2.1. Creation o f conditions and categories 33 111.6.2.2. Organizational structures 34 III.6.2.2..1 Permissive cooperatives 36 III.6.2.2..1.1 Laissez-aller cooperatives 36 III.6.2.2..1.2 Non-direct ive cooperatives 36 III.6.2.2..2 Democrat ic cooperatives 37 III.6.2.2..2.1 Consultative cooperatives.. . ; 37 III.6.2.2..2.2 Participatory cooperatives 37 III.6.2.2..3 Authoritative cooperatives 37 III.6.2.2..3.1 Supervisory cooperatives 38 III.6.2.2..3.2 Autocrat ic cooperatives 38 111.6.3 Statistical analysis. ; 38 111.6.4 Operational rules i n action: a democratic decision-making 40 III. 6.4.1. Strategic organizational decision-making 40 111.7 D I S C U S S I O N 43 111.7.1 The nature o f operational rules. 43 111.7.2 Rules, structures and performance 44 111.7.3 Informal and formal operational rules o f cooperatives 45 CHAPTER IV ADAPTATION ABILITY AND PERFORMANCE I V . 1 I N T R O D U C T I O N 48 IV.1.1 Purpose o f the chapter 49 IV.1.2 Research question 49 IV.1.3 Hypothesis 49 TV. 1.4 Definit ion o f terms 49 I V . 1.4.1. Organizational adaptation, learning and development 49 IV.1.4.2. Env i ronment 50 TV.1.5 Organization o f the chapter 50 IV.2 C O N C E P T U A L F R A M E W O R K 51 rV.3 T H E O R E T I C A L F R A M E W O R K 52 FV.3.1 Approaches assuming substantial influence from the decision-making units for adaptation 52 IV.3.2 Approaches assuming little or no influence from the decision-making unit for adaptation 53 v IV .4 C O N T E X T F O R A N A L Y S I S •••• 53 IV.4.1 Legal framework 53 IV.4.2 Market setting 54 IV.4.3 Financial sources • • • • 55 IV.4.4 Technological level 56 IV.4.5 Resources availability 56 W . 5 M E T H O D O L O G Y 57 IV.5.1 Data collection 57 IV.5.2 Qualitative data analysis 57 IV.5.3 Statistical data analysis • 58 IV.6 R E S U L T S •• 58 IV.6.1 Data collection 58 IV.6.2 Qualitative data analysis 58 IV.6.3 Levels for adaptive ability 59 IV.6.3.1. L o w adaptation. • 59 T V . 6.3.2. Adaptat ion for survival 61 IV.6.3.3. Adaptat ion for improvement 61 I V . 6.3.4. Adaptat ion for expansion 61 IV.6.4 Cooperative influence on the adaptation process and adaptive ability. 62 IV.6.5 Statistical data analysis 63 I V . 7 D I S C U S S I O N •• 6 4 IV.7.1 Phases o f adaptation at the population level 65 IV.7.2 Cooperatives' adaptive strategies and aids 66 I V . 7.3 Factors constraining adaptation 68 CHAPTER V T H E INFLUENCE OF INTERMEDIARIES O N T H E PERFORMANCE OF FISHING COOPERATIVES V . 1 I N T R O D U C T I O N 71 V . l . l Purpose o f the chapter., 71 V.1 .2 Research questions 72 V.1.3 Hypothesis 72 V.1 .4 Def ini t ion o f terms 72 V . 1.4.1. Intermediaries 72 V . l . 4 . 2 . Market posit ion 72 V.1.5 Organization o f the chapter 72 Y - 2 C O N C E P T U A L F R A M E W O R K 73 V . 3 T H E O R E T I C A L F R A M E W O R K 73 vi V . 4 C O N T E X T F O R A N A L Y S I S 75 V.4.1 Intermediaries-producers relationship 75 V.4 .2 Legal framework for economic regulation ; 76 V.4.3 Fish marketing i n Yucatan 77 V . 5 M E T H O D O L O G Y 79 rV.5.1 Data collection 79 IV.5.2 Qualitative data analysis 79 IV. 5.3 Statistical data analysis 80 V . 6 R E S U L T S 8 0 V . 6.1 Data collection 80 V.6.2 Qualitative data analysis 81 V.6.2 .1 . General characteristics o f the fish market — 81 V.6.2.2. Market posit ion o f cooperatives 83 V.6.2.3. Cooperatives' strategies for market exchange 83 V.6.2.3..1 Non-reciprocal exchange strategies 84 V.6.2.3..2 Reciprocal exchange strategies 85 V.6.2.3. Market ing systems 86 V.6.2.3..1 Dendri t ic marketing system 86 V.6.2.3;.2 In-site marketing system 87 V.6.2.4. Government as intermediary 88 V.6.3 Statistical data analysis 89 V . 7 D I S C U S S I O N • 9 1 V.7.1 T h e resource-power o f the intermediaries 91 V.7.2 Financial dependency and non-reciprocal exchange strategies i n the I F M S and D F M S 92 V.7.3 Financial dependency and reciprocal exchange strategies in the I F M S • 93 V . 7.4 Exchange relations and socio-cultural context 93 CHAPTER VI T H E CUMMULATIVE EFFECT OF INDEPENDENT VARIABLES O N PERFORMANCE V I . l I N T R O D U C T I O N •: 95 V I . 1.1 Purpose o f the chapter 95 VI.1.2 Research questions 96 V I . 1.3 Hypothesis : 96 V I . 1.4 Conceptual framework 96 V I . 2 M E T H O D S , 96 VI.2.1 Data screening and correlation 96 VI.2.2 Cluster analysis 98 v i i VI..2.3 Multidimensional scaling 98 VI.2.4 Mult iple regression analysis : 99 VI .3 R E S U L T S "... 99 VI.3.1 Correlation 99 VI.3.2 Cluster analysis.... 101 VI.3.3 Multidimensional scaling 103 V I . 3.4 Multiple regression analysis 105 V I . 4 D I S C U S S I O N 107 C H A P T E R V I I V I I . l G E N E R A L C O N C L U S I O N S V I I . 1.1 Operational rules, organizational structure and performance.. . . 109 V I I . 1.2 Adapt ive ability and performance 110 VII .1 .3 . Intermediaries and performance ; I l l VII .2 I M P A C T S O F T H E F A C T O R S A F F E C T I N G C O O P E R A T I V E ' S P E R F O R M A N C E T O F I S H E R I E S M A N A G E M E N T 1 1 1 V I . 2.1 Posi t ion o f cooperatives vis-a-vis intermediaries and the government • ^ VII .3 C O N T R I B U T I O N S T O T H E O R Y : 1 1 4 114 V I I . 3.1 The measurement o f success 115 VII .3 .2 O n the organizational framework VII .3 .3 O n theoretical frameworks : ^ ^ R E F E R E N C E S • 1 1 8 A P P E N D I X A Gu ide questions to interview cooperatives' board o f directors 132 A P P E N D I X B Questionnaire for measuring satisfaction among members 135 A P P E N D I X C Operat ional rules counting system l 4 ^ A P P E N D I X D Catch composi t ion, in percentage, per cooperative l 4 ^ A P P E N D I X E Typica l decision situations at different levels o f organizational structure o f cooperatives 147 viii L I S T O F T A B L E S ! Table II. 1 Relationship between the variables, research questions, and survey 18 items Table II.2 Summary o f original, adjusted, and real sample size per cooperative 20 Table IL3 Section o f the code-book designed to process the information from questionnaires and interviews 22 Table III.2 Condit ions. Categories, and sub-categories o f organizational structure, and the classes o f cooperatives having similar conditions 35 Table III.3 Average scores o f operational rules among different organizational structures 36 Table III.4 Summary o f overall satisfaction, average catch (tons), and total score o f operational rules o f fishing cooperatives i n Yucatan 39 Table I V . l Pr incipal technical characteristics o f the cooperatives' fleet i n Yucatan 56 Table IV .2 Summary o f conditions, sub-categories and categories o f adaptive ability 60 Table IV .3 Adapt ive responses o f fishing cooperatives to environmental disturbances 62 Table I V . 4 Non-parametric correlation adaptive vs. performance 63 Table FV.5 Summary o f adaptive ability, satisfaction and average catch (tons) o f fishing cooperatives i n Yucatan 64 Table V . l - Fishing intermediaries, and their range o f activity, i n Yucatan 77 Table V . 2 Summary o f the conditions determining the market posit ion o f cooperatives, Yucatan 84 Table V . 3 Market strategies developed by cooperatives i n different market systems 85 Table V . 4 Dis t r ibut ion o f costs and benefits per trip o f a shrimp trawler i n Yucatan ' 89 Table V . 5 Spearman's correlation coefficients for market posit ion wi th satisfaction and catch per cooperative 90 Table V . 6 Market posi t ion expressed by exchange strategies and their numeric value, and performance per cooperative 90 Table V I . 1 Summary o f the multivariate methods used for statistical analysis 98 Table V I . 2 General results o f independent and dependent variables per cooperative 100 Table V I . 3 Non-parametric correlation between all variables 101 Table V I . 4 Summary o f the multiple regression analysis 105 Table V I . 5 Summary o f regression coefficients o f multiple regression analysis 105 Table V I . 6 Summary o f the excluded variables from stepwise regression 105 x L I S T O F F I G U R E S Figure I . l Factors (independent variables) influencing performance (dependent variable) o f fishing cooperatives 5 Figure 1.2 Geographical distribution o f primary, (S=Sisal, SF=San Felipe, R L = R i o Lagartos, and E C = E 1 Cuyo), secondary (C=Celestun and D B ^ D z i l a m Bravo), and tertiary (P=Progreso) communities i n Yucatan 11 Figure 1.3 Organizational structure o f fishing cooperatives i n M e x i c o 12 Figure III. 1 Relationship between rules and performance 29 Figure III.2 Decis ional levels i n the organizational structure o f fishing cooperatives in M e x i c o < 31 Figure III.3 Cooperative decision-making process 42 Figure I V . 1 Conceptual model for adaptation 51 Figure rV . 2 Commercial izat ion relationship i n the fishing market i n Yucatan, M e x i c o 55 Figure IV.3 Relative positions o f cooperatives regarding their adaptive ability and control over the adaptation process 63 Figure V . l Market factors affecting the performance o f cooperatives in Yucatan 73 Figure V . 2 Typica l fishing exchange arrangements i n fishermen organizations i n Yucatan 78 Figure V . 3 Art icula t ion between producers and consumers through intermediaries 79 Figure V . 4 Dendri t ic fishing marketing system 87 Figure V..5 In-site fishing marketing system 88 Figure V I . 1 Variables, and their relationship, analyzed i n the study 97 Figure V I . 2 Hierarchical cluster analysis. Dendrogram using average linkage 102 Figure. V I . 3 Scatter-plot o f linear fit 103 Figure V I . 4 Mult idimensional s c a l i n g ' m a p ' o f cooperatives 104 x i A C K N O W L E D G E M E N T S The culmination o f this thesis is the joint effort o f several people w h o contributed, supported, and even crit icized it. A t its strategic level, I 'm greatly thankful to m y academic supervisor, D r . T i m McDan ie l s , who taught me to focus on the important variables o f the study, how to identify their relationships, analyze them, and then put them together to be explained i n a fluent, clear and understandable way. Equally, I 'm i n debt w i th the other members o f my supervisory committee. D r . M i c h a e l Healey taught me h o w important is to incorporate the human factor i n fisheries assessment and management, and to consider the social and economic impacts o f different exploitation regimes. D r . Maureen Reed encouraged me to check i n the literature to find theoretical support for my approach; her contribution o n the interaction between different types and communities and their social organizations is highly valuable. Unfortunately, she could not be i n this university to the completion o f this document. D r . Les Lavkul ich-provided the philosophical perspective to the study. Put i n other words, he made think about several aspects o f the study f rom perspectives different to the academic one. "Virtual' contributions to the study were made by members o f the discussion list cooperative-bus(a),relay.doit.wisc.edu. from w h o m I obtained valuable ideas o n different aspects o f cooperative organizations. I also appreciate the bibliographical support f rom the International Cooperative All iance and the Cooperative Branch o f the International L a b o r Organization. In the administrative level, I would like to thank the administrative staff at the Centre for H u m a n Settlements (CHS) at U B C for helping me to solve office-related problems", and for providing me wi th a quite and friendly atmosphere that allowed me to concentrate o n my readings and analysis. Outside U B C , the administrative members o f the two funding agencies that supported my study were also o f great assistance. These agencies are the Mexican Counc i l o f Science and Technology ( C O N A C Y T ) and the International C o u n c i l for Canadian Studies ( ICCS) . Emot iona l support emerged from three sources. A t C H S , other P h . D . students shared wi th me their doubts and certainties while completing their programs. I specially thank Joe A r v a i , the best office mate I ever had, for making an enjoyable and enlightening experience sitting i n the same office. I had enriching discussions wi th Mahdav Badami, Kei tsuke E n o k i d o , and E r i k a de Castro, w h o made valuable recommendation for solving specific problems o f my study, and w h o offered their enthusiastic friendship. Other special friends volunteer their support when needed. Edua rd Ni suk , Johanne Dalsgaard and Jasmin Jawanda read and corrected the earlier version o f some chapters. K i m Jawanda, M i k i k o Terashima, Claudia L a c h , Migue l Cabrera, Guadalupe Mexicano and V i c t o r H u g o Naranjo, had always an encouraging w o r d to keep me working. I 'm especially grateful to Gal ina A n t o n o v a for helping me to go beyond the limits. xu M y family also played an important supporting role. I have no words to thank my mother, brothers, sisters, nephews and nieces for backing me up all this time I was away from them. The distance was not an impediment for them to cheer me up. I profoundly regret riiy father and Sonia are not here to celebrate wi th us. M y infinite gratitude to Silvia and Julieta for being there. Finally, the most important reasons for completing this study are Nayel l i and Sofia, my two wonderful daughters. xui CHAPTER I GENERAL ANALYTICAL FRAMEWORK I.l I N T R O D U C T I O N Resource management has been dominated until recently by natural scientists and economists despite the fact that management involves regulating human behavior. Historically, the main objectives o f resource management were the conservation o f the stocks, the economic efficiency o f their exploitation, and the efficient allocation o f those resources. In modern resource management, however, there is a major consideration for the "human dimension". Consequendy, die objectives have expanded to help ensure that economic benefits return to die communities from which local public resources have been exploited, and that such exploitation is done on an ecologically sustainable basis. Parallel to die.redefinition and broadening o f resource management objectives is the emergence o f new stakeholders and the re-evaluation o f the role o f previous ones. Intergovernmental agencies and more recendy, non-governmental organizations have emphasized organizational factors as important i n promoting socially and biologically sustainable development (Caddy and M a h o n , 1995). In addition, the reinvigorated participation o f traditional stakeholders has been emphasized, such as the h e w position o f cooperatives regarding the protection o f the environment (Saxena, 1995). Participation o f the affected parties in the design o f management policies is an expression o f democracy. It implies the redistribution o f authority that enables organizations to be included in the social, economic and political processes that affect them. They can, i n turn, induce significant reforms that enable them to share the benefits o f the exploitation o f local natural resources. However, not all organizations can propose and induce such reforms. Several characteristics account for an efficient participation i n the design o f management policy. Organizations must be knowledgeable o f the local resources (Holland, 1996), socially and economically homogeneous (Jentoft, 1989), committed to and experienced wi th rule-making, structured for democratic decision-making, flexible and able to adapt to external conditions (Nielsen and Vedsmand, 1999), and be steered by leaders wi th dynamic mental models for problem-analysis (Moxnes, 1998). I f we want to encourage more successful organizations i n resource management contexts, it is important to understand why some organizations are more effective in achieving their objectives than others. Cooperatives are potentially one o f the most important and yet most neglected stakeholders in the design o f resource management schemes. Many studies have been conducted to show the benefits and limitations o f cooperatives i n the design o f resource management policies and i n improving members' standard o f l iving (Petterson, 1980; McCay , 1980; Valdez-Pizzini , 1990; Jentoft and Sandersen, 1996). However, a number o f studies have demonstrated that not all the cooperatives are successful i n contributing to an efficient resource management (Poggie, 1980; M c G o o d w i n , 1980; Poggie et al., 1988). Furthermore, some cooperatives limit their performance to technical operations without acquiring any direct responsibility in managing ;the resources that are the basis o f their own survival. Thus, for researchers and policy makers, the question o f why,cooperatives perform differendy, due to manifold factors is an important topic for research. 1.1.1 Importance of studying organizations and cooperatives Organizations can be classified according to how they are incorporated within the legal structure o f the nation-state, or the instimtional environment. H o w they are incorporated refers to the ways by which organizations are made part o f the nation-state, and hence how they are given certain rights and obligations. In this way, the state supervises how organizations operate and sets up regulations to 1 monitor those operations. Organizations in turn have discretion to act within legal structures and negotiate more favorable terms for themselves (Butler, 1991). It is hard to imagine our existence without organizations. They are present in our life from our birth to our death. The hospital where we were born, the daycare and schools we attend, the companies that produce our clothes, build our houses or distribute food, the police that defend us from organized crime, and all o f the other private agencies that provide us with the goods and services needed to carry out our modern life are organizations. A t the national level, the government is the organization that regulates and coordinates our life i n common with other people. Understanding more about the structure and operation o f organizations could lead to a more informed insightful life wi th these organizations. A cooperative is a type o f "mutual benefit" organization that exists for the benefit o f its members. The norms o f performance i n a cooperative often have a strong moral component. The institutional environment sets up regulations to ensure that the rules o f association are kept, and there is no misappropriation o f the funds. What makes a producers' cooperative different from other mutual benefit organizations is that their production is commercialized in the market, so that the cooperative has some characteristics o f a market organization. These features are competitive norms o f performance, and operate under the supervision o f official regulators, who ensure that the market remains efficient i n terms o f free flow o f information, products and services. Cooperatives are important because they are economic organizations that reduce members' uncertainty and lower transaction costs that would be faced by many individual operators. Transaction costs and uncertainty are due to .an imperfect legal contract environment (Landa, 1979). Cooperatives also provide job opportunities to residents o f communities i n which they operate, reducing the need to seek employment alternatives i n other areas. A s a result, familial structure and kinship ties tend to endure more, reinforcing the overall community's social structure; Finally, the cooperatives could be considered part o f the "local implementation structures", that is, the network o f local actors that are directly involved wi th the delivery o f official development policies (see Sabatier, 1986). L o c a l involvement increases the legitimacy o f policies among the people affected by it, and hence their support and compliance (Torres, unpublished document). 1.1.2 Purpose and overview of the study The purpose o f this study is to explore and understand how certain key factors contribute to differences i n the performance o f cooperative organizations, using fishing cooperatives o f the Yucatan State, S E Mexico as a case study. The type o f organizational structure, the ability to adapt to external disturbances, and the relationship established with other market agents were identified as important factors based o n my six-year working experience as training coordinator i n the research location, and according to the literature. The influence o f those factors on cooperatives' performance is analyzed i n terms o f their relative effect on satisfaction o f cooperatives' members and the average catch reported by these organizations during a five-year period. The study also develops categories for organizational structure, adaptive ability, and market position, to characterize the different strategies used by cooperatives to achieve their goals. The central tool for data collection is a mixed-methods design that includes a survey, face-to-face interviews, personal observation, and the analysis o f secondary sources. The relationships among variables were characterized through qualitative and statistical analysis o f the data. The results o f the study are discussed i n terms o f their empirical support for social science theories, especially organization theory, their contribution o f new theoretical insights into the study o f cooperatives, and the implications for the management o f natural resources. 2 1.1.3 Research questions The fundamental question investigated i n this study is why cooperatives perform differently when they have been established under the same governmental guidelines and legislation, and their function, at least theoretically, should be identical. E a c h cooperative has access to similar marine resources, and the market structure is comparable in practically all the fishing communities. A t the level o f the fisher, their fishing technological sophistication, the time spent fishing per year, their educational situation, and their fishing ability are very similar. However , based on personal observation after six years working experience i n the study are, it was found that there were significant differences in the organizational structure o f the cooperatives; the way they interact with intermediaries; how they have been adapting to social changes in their communities; to modifications to the legal framework, and to changes in the market structure due to the globalization o f the economy. In investigating why cooperatives have evolved different organizational structures and, consequendy, are performing iss imi lar ly , the intriguing question was why do cooperatives evolve alternate organization strategies when their objectives and goals are similar. Thus, this research addressed the generic issue o f evolution o f organizations rather than a comparison o f changes among or between individual cooperatives. Comparisons were made across cooperatives to have a better understanding o f the cooperative sector and to compare them relative to their organizational attributes and to their relationship with the surroundings. Analysis at the individual level regarding fishing efficiency, values and strategies for decision-making was peripheral and part o f the context for selecting cooperatives. Observed differences i n performance among fishing cooperatives led to the following major research question: H o w do organizational factors, the ability to adapt and market factors affect the performance o f these cooperatives? For each o f the three factors identified i n the overall question, I formulated secondary, research questions. T o understand the structure o f the cooperative, it was necessary to know how operational rules, and organizational structures have developed over time, and how decisions are made concerning the adoption o f these rules and structures. A s for the ability to adapt, it was necessary to know what kind o f dynamics exist between cooperatives and their social and economic surroundings, and what are the strategies to adapt to changes i n these settings. Finally, to understand the market, I also considered what k ind o f relationship existed between cooperatives and market agents, and what were the strategies o f cooperatives to deal wi th such agents. 1.1.4 Hypotheses T o guide interpretation o f these research questions, I developed three operational hypotheses that represent particular predictions about the factors under analysis. The hypotheses were examined with straightforward statistical tests and qualitative analysis. • Hypothesis one The larger the number and the variety o f rules followed by a cooperative, the more successful is the cooperative. Hypothesis two The higher the adaptive ability o f a cooperative, the more successful is the cooperative. Hypothesis three The stronger the market position o f a cooperative, the more successful is the cooperative. F o r each o f these three hypotheses, success o f a cooperative is measured i n terms o f the stated satisfaction o f its members, and the size o f its catch, which is a measure o f economic success. 3 1.1.5 Definition of terms In the interest o f consistency, the following terms are defined for use throughout the study. Some other concepts are defined as they first appear i n the coming sections and chapters. 1.1.5.1. Organisation A working definition o f organization is that it is a social unity that has a purpose, boundaries, and patterns o f members' activities i n a recognizable structure. Organizations have physical assets and people doing tasks, taking raw materials, transforming them and cHsttibuting products to the market. A n organization also entails the flow o f capital and information for decision-making and coordination (Buder, 1991). Organizations plan social activities systematically through a set o f strategies o f how the activities can be organized to achieve the purpose o f the organization. Activities are implemented using resources allocated to mobilize people who are coordinated by an authority system that organizes those activities. 1.1.5.2: Cooperative A cooperative is defined as "an autonomous association o f persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointiy-owned and democratically controlled enterprise" ( ICA, 1995). The definition emphasizes several important attributes o f cooperatives. "Au tonomy" means that cooperatives are independent o f government agencies and market enterprises; "association o f persons" embraces any legal definition o f "person", which includes companies as well as individuals. "Voluntary" means that members are free to join and to leave at wi l l . "Meet needs" is the central purpose o f the cooperatives; needs may be economic, cultural, or social. "Joint ownership and democratic control" express the idea o f members owning the cooperative on a mutual basis, and that decision is reached by consensus. "Enterprise" indicates that the cooperative is an organized venture that operates i n the marketplace, and engages i n the exchange o f goods and services (Hoyt, 1996). . . • • • 1.2 CONCEPTUAL FRAMEWORK In the conceptual framework for this study, the factors influencing the performance o f the cooperatives are the independent variables, whereas performance or organizational success is the dependent variable (Figure I . l ) . Pr ior and intervening variables are described for each independent variable i n the following chapters o f this study. 1.2.1 Independent variables 1.2.1.1. Operational rules One important independent variable is the set o f operational rules for cooperatives. Operational rules facilitate collective action for improving productivity and interpersonal relations to foster cohesiveness. Six operational rules are examined according to Os t rom (1992) and Buck (1989). Addi t ional ecological rules are considered to explore the cooperatives' position regarding the condition o f marine resources: 1. Eligibility rules, or the conditions to be, or not, a member o f the cooperative 2. Decis ion rules, or the formulas used for decision-making in collective actions 3. Posi t ion rules, that is, the position members can hold within the cooperative 4. Payoff rules, or the rewards or penalties which may be assigned to actions or outcomes 5. Authori ty rules, or the authorized action members can take independendy 6. Information rules, that is, the information that members should, or not, reveal to others . 7 Ecological rules to interact wi th the biological environment 4 The "strength" o f the rules is measured through an arbitrary counting system that assigns a value to a specific rule depending on its importance to facilitate collective action and personal interrelations. I explain the counting system in detail in the next chapter, which deals with the methodology for data collection and analysis. 1.2.1.2. Adaptive ability A second independent variable concerns the cooperatives' ability to handle external changes, that is, the ability o f a cooperative to re-establish the equilibrium it had wi th the external environment when a disruption has occurred. Changes i n the surroundings may create problems or offer opportunities to a cooperative. Yet , i f it is incapable o f reacting to those changes, problems may worsen and opportunities may disappear. Depending on the severity o f external changes, cooperatives have to mobilize available resources or search for other ones i n order to restore the balance with the external environment. Adaptive ability implies knowing how the groups adapt to the new circumstances, and how this adaptive power has lead to different performances. Adaptation requires a certain degree o f flexibility i n the rules, internal control for organizational development, and organizational learning capability. A l s o important, is the availability o f financial and material resources necessary to implement adaptive actions. A categorical scale to measure different levels o f adaptability is explained i n the methodology section. Independent variables Operational rules Adaptive ability Market position Dependent variable Performance Figure 1.1. Factors (independent variables) influencing performance (dependent variable) of fishing cooperatives 1.2.1.3. Market position . A third independent variable is the market position o f cooperatives. The position o f the cooperatives i n the market refers here to their role as producers o f raw material. This role is related to the other market agents, or intermediaries, wi th which cooperatives have established a range o f different relationships. These relationships affect cooperatives' strength i n influencing the prices they may receive for their production. The level o f freedom to bargain depends i n turn o n the dependence that cooperatives have on specific intermediaries, and on the willingness o f the latter to improve the operating conditions o f the cooperatives. Thus, a cooperative has a stronger market position when it has more freedom to seek better prices and its dependence on other market agents is low. In some cases, the intermediary contributes to improve the efficiency o f the cooperative. Market position is important because the development o f cooperatives is often shaped by their financial dependence o n 5 intermediaries (Acheson, 1981; Medina, 1988; Hartman, 1986). In general, dependent cooperatives have little chance to bargain.over the price of their catches, and no opportunity to seek better prices with other buyers. Consequendy, their capability to capitalize and reinvest in production factors is limited. On the other hand, cooperatives that have access to market information and control over the processing and distribution of their production have more options to negotiate better prices for their catches. In the methodology section I describe a scale of different categories to explain how market position is measured among cooperatives. 1.2.2 Reasons for using the independent variables There are several practical and theoretical reasons to justify focusing the analysis on the influence of these three independent variables. The most important practical reason is that these variables appeared to be important during my six years working with these cooperatives. Another practical reason is that the federal legislative framework and the state government programs applied exacdy in the same way to all. cooperatives, which allowed me to assume that political factors' influence is homogeneous to all cooperatives. Another practical reason to narrow the analysis to three variables is the limitation in both statistical and qualitative information about cooperatives and fishing communities in Mexico. Initially, I tried to explore the relationship between the performance of cooperatives and the social stability of their communities. However, during my fieldwork I found out that there was no statistical information available to assess the stability of the social structure of the coastal communities during any period of time. Consequendy,. I could not do this part of the analysis. Turning to theoretical reasons, I followed the mainstream of the classic, neoclassic and modern structural organization theory concerning the interdependency between the structure and function of organizations. Although these theories analyzed organizations from different perspectives, which are explored in the theoretical framework, all of them recognize the importance of assessing the influence that each variable has on the other. The first step in the analysis of organizations is to understand their internal structure, lines of authority, units of control and coordination, and the operational rules that make the organization run. This understanding, however important, is not sufficient; it is also necessary to know the influence of the external environment on the structure and functioning of the organization, and how it responds to that influence. For this level of analysis, I relied on organization theories concerning the population ecology of organizations, whose major concern is the adjustment of organizations to changes in their environment and how it is affected by the decisions made by the organizations. I divided the external environment into separate elements for analytical purposes, and then I focused on the factor that, according to my experience, had the deepest impact on the performance of Yucatan cooperatives: market intermediaries. 1.2.3 Dependent variable One of the main purposes of my study was to separately assess the association between three variables considered as independent and one variable defined as dependent. However, in the determination of the relationship between these variables, none of them can be considered as an experimental independent variable. Theoretically, the independent variable is a predictor of the dependent variable, but even if the data show a correlational relationship, they cannot be taken as definitive evidence of a causal relationship, that is, that changes in the independent variable causes variability in the dependent variable. There may be more factors that determine changes in the dependent variable. Moreover, the variable selected as dependent may influence the variable selected as independent. The definition of the variables depends on the objectives of the study, and for this case, the main objective was to characterize the influence of several factors on the performance of the cooperatives. The performance was measured in two different ways. The first one is a subjective, constructed measure, namely members' satisfaction. Satisfaction with the performance of the cooperative is an affective response to a cognitive evaluation of the performance. Thus, satisfaction, is a concept that 6 includes affective and cognitive dimensions (see M o l m , 1991). The cognitive evaluation is contrasted against a prevailing criterion, the aspirational level, held by the members o f the cooperative. I f the cognitive evaluation yields a performance that falls below this level o f aspiration, members would be dissatisfied wi th the performance o f the cooperative. Therefore, several members may evaluate differendy the performance o f their cooperatives because they have a different level o f aspiration. Members from less structured cooperatives with low records o f catch may be more satisfied with their cooperative than members o f highly productive cooperatives, because the aspirational level o f the former is lower, thus low catches still represent a good performance for them. The other performance measure is a.more direct, natural scale based on the average total catch reported by each cooperative from 1993 to 1997. 1.3 T H E O R E T I C A L F R A M E W O R K Traditional social and economic theories consider several decision-making units, such as companies, resource holders, governments, labor unions and political parties, which are important i n explaining and predicting social and economic phenomena (Helmberger and Hops , 1962). In coastal settings i n Mexico, the cooperative organizations are an important decision-rnaker. There are, however, a few known methodological principles for the analysis o f cooperatives. F o r instance, Helmberger and Hoos (1962) consider "that organization theory provides a broader interpretation o f the firm that is useful for empirical research on cooperative decision making". These authors go o n to point out that a cooperative can be seen as a firm since it includes both persons and privately owned physical facilities. Also , cooperatives mobilize production factors, produce goods and service, and rely primarily on the proceeds from the sales to meet production costs. The two basic differences between a cooperative and a profit-seeking firm are the motivations to be a member o f each organization and the unit o f control. In a firm, investors seek a high return o f their investment and the control is centralized in one or few individuals. Conversely, members o f a cooperative seek goods and services provided at cost and the unit o f control is the whole cooperative. Helmberger and H o o s ' study is an exception i n organization theory since most studies about economic and social organizations focus their analysis in private firms or large bureaucratic agencies (Buder, 1991; Hage, 1980; Cyert and March , 1988; D o u m a and Schreuder, 1998). Chen (1984) recognizes that using firm theory is not enough to explain the behavior o f cooperatives, and that a broader interpretation o f the firm is needed to understand differences among the two types o f organizations. The approach I adopted for the study o f cooperative organizations is the "systems perspective" i n modern structural organization theory. Under this perspective, a cooperative, as any organization, is viewed as an organized collection o f parts united by prescribed interactions and designed for the accomplishment o f specific goals (Boulding, 1956, quoted by Shafritz and Ott, 1992). Cooperatives are seen as a set o f dynamically interconnected elements including their process, feedback loops and the environment i n which cooperatives operate and with which they continuously interact. Structural organization theory differs from the classical theory because the latter developed a simplistic and mechanistic view o f organizations, i n which any organization could be managed according to general principles o f management operating as 'span o f control ' (Simon, 1946). Neo-classical theorists, on the other hand, contend that organizations have a dynamic nature i n which the organization and its members impact each other, some times i n unpredictable and unforeseen ways (Shafritz and Ott, 1992): However , these theorists d id not look beyond the organization's boundaries to explore its relationship wi th the surroundings. Organization can be examined as well at three different levels o f analysis, that is, micro, meso and macro levels (Hage, 1980). A t the micro level the unit o f analysis is the manager, and the central concern is his or her influence on the design, morale, and efficiency o f the organization. A t the meso-7 level, the organization is the unit o f analysis, and the central concern is the structure o f the organization and its efficiency. A t the macro level the relationship wi th the extra-organizational environment is the unit o f analysis; the main concern is wi th the larger economic, social, and political institutions that may influence the development o f the organization. Al though I recognize the importance o f the leaders' personal styles in the development o f the cooperatives, a microanalysis perspective was not adopted because it would have involved both psychological and behavioral analyses, which are beyond the scope o f the present study. Therefore, the rest o f the thesis focuses o n the meso and macro levels o f analysis. • In modern structural organization theory, the structure means relatively stable relationships among the positions, areas, and work processes that make up the organization. The theory deals wi th hierarchical levels o f authority and coordination, and horizontal differentiation between organizational areas. It is also concerned with the same issue as classical theory; the.goal o f organizational rationality is to increase the production o f wealth i n terms o f real goods and services. However , there are three basic assumptions o f the modern structural theory (Bolman and Deal , 1984) that make it different and o n which I based my analysis o f the meso and macro levels. 1. Organizations are rational institutions whose primary purpose is to accomplish established objectives. Rational organizational behavior is best achieved through systems o f defined rules and formal authority. Organizational control and coordination are key for mamtaining organizational rationality. 2. There is an appropriate structure for any organization i n light o f its given objectives, the environmental conditions surrounding the organization, the nature o f its products and/or services, and the technology o f the production processes. 3. Many problems in an organization result from structural flows and can be solved by changing/adjusting its structure. The first assumption implies that traditional patterns o f hierarchy, well-defined rules, vertical lines o f communication, and structured decision-making are present at the meso (organizational) level. I examine this assumption first, emphasizing the presence o f several operational rules, different organizational structures, and various decision-making situations and structures. The second and third assumptions denote dynamic conditions i n which the environment changes rapidly and the cooperatives adapt to the best structure possible according to these changes. The study focuses then at the macro (environmental) level emphasizing different adaptive responses depending on several organizational structures. The macro level analysis is important because understanding only the inner control and coordination o f an organization is not enough to understand its true nature. Organizations can not exist as self-contained entities isolated from their environment. Organizations are not static; they are dynamic, changing constantly to different states o f equilibrium. They should be adaptive systems integrated to, and influencing their environment (Shafritz and Ott, 1992). T o facilitate the analysis o f the changes i n the external environment and the adaptive responses by the cooperative organizations, the environment is divided into major market, social, legislative, financial and biological components. The final component o f my study is also at the macro level, but focused o n the market element o f the surrounding environment. I chose specifically to analyze the influence o f intermediaries on the performance o f the cooperatives, because it is the main extra-organizational force determining the development o f this type o f organization in the study area. The broader theoretical perspective that I 8 have used to carry out this analysis is social exchange theory (Befu, 1977; M o l m , 1991). However , more specific approaches are examined as well , such as the relationship o f buyer-supplier (Lilliecreutz, 1998; Krause, 1997; Krause, 1999); and satisfaction and power within that relation (Molm, 1987; M o l m , 1991). These theoretical perspectives are intended to explain how the market influence operates, and to predict what level o f organizational performance may be reached given a certain level o f influence. 1.4 C O N T E X T F O R ANALYSIS T o provide some context for the analysis, this section describes the general social, economic and political conditions under which cooperative organizations operate in Mexico . Subsection 1.4.1 provides an overview o f the fisheries in Mex ico and Yucatan, and a description o f the general characteristics o f the fishing market and communities, which help to explain the relationships established between cooperatives and the intermediaries examined in Chapter V. Subsection 1.4.2 describes the organizational structure o f the cooperatives as defined by the Mexican legislation. This legal organizational structure is the basis o f understanding different types o f organization described i n Chapter III. The subsection also briefly examines the events that have determined the evolution o f cooperatives; this evolution i s important to understand how cooperatives have adapted to different environmental changes during their historical development. Changes and adaptations are analyzed later i n Chapter I V . 1.4.1 Overview of the fisheries in Mexico Mexican fisheries have had a low priority i n terms o f national economic development. In the period from 1993 tol997, the contribution o f fisheries to the G D P was less than 1.0% ( T N E G I , 1998). Many factors have contributed to this situation. O n e o f them is the uneven geographical development o f fisheries. The four states in the N o r t h Pacific coast (Fishing Zone I) contribute up to 65% o f the national catch. The four states in the G u l f o f Mex ico (Fishing Zone III) and one other state from the Fishing Zone rV, contribute another 20% o f the total production. The remaining 15% are reported by other 23 states. The concentration o f fish production is followed by a concentration i n the catch composition: i n the same period, 69% o f the total catch (in weight) was made up o f only 10 species, whereas more than 26 species comprised the remaining 31%. A m o n g the most important species were tuna, sardine, shrimp, porgy, and squid. Harvesting i n the Mexican fisheries is predominately at a small-scale level, since 97% o f the more than 100,000 boats complete daily trips close to the coast. The value o f the total catch in 1997 was about $1.2 bi l l ion U S D (Ministry o f Environment, Natural Resources and Fisheries, S E M A R N A P , 1999). O n e key reason why fishing activities have had a low priority i n the development o f the country, is that the economic transition pursued by the Mexican government since the 1940 emphasized a shift from an agricultural to a semi-industrialized economy. Consequendy, the federal government has directed its programs to those sectors o f society that are considered socially, economically and politically important. Us ing the Gross Domest ic Product ( G D P ) as a basic measure o f the aggregated economic activity, the services sector (commerce, transportation, communication, and financial and personal services) has accounted for more than 50% o f the G D P since 1950. The most dynamic sector has been heavy industry (manufacturing, construction, electricity and petrochemicals), whose participation increased from 21.5% o f the G D P i n 1950 up to 27.7% at present. O n the contrary, the primary production sectors (agriculture, catde raising, forestry and fishing) decreased i n their contribution to the G D P from 19% i n 1950 to 8% in 1985 (Lustig, 1992). 9 1.4.1.1. Overview of the fisheries in Yucatan Fisheries in Yucatan State, located i n the middle o f Fishing Zone I V , parallel what is found at the national level. The catch is largely made up o f three species: lobster, grouper, and octopus, which represent up to 80% o f the fish state production. There are, however, more than 25 species with commercial value. Artisanal boats dominate the fleet with roughly 90% o f the units suited for coastal fishing only ( S E M A R N A P , 1998). Fishing cooperatives represent approximately 15% o f the fishers, 20% of the small-scale boats and report only 12% o f the total catch. Consequendy, private firms own 7 1 % o f the State's small-scale fleet and 85% o f the commercial vessels. In the last decade, 86% o f the catch was reported by the private sector, although the private sector processed and traded practically the entire State production (Salas and Torres, 1996). 1.4.1.2. Fish marketing in Yucatan Fishing cooperatives in Yucatan operate i n an imperfectly competitive market, dominated by oligopsonistic competition. A small number o f buyers and a larger number o f sellers, whose product is homogeneous, characterize this type o f market competition (Blomquist et al., 1990). A distinctive feature is that local fish buyers are aware that their buying strategies affect each other, which influences prices and creates mutual interdependence among them. Cooperatives as sellers, in turn, may have preferences for dealing with particular buyers. Some others actually seek buyers outside the region to obtain higher prices. In both situations, cooperatives can influence prices at least at the community level; the cooperatives actually buy their members' catch to sell it and redistribute the income equitably. I f the price offered by the coop were higher than the one proposed outside the group, non-members would be attracted to sell to the cooperative, obliging other buyers in the community to increase their prices in order to ensure their supply. 1.4.1.3. Characteristics of fishing communities There are fifteen fishing communities i n Yucatan. They can be grouped in three different types, based on Schnore's classification (Schnore, 1967), which emphasizes levels o f production. Twelve are primary communities, i n which the. main production is extractive, and the environment is a source for the extraction o f raw material. The other two are secondary communities, which practice secondary as wel l as primary activities: the main production is manufacturing and processing extracted raw materials. Finally, there is one tertiary community, which develops primary, secondary and all o f the activities that consist o f distribution o f raw materials and processed goods, and services, such as financial, communication, and recreation. Al though not located on the coast, the capital city is considered as a tertiary community as well, since fishing products are concentrated, processed and exported from there. Figure 1.2 shows the seven coastal communities where fishing cooperatives are distributed. In the primary communities there is not a noticeable physical separation o f activities and inhabitants; segregation is minimal since the population is fairly homogeneous, and the activities carried out are highly similar. There is little spatial differentiation because fishermen concentrate i n a central cluster o f dwellings and travel a short distance to peripheral places each day where their boats are docked. The tertiary communities are considered the centers o f fish processing and trading, as wel l as for manufacturing goods and providing services. The occupational heterogeneity is related to a higher social differentiation and stratification, and to their larger population density. The two secondary communities' social structure rests between the two previous categories. 10 Figure 1.2. Geographical distribution of primary (S=Sisal, SF=San Felipe, RL=Rio Lagartos, and EC=E1 Cuyo), secondary (C=Celestun and DB=Dzilam Bravo), and tertiary (P=Progreso) communities in Yucatan. The relationship between the tertiary and the other two types o f communities o n the coast can be described using a regional analysis framework (see M c C a n n , 1987). Tertiary communities are characterized by their accessibility to extra-regional markets and their diversified profile o f industries, as well as by their high urbanization and concentrated population. These communities are able to influence the economic, social and political decisions o f regional importance. O n the other hand, the other coastal communities are highly dependent on the exploitation o f primary resources; thus, they are regarded only as providers o f raw material. Their urban systems are weakly integrated and have a restricted political expertise; these communities have limiting physical characteristics such as roads and processing facilities. Consequendy their ability to gain access to extra-regional markets depends on the facilities and services located i n tertiary communities. 1.4.2 Development of the cooperative sector Because o f increased exploitation o f Mexico 's fishing resources by foreign fleets and companies, at the turn o f the twentieth century the Mexican government tried different ways to restrict further expansion o f those enterprises. Simultaneously, measures were taken to promote the development o f Mexican fishing companies and to create a stable and organized labor force able to harvest national fishing resources. T o support these actions, the Mexican government created a legislative framework in 1925; a Fisheries L a w recognized state control over fishing resources and its right to regulate their exploitation. O n this basis, preferential access to fishing permits was given to national firms and specific restrictions were placed on the operation o f foreign vessels in Mexican waters. 1.4.2.1. Cooperatives'organisational structure Cooperatives may have different organizational structures to achieve their objectives. Grouping units inside the cooperative facilitates the identification o f levels o f decision-making, channels o f communication, allocation o f resources, and lines o f authority. Some cooperatives are organized by. 11 function, where different phases of the fishing process are managed separately, such as harvesting, processing and marketing. Other cooperatives are organized by product, wi th each unit specializing i n different commodities. Marketing may be another way o f dividing the structure o f the coop, each division focusing on local, regional or international markets. Furthermore, the specialization o f the units can be directed to different, types o f customers, such as small buyers, large companies or government trading agencies. Accord ing to the Mexican law o f cooperatives, active cooperatives o f producers in Yucatan must be organized in a manner combining three different types o f structures: line, staff, and committee, as shown i n Figure 1.3. The line structure establishes direct vertical links between different levels o f decision-making, and it should represent a clear authority structure. The highest level o f authority is the general assembly composed o f all the members. Assemblies are held at least once a year. T h e administrative council, which executes the assembly agreements, represents the next level, and different committees are at the lowest level o f authority. These committees are groups o f members formally elected every five years by the general assembly to consider or decide on certain matters. Committees can be permanent or temporary and usually supplement line and staff functions. The staff structure implies that non-members with certain skills and knowledge are added to the organization to advise or support the decision-making level. These people can be bookkeepers, secretaries, advisers, or technicians. General assembly Counc i l o f administration Bookkeeper Technical control committee Counc i l o f vigilance Secretaries Social prevention committee Educat ion committee Arbitrat ion committee Figure 1.3. Organizational structure of fishing cooperatives in Mexico There are 35 fishing cooperatives registered i n Yucatan State, mosdy operating at the small-scale level. Membership ranges from 15 to 211 fishers. Fishing is carried out using fiberglass boats, ranging i n length from 24 to 35 feet; fishing trips last 8 to 12 hours a day. M a i n species caught depending upon their availability and economic value are octopus, grouper and lobster. F ishing gears comprise nets, semi-autonomous diving, a local gear made o f bamboo sticks, and long line. Mos t o f the cooperatives lack administrative skills. The cooperatives and their members focus, on harvesting o f the marine resources. Cooperatives do and promote limited processing o f the catch, leaving this activity to the 12 intermediaries. Only 3 o f the cooperatives process and trade their catches directiy to the market. F r o m the total catch registered in Yucatan from 1993 to 1997, cooperatives' participation was 8.2% i n biomass and 10.4% i n economic value. Members o f cooperatives i n the middle and West areas o f the coast are full time fishermen, whereas members o f the East Coast cooperatives fish from 8 to 12 months per year. They combine their fishing with some ranching, especially when the weather is not appropriate for fishing. Members ' age ranges from 16 to 70 years old, 75% o f which are 25 to 50 years old, and years o f fishing experience ranges from 2 to 49 years. 90% o f members have only elementary education. Family size o f members is from 2 to 6 people. 1.4.2.2. Inception The cooperative sector was initiated i n 1934. This was a significant period i n Mexico , in which state interventions in the economic life o f the country emphasized nationalist yet populist measures designed to reinforce the government's political alliance with the peasantry, as well as the working and middle classes. Interventions included the establishment o f the Federal L a w o f Cooperatives, and the provision, over a period o f years, o f the reservation o f a number o f commercially valuable marine species, including shrimp, oyster, and lobster, for exclusive exploitation by Mexican fishermen organized in cooperative organizations. The central purpose o f the legislation was to counter the weaknesses o f the private fishing sector by organizing a cohesive labor force and facilitating private investments in large-scale, capital intensive outfits (Buckles, 1984). 1.4.2.2. Inception The cooperative sector was initiated i n 1934. This was a significant period in Mexico , i n wh ich state interventions in the economic life o f the country emphasized nationalist yet populist measures designed to reinforce the government's political alliance wi th the peasantry, as well as the working and middle classes. Interventions included the establishment o f the Federal L a w o f Cooperatives, and the provision, over a period o f years, o f the reservation o f a number o f commercially valuable marine species, including shrimp, oyster, and lobster, for exclusive exploitation by Mexican fishermen organized i n cooperative organizations. The central purpose o f the legislation was to counter the weaknesses o f the private fishing sector by organizing a cohesive labor force and facilitating private investments in large-scale, capital intensive outfits (Buckles, 1984). 1.4.2.3. Current situation The Mexican government has faced conflicting interests i n the development o f the fishing industry. F r o m the 1930's through the 1950's, the state fostered and emphasized the collective use o f marine resources and its commitment to equity by setting up cooperatives and giving them exclusive exploitation rights over these resources (Vasquez-Leon, 1995). This orientation changed from the 1960's to the m i d 1980's, when the government pursued its commitment to fostering national economic growth by allowing private investors to obtain substantial benefits from the fisheries through the renting o f boats, equipment, and processing facilities to cooperatives. A t the same time, the government dismissed equity concerns by consigning the cooperative sector to its legal base and i n fact doing litde in the way o f promoting its development (Hernandez, 1988; Mendoza,T985) . The most recent and dramatic change in the fishing policy started i n 1992 wi th the gradual transfer o f harvesting rights and control over all phases o f production and distribution o f fish-based products to private investors. 1.4.2.4. Perspectives The most important legal access that cooperatives have to fish resources is a concession, which is a fishing license that lasts from 5 to 20 years, wi th the possibility o f renewal. Unl ike the concession i n 13 previous versions o f the law, this legal instance is now transferable. T o put it briefly, the most recent version o f the. Fisheries L a w (1994) reintroduced natural resources as private property, with the advantage o f being legally secure for a longer period o f time. In addition, the concession is transferable and can be sold (Villamar, 1994). A s result o f these measures, the goal o f gaining economic efficiency through the privatization o f fishing resources, the possibility o f mercantile exchange, the official deregulation, and the freedom o f market forces are factors that are operating in , and wi l l determine the fishing development i n Mexico . Defining private property rights i n this way, the concession as commodity, has at least three consequences. The first one is the weakening o f the cooperative sector, since private, powerful investors wil l ing to exploit fishing resources more efficiendy may eventually displace the cooperatives. The second consequence relates to the first one in the sense that the displacement might mean lack o f employment and a struggle for subsistence to thousands o f fishers. The third one relates to the ecological costs o f privatization, which might be high i n achieving such an economic efficiency, as it has occurred in many fisheries around the world. 1.5 L I M I T A T I O N S A N D S I G N I F I C A N C E O F T H E S T U D Y A t least two limitations merit discussion i n this study. The first one is the ontological question o f "What is reality?" The qualitative nature o f the study determines that reality is constructed by the individuals involved i n the research situation (see Creswell, 1994). Therefore, the findings could be subject to interpretations different from mine. I tried to rrunimize this shortcoming by. reporting precisely the opinions and definitions o f the informants. The other limitation is related to the survey design I used to collect information. It is known as 'static group comparison design', and aims to explain and interpret relationships among variables across comparison groups (Creswell, 1994). I categorized the various comparison groups (cooperatives), using the values o f the selected independent variables. B y comparing the corresponding dependent variable scores, it was possible to assess whether there is a relationship between the variables. However, there is the possibility that other independent variables between two comparison groups not considered here might also affect the dependent variable. Such independent variables are alternative explanations for different dependent variable values. Another aspect o f this design is that it enables one to meet only the first criterion for deducting causation, that is, the correlation between variables. The other two criteria for causation are that the independent variable precedes the dependent variable i n time and that there are no alternative explanations o f the group differences i n the dependent variable. The significance o f this study for other researchers includes identifying the necessity o f designing further studies to address this shortcoming and meet these two criteria o f causation. O n e study would have to be longitudinal to meet the time-order criterion, taking into account changes over time by collecting data in two or more periods. Another study should be a cross-sectional design to meet the third criterion by using variables to represent phenomena that explain the differences among groups that have occurred over, a period o f time. O n e aspect o f the significance o f this study for researchers includes the novel use o f survey methodology and the various social theories used for studying cooperatives. F o r fishery managers, the study is important because it points out deficiencies in the local adoption o f unknown and sometimes adverse management schemes devised by centralized public agencies. It also exhibits the necessity o f creating strategies for freeing the cooperatives from social and economic constraints during the market exchange. The study also identifies some factors that would be promoted and some that should be discouraged i f improving the performance o f cooperatives is considered as an objective i n fisheries development. 14 Finally, there is an obvious significance o f the study to my professional development. I understand that reporting the correlation between variables is not sufficient to understand a phenomenon, and that describing it is not necessarily an analysis. I have tried to make this study meaningful by putting it i n the largest context o f the fishery i n Mex ico and its management, and by finding patterns o f occurrence o f key variables. M y intention is to know the cause o f this occurrence to improve the existing operating conditions o f cooperatives and to propose solutions to several practical problems. I also understand that theories are at best a simplification o f a highly complex reality. But the first way to start dealing wi th this complexity is by confronting it wi th one's theories, however simple, i n a continuous and dialectic way that may enhance the understanding o f our reality. 1.6 O R G A N I Z A T I O N OF T H E THESIS The thesis is organized i n seven chapters. This chapter has outlined the general conceptual, theoretical, and operational frameworks to set the general context in which the cooperatives operate in Mexico . Chapter II describes the methods used for data collection and qualitative and statistical analysis. It describes how independent variables were measured and how classification schemes o f cooperatives were developed. E a c h o f chapters III to V I consists o f a brief introduction, specific research questions and a hypothesis. Particular details complementing the methodology described i n Chapter II are also included. Results for each variable are discussed i n order to address and answer the research questions. The purpose for this design is to emphasize the analysis and findings relevant to each factor affecting cooperatives' performance. In this way, operational rules are analyzed in Chapter III, the adaptive ability is investigated i n Chapter I V , whereas the market position is examined i n Chapter V . Chapter V I provides a statistical analysis o f the three independent variables together to disclose their potential combined influence o n the performance o f the cooperatives. The last chapter provides general conclusions about all the variables analyzed, emphasizing the implications o f the study for the management o f fisheries in Mexico . 15 C H A P T E R II M E T H O D S 11.1 I N T R O D U C T I O N This chapter outlines the methods used to collect and analyze the information needed to answer the research questions. The approach is the combination o f quantitative and qualitative methods because certain methods are more appropriate than others for a specific situation within a single study. This mixed-methodology design allowed me to combine methodological steps at several phases o f the data collection-analysis process. Fo r example, the survey is a quantitative method o f data collection; this information is then analyzed through statistical tests to generalize from the sample to the population. O n the other hand, interviews, documents and observations are qualitative methods for collecting data. The analysis o f the information obtained provides the basis for developing categories from particular sets o f information, and developing a qualitative narrative that shows patterns for that information (Creswell, 1994). The study locations were seven fishing communities i n the coast o f the Yucatan State, i n the southeast o f Mexico . The case study focused o n 21 small and large-scale fishing cooperatives grouped i n two separate federations. 12 Small-scale cooperatives were those operating fiberglass .boats no more than twenty-seven feet i n length and which have the capacity for one-day trips. Average catch did not exceed 100 K g / d a y . O n the other hand, 9 large-scale cooperatives operate vessels ranging from thirty-five to sixty-five feet i n length, which are capable o f carrying out trips o f two to four weeks. Average catch is variable, depending o n the gear and the deck capacity, but usually is above 150 K g / d a y . Information from the field offices o f the Ministry o f Fisheries, the federations and the cooperatives related to the number o f cooperatives and membership, was contradictory. However , it seems that there were about 35 cooperatives operating with approximately 1,500 members, which represents approximately 10% o f the total number o f fishermen i n Yucatan. . 11.2 SOURCES OF I N F O R M A T I O N Four different methods for collecting information were used during the summer o f 1998 i n the study location. The methods were: • A semi-structured, open-ended interviews complemented wi th personal notes • A survey based o n closed-ended questionnaires • Occasional observational notes, taken as an observer (not as participant) • Analysis o f public documents T w o different protocols were devised for the interviews and the survey. The interview protocol covered descriptive and reflective components (open-ended questions) i n which informants provided specific information and were allowed to expand their points o f view for each question (see Appendix A ) . Interviewees were the members o f the boards o f directors for each of. the 21 cooperatives. The resulting data were used to classify the independent variables, that is, operational rules, adaptive ability, and market position. I took reflective notes after the interviews to record my 16 o w n thoughts and impressions; interviews also comprised a demographic component to record the 'age' o f the organization, number o f members, number o f boats, and the like. The questionnaire protocol also included descriptive and reflective components, i n which informants were allowed to elaborate an explanation o f why they were (dis)satisfied wi th the performance o f their cooperatives in different aspects. These aspects included the relationships wi th fish buyers, communities and authorities; the performance o f the cooperative in getting loans, training courses, and technical support; its ability for searching for technological innovations, lobbying and bargaining, and others (see Appendix B) . Through a satisfaction scale based on U k e r t ' s scale (DeVellis, 1991), where l=very satisfied and 5=very dissatisfied, an average overall satisfaction measure was estimated for each cooperative. The process o f asking questions to members o f the cooperatives, allowed me to build a numeric characterization o f the sample from the target population. The survey design allowed me to generalize from a sample to the population and make inferences about the occurrence of. some organizational characteristics o f this population (see Creswell, 1994). The survey I used i n this study was a special case o f a cross-sectional design called 'static group comparison design' survey. It was cross-sectional because the information was collected at one point i n time, but differed from standard cross-sectional designs because it compared groups only once, based on one or few criteria. One advantage o f the survey was that, as a non-experimental research method, I was able to define which variables were independent and which dependent. This characteristic played an important role i n deciding the methods applied for data analysis. Other advantages were (1) it was relatively easy and cheap to design the survey and to collect and organize the information; (2) it was also relatively simple to identify attributes o f a population from a small group o f members o f that population. Practical considerations were also important i n deciding which survey design to use. The data collection procedure was convenient because it was cheaper to visit the fishing communities in M e x i c o than to request the information by telephone from Canada. I also had to consider the fact that members o f the cooperatives are still not used to telephone or mail interviews, in which case a high rate o f non-respondents would be expected. Finally, being in the communities meant it was convenient for me to invite fishermen to participate i n the survey and to randomly select them on site. Table II. 1 shows which survey items were used to answer the research questions. The final source o f information was catch reports obtained from the same cooperatives and from the offices o f the Ministry o f Fisheries. I analyzed the catches per month and per species as reported by each cooperative from 1993 to 1997. Then I calculated the total average catch during that period. II.3 T H E S A M P L I N G PROCESS T h e sampling process covered many steps from defining the target population to actually choosing the sample. The sampling process was designed to select the sample to which the questionnaire was applied.The process was developed following steps outlined by Czaja and Blair (1996) or as noted. 17 II.3.1 The target and study populations The target population was the group to which the results o f the study could be generalized. In this case, the target population included all 1,500 members o f the thirty-five fishing cooperatives i n Yucatan. The study or survey population was a subgroup o f the target population from which respondents were selected to answer the survey. The boundaries o f the units o f analysis delimited the study population. The unit o f analysis i n this case was the fishing cooperative, and the boundaries regarded as important were the following: • Legal: the L a w o f Fisheries and the General L a w o f Cooperatives define this boundary, and excludes other types o f fishing organization. • Geographic: Cooperatives were selected from the seven fishing communities along the coast o f Yucatan where these groups are located. • Cooperatives' age:. On ly groups with more than five years operating i n the study area were chosen. T w o important exceptions were made; two cooperatives started operations i n 1996 as cooperatives, but they have been operating under different legal denomination since the beginning o f the 1990s. These boundaries narrowed the study population to twenty-one fishing cooperatives, identifying automatically the sample for the interviews wi th the boards o f directors. Table II. 1 Relationship between the variables, research questions, and survey items. Variables Research questions Survey items Independent • Operational rules . • Adaptive ability • Market position How: • Operat ional rules affect performance? • Adapt ive ability affect performance? • Market posit ion affect performance? Interviews • Questions 1-19 • Questions 20-33 • Questions 34-43 Dependent • Level o f satisfaction • Complete questionnaire II.3.2 Sampling design and size The sample design applied to estimate the number o f members to assess their satisfaction was a simple multiple-stage sampling design that comprises a two-stage sampling process. In both stages, I used a simple random sampling technique. The first stage involved a random selection o f groups, in this case the cooperatives, and the second stage involved the random selection o f members o f the selected cooperatives to produce the final sample. This multistage approach required trade-off between improved precision o f the sample estimates and higher complexity. A s the number o f stages increases, the precision decreases. Hav ing only two stages reduces the difference between 18 estimates o f statistics and parameters, and thus increases the reliability o f the inferences from the sample-to the population (Czaja and Blair, 1996; Henry, 1990). The sample selection within each cooperative was independent and guaranteed an equal probability o f selection to all its members. Since the probability o f selection is determined by the cumulative probability o f selection, unequal probability o f selection in the first stage was compensated i n the second stage. F r o m the cooperatives selected i n the first stage, the sample size i n each was estimated with the probability proportionate to size, P P S , (Henry 1990), because cooperatives have different sizes o f membership. The cooperatives selected i n the first stage are referred to as Primary Sampling Units or P S U , and the purpose o f applying P P S was to give similar probability to any member o f any cooperative to be selected i n the sample. The formula to calculate the sample size at this stage was: p = c * N c / N where p is the probability o f selection c is the number o f P S U (cooperatives) N c is the number o f elements i n each P S U N is the total number o f elements i n the study population Whereas N c was obtained from each cooperative, c was calculated direcdy as 60% o f the total number o f cooperatives registered i n Yucatan. This arbitrary first stage sample size yielded twenty-one cooperatives, wh ich were selected from the seven fishing communities based o n the convenience to sample them according to their distribution. Thus, eight cooperatives were selected direcdy because they were located i n five communities, making it easier to sample them. Four more cooperatives from another community were selected based o n their availability since I d id not know which ones were still operating and what was the chance o f contacting the members. The remaining nine cooperatives were selected from the last community where fourteen cooperatives operate. Because the sample sizes o f cooperatives with more than one hundred members were extremely large, I adjusted them by re-estimating the probability o f selection with an arbitrary weighing factor (wf). It was calculated as the probability o f selection calculated from the P P S , divided by the same probability times ten: wf = p / p * 1 0 This procedure yielded a probability o f selection o f 0.1 for these cooperatives. The criteria to choose this adjusting factor were to calculate a new probability o f selection less than 10% or to have sub-sample sizes around twenty members o f less. The samples for larger cooperatives were recalculated with this correction factor. T h e total sample size was estimated as 164 members as a target, based on these criteria. D u e to the presence o f non-respondents, the real sample size was 155 members, from sixteen cooperatives. The real sample size represents 94% o f the adjusted 19 sample, and 14% o f the total membership i n the study population, and also reveals the non-respondent cooperatives. Table II.2 summarizes the sample sizes per cooperative, original, adjusted and real. II.3.3 The sampling frame The sampling frame is the list(s) or resource(s) that contain the members o f the study population. This frame was defined from three different yet related types o f lists: official records managed by the Ministry o f Environment, Natural Resources and Fisheries, records from the most recent ordinary assembly, and updated members' list supervised by the boards o f directors. B y combining these three lists it was possible to compile the most recent list o f the cooperatives' members. It was important that the definition o f the target and study population is clear so all or most members o f the study population were members o f the target population as well. In this way, differences between study population's statistics and target population's parameters (non-sampling bias) were reduced; inferences from the sample to the population were, therefore, more reliable (Henry 1990). ^ Table II.2 Summary of the original, adjusted and real sample size per cooperative Cooperative N o . of Probability of Sub- Sub-sample Real sample ID members selection sample size size (PPS) size . adjusted R L P 56 1.0 56 6 n.r. SF 207 3.8 793 21 21 D B 99 1.8 181 10 21 T P M •22 0.4 9 9 n.r. PS 12 0.2 3 3 n.r. C A 18 0.3 6 6 10 P G 53 1.0 • 52 5 10 C P 211 3.9 824 21 . 21 E C 118 2.2 258 12 13 R L 160 3.0 474 16 16 C C B 20 0.4 7 7 n.r. P D 15 0.3 4 4 n.r. C P P 24 0.4 11 11 7 P I 15 0.3 4 4 5 D P 15 0.3 4 4 5 P I I 12 0.2 3 3 4 P C ' 15 0.3 4 •4 5 P C H 15 0.3 4 4 5 N K ' 15 0.3 4 4 5 E C 18 0.3 6 6 5 B 15 0.3 4 4 5 Total 1,135 2,655 164 155 20 11.3.4 Choosing the sample There were four steps to generate a list of respondents to assess the level of satisfaction. First, from the complete list of members of each cooperative, the sub-sample size was identified. Second, the identification number assigned by SEMARNAP to each fisherman was used to select him randomly. In doing so, the last four digits of the identification number were compared with the last four digits in a random number table. Random numbers were automatically generated using standard computer routines. In the third step, each member whose identification number matched a number in the random table was selected as respondent. The process was repeated, without replacement, until the number of members necessary to complete the sub-sample size was obtained. Some more individuals were further selected to replace possible refusals or individuals that for some reason were unable to answer the questionnaire. Finally, with the help of the board of directors, the selected members were notified and told the time and place to administer the questionnaire. The process was easier in six of the communities with small-scale level of harvesting. In the remaining community, the largest one, where all of the members usually carry out two to three week trips on industrialized ships, having the selected members at the same time was very difficult. In fact, it was not possible to apply the questionnaire to three cooperatives in that community. This situation, known as non-response bias, created differences between the study and target populations. The omission of this group of respondents from the data collection was not random thus creating a bias in the results. 11.3.5 Non-response errors In order to prevent and reduce non-response errors during the survey, I took preventive measures according to two types of error. The unit non-response error is related to respondents, therefore gaining fishers' trust from the beginning was essential to get their participation, especially with inefficient cooperatives that tended to be distrustful and blame their failure on "outsiders" in general. Thus, being honest and clear about the purposes of the study was very helpful to make fishermen more willing to participate in the survey. In the case of the three cooperatives mentioned above, I tried different strategies and times to contact them and thus reduce this type of error; however, they were never willing to participate in the survey. In the case of item non-response error, two measures were equally important. The first one was carefully designing a set of questions that were not harmful, especially in sensitive issues, such as giving an opinion about the board of directors. The second one refered to assuring fishermen that the information they provided was both necessary and confidential. These measures were necessary to reduce as much as possible errors due to the lack, of information either because respondents were not able to answer the questionnaires, or because the questions were unclear or threatening. The idea was to devise a routine, secure procedure to get fishermen's cooperation in answering all or most of the questions. II.4 PRETEST AND CODE-BOOK This section describes the questionnaire pretest and the elaboration of a codebook for entering information from the questionnaires and interview protocols into computerized databases. II.4.1 Questionnaire pretest The first draft of the questionnaire was distributed among ten peers for review and comments. Considering that most of them did not know anything about fisheries in Mexico, they were asked to 21 focus on format and clarity. Therefore, the details most frequendy pointed out were concerning the widening o f the measurement scales to 5 or 7 attributes containing a very positive and a very negative ends, wording with understandable concepts, and including the "Missing/refuse" category. A second pretest was carried out i n Yucatan, once the questionnaire was translated into Spanish. O n this occasion the reviewers were three technicians wi th ample-working experience at the coast o f the state. The focus at that time was on wording, clarity and timing. Since the technicians knew the style i n which people speak Spanish at the coast, their suggestions were helpful to make the questions understandable. A thkty-minute time frame was estimated to answer all the questions. The technicians mentioned that the sequence o f the questions was logical and clear, so it would be easy for the fishermen to follow the questionnaire. II.4.2 Code-book I developed separate codebooks to enter responses to the questionnaire and the interviews, and to process and analyze the information. A sample codebook is shown in Table II.3. Table II.3. Section of the code-book designed to process the information from questionnaires and interviews Question Variable Variable Value number name label Label Value I Ident. Identification number Person 1... 001... Person 100 100 1 Managsty Satisfaction with • Completely satisfied 1 management style • Mostly satisfied 2 • Mixed 3 • Mostly dissatisfied 4 • Completely dissatisfied 5 • Refused/missing 9 2.a Fisbuy Evaluation of dealing • Excellent 1 with fish buyer • Very good 2 • Good 3 • Fair 4 • Poor 5 • Refused/missing 9 The first column refers to the progressive numbering o f the questions i n the protocols. The "variable name" column represents the column's head in the database screen and the SPSS program uses it in all the statistical tests; the variable name has to be shorter than 8 characters. The "variable label" column represents the complete variable name and is used to label the variables in the outputs (graphs and tables). The value label and value columns show the variables' categories and their values from the questionnaires. Fo r instance, satisfaction was ascertained by direcdy asking members their opinion about different aspects o f the cooperatives' management; in this case, categories ranged from "Completely satisfied" to "Completely dissatisfied". E a c h o f these categories has a corresponding numeric value, which was assigned by the researcher. "Completely satisfied" had a value o f 1, while "Completely dissatisfied" had a value o f 5. The values were used to estimate an average overall satisfaction for every cooperative, considering the total answers o f each member. 22 11.5 I N S T R U M E N T A T I O N Instrumentation refers to the characteristics o f the tools used during the data collection. First, the survey questionnaire and interview protocols were self-designed because there were no previous experiences i n the study area. Second, to evaluate the validity o f the survey instrument (questionnaire), that is, to know i f the answers provided by the respondents were valid measures o f what I was trying to measure, I analyzed patterns o f association o f the answers. The evidence o f how good was the measurement o f satisfaction was indirect because I was measuring a subjective phenomenon. Since subjective states o f people are not direcdy observable, I could only infer that what I was measuring should behave i n a predictable way (see Fowler Jr., 1995). T o evaluate this pattern o f association I relied on predictive, construct and face validity. Predictive validity is the extent to which a measure predicts the answers to different questions. Construct validity means that i f several questions are measuring the same or closely related things, then they should be highly correlated with one another. Predictive and construct validity are closely l inked because one can expect that i f questions measuring similar things are highly correlated, the answer o f one question would be a good predictor o f the answer to a correlated question. The questionnaire I used i n this study was built to measure construct and predictive validity. F o r instance, after asking for the satisfaction about the overall administration o f the cooperative, the members were asked for their satisfaction about different administrative activities, such as the relationship established with authorities and buyers, the ability o f managers to get financial and technical assistance, and the way operational rules were applied, among other situations. Next , some o f these situations were 'broken down ' to more detailed situations, such as access o f members to financial aid, equipment and facilities and technical assistance. In this way, I could expect that members satisfied with the general administration o f the cooperative would be similarly satisfied with specific administrative activities and wi th different situations related to these activities. The final measure o f satisfaction was the average satisfaction o f all those situations. The last way to measure patterns o f association was face validity, which occurs when the questions measure what the questionnaire purports to measure. Face validity was carried out during the field pretest o f the questionnaire. In this situation, people who were tested wi th the questionnaire were able to express direcdy i f the questions measured what they were intended to measure. Field pretest also helped to improve the wording o f the questions and their format. 11.6 D A T A ANALYSIS II.6.1 Qualitative analysis The qualitative analysis o f the data was based on its reduction and interpretation (see Creswell, 1994), which was performed to create categories within which to accommodate the organizational structures, market position and adaptive ability o f cooperatives as explained by the directors interviewed. B y reduction and interpretation I mean that I reduced a large amount o f information to a few categories based on the patterns o f appearance o f certain organizational and market characteristics, and adaptive responses to extra-organizational changes. I then analyzed and interpreted those categories to help answer the research questions. T h e methodology for category construction i n the case o f organizational and market issues, and for the ability to adapt, involved five basic steps: (1) grouping answers, (2) wri t ing notes, (3) grouping for conditions, (4) creating categories, and (5) creating classes. In the first step, I 23 quickly read the transcripts f rom the interviews, to gather first impressions from the data, and make major groups o f answers. Groups were created after constandy comparing answers from different respondents to specific questions. Once I had these groups o f answers, I wrote several notes wi th two purposes. The first one was to associate thoughts as I read the interviews again or while working on any other task o f my study. Whenever a thought came to my m i n d related to the groups o f answers, I wrote as much information as I could relate to groups o f answers even though some o f it seemed Unimportant. T h e second purpose o f wri t ing the notes was to initiate the generation o f conditions emerging from the data, i.e. to track data from the immediate answers o f the respondents, the notes and the resulting conditions. Condi t ions are the situations required improving the performance o f the cooperatives. The conditions were grouped into general categories. T o facilitate the posi t ioning o f cooperatives in each category, I developed sets o f sub-categories. Hav ing developed the categories, I read the transcripts o f the interviews once more and compared them wi th the conditions created to place the cooperatives wi th the same conditions into different classes. These classes represent similar types o f conditions that groups o f cooperatives have created to reach their objectives hence deterrrrining their performance. II.6.2 Statistical analysis The analysis o f the data was carried out at two levels. The first was a descriptive analysis o f all independent and dependent variables. Descriptive statistics were used to organize the data to present them in an orderly way. The report o f this analysis is shown i n the Results sections o f Chapters III, I V , and V . The descriptive analysis includes my design o f an arbitrary counting system to estimate the number o f rules from the interview wi th the boards o f directors. E a c h rule was assigned with a numeric value according to two criteria. The first criterion depends on the action implied by the rule; for instance, i f a position rule implies the implementation o f four committees, one point is assigned per committee implemented. The second criterion depends o n the rule's relative importance for the achievement o f the organizational objectives. Fo r instance, i n the case o f eligibility rules, giving a member the opportunity to defend himself supported by witnesses, was considered a more "structured" rule (value=3) than without witnesses (value—2) or excluding any defense opportunity for the member (value^l) . Finally, the values were simply added up to have a total score per cooperative. The counting system showing the score per rule is displayed i n Appendix C. The next level o f analysis was performed using the Statistical Package for Social Sciences (SPSS) software (Norusis 1997). A t this level o f analysis, the strength and direction o f the relationship between variables was determined for testing research hypotheses and answering research questions. This level included the application o f inferential statistics to make generalized conclusions by inferring characteristics o f the population from the numeric description o f the sample. Inferential statistics were i n turn divided i n two major categories. O n the one hand, bivariate statistics refer to the determination o f the relationship between two variables where neither is an experimental independent variable. The way i n which relationships among variables were analyzed was by looking at their association, that is, i f one variable increases (or decreases) as the other one increases. A s one o f the major purposes o f the analysis was to assess individually the association among independent, variables and the dependent variables, the Spearman's coefficient o f correlation was chosen to measure that association. 24 Al though neither correlation nor regression analysis facilitates the definition o f the independent variable as predictor o f the dependent variable, it is important to stress that while the data show correlational relationship (as shown i n latter chapters) they can not be taken as definitive evidence o f a causal relationship. There may be more factors that determine whether the dependent variable w i l l change according to one or more independent variables. It may also be true that the variable selected as dependent influences the variables selected as independent. T h e point is that defining the independent and dependent variables depends upon the research's objectives and should not be interpreted to mean that the independent variable invariably causes the dependent variable i n the real wor ld . T o prove causality it is necessary to prove that the relationship is non-spurious, the predictor preceded the effect i n time, and there is a plausible rationale for why one variable should be a cause o f another. Mult iple correlation analysis, cluster analysis, multiple regression analysis, and multidimensional scaling were applied o n Chapter V I to find out the relationship, o f all variables influencing performance. The analysis then concentrated on the performance o f cooperatives during the last year, 1997, o f the period analyzed, because it was the only year for which more detailed information on the performance was available. The purpose was to find i f there is a differential influence o f the variables analyzed between cooperatives practicing small and large-scale fishing. I used multivariate analysis because I needed to analyze several related variables simultaneously and, without a priori assessment, I considered each variable equally important at the beginning o f the analysis. Multivariate statistical methods allowed me to study the joint relationships o f variables that are positively correlated. The use o f multivariate statistical analysis i n this study is an illustrative example o f how variables can be analyzed. I had small sample size because I was working with organizations as the unit o f observation, and it was impossible to obtain a larger sample size. Recognizing these limitations, the estimates derived through the multidimensional scaling and cluster analysis are the best estimates available o f the parameters, given the information available. The findings should be considered only illustrative given the small sample size. Regarding the sample size for multiple regression analysis, an important consideration is to have more cases than variables. In stepwise regression, a suggested min imum case-to-variable ratio required is to have at least 4 to 5 times more cases than independent variables (Tabachnick and Fidell , 1996). Accord ing to this criterion, 15 cases should be adequate as I analyzed 3 independent variables. However, I had 21 cases (cooperatives) making the ratio o f 7 cases per each independent variable. 25 CHAPTER III RULES, ORGANIZATIONAL STRUCTURES AND PERFORMANCE III.l INTRODUCTION Information collection for resource management, particularly in fisheries, is often focused o n the resources themselves rather than on the resource users and their organizations. W h e n information regarding resource users is available, it is often statistical, focused on their numbers, production units, and quantity o f outputs. In the same fashion, economic information for resource management often addresses prices per unit produced, production costs, benefits from exports, net incomes, and so on. O n l y recendy have more qualitative factors, such as values, perceptions, group affiliation, and other socio-cultural users' traits been seen as important when developing resource management policies. (Specific references regarding this topic appeared i n the special issue o f Aquatic L iv ing Resources, V o l . 8, Nb. 3, 1995.) T o be successful, resource management regulations must reflect and be supported by the cultural context within which the management regime operates (Buck, 1989). Broad resource management regimes should also reflect an understanding o f local rules i n order to avoid disrupting social relationships. Yet , combining more formal resource management with local rules wi l l not necessarily ensure social cohesion in resource exploitation. A s Gross and Rayner (1985) indicate, the number o f rules i n a management context does not necessarily indicate the strength or wisdom o f prescriptions. Groups may use multiple and contradictory rules that ultimately undermine social order and optimal production. On ly when rules enhance authority is the advancement o f social goals more likely to occur. Similarly, organizational goals are most often achieved when clear rules, and an orderly structure, yield the desired level o f performance. O n the other hand, organizational structure and performance have been shown to be associated wi th different organizational characteristics, such as communication (Fisher, 1974), organizational values (Van Wart, 1998), members' roles (Ross and Ross,- 1989), and decision-making behavior (Cyert and March , 1988). Other researchers have studied the relationship between rules and organizational structure, and how changes i n one variable affect the other. Those studies indicate that when rules have been largely institationalized, the structure tends to become rigid, allowing only a small margin for adjustment and adaptation. Rigidity is often a precursor to organizational decline, especially when the environment changes constantiy and exposes new challenges to which the organization can not respond adequately i n time or mode. O n the other hand, when rules and the organizational structure are flexible, adaptation is easier and the changing environment can be confronted more effectively (Cameron, 1984). Flexibility is especially valuable for new, innovative organizations that need to adjust frequendy. However, too much ability to "bend and twist" may create a sluggish organization where processes and goals are not completely achieved. Organizational structures are thus the vehicle by which rules are embodied and implemented. Rules vary across organizations i n many dimensions: the severity o f sanctions for violating rules, the consistency o f enforcement, the degree i n wh ich members internalize rules, the way they are carried across generations, and the amount o f compliance they receive. Organizations need to develop rules and fit them to an appropriate structure i f they are to survive and advance in their specific environmental surroundings. ' 26 111.1.1 Purpose of the chapter The purpose o f this chapter is to explore and understand the organizational factors that have contributed to differences i n the performance o f fishing cooperatives i n Yucatan, Mexico . Based on my six-year working experience i n the research area, I concentrated on -the operational rules that members have implemented to govern their personal associations inside the cooperatives. A l s o , I was interested in how such rules have determined the organizational structure o f the cooperatives and how rules and structure have influenced their performance. This study develops several organizational categories to illustrate how the number and type o f rules determine the control within the cooperative, and what organizational elements have been implemented along the levels o f decision inside the cooperative's structure. 111.1.2 Research question In the first Chapter, I established that the two main questions o f the study were (1) what are the major sources o f differential performance o f cooperatives, and (2) how do those sources affect such performance. The sources I analyze in this chapter are operational rules; specifically I explore how they determine the control over interpersonal relationships and influence the emergence and continuance o f different levels o f organizational structure. 111.1.3 Hypothesis The operational hypothesis tested to explore specifically the underlying relationship between operational rules and performance (hypothesis one, page 3) is the following: The larger the number and variety o f operational rules followed by a cooperative, the more satisfied its members and the more catch reported 111.1.4 Definition of terms 1111.4.1. Rules In the study o f organizations, a rule is a regulatory mechanism o f social control by which behavior is shaped into predictable, orderly relationships. In this regulatory connotation, rules are the basis for order within human groups, the mechanism by which behavior becomes dependable by group standards, the procedure by which the internal conflicts are regulated, and the instrument by which collective efforts are mobi l ized to goal attainments (Neal, 1971)- Effective rules, either i n a small group or i n a whole civilization, are patterns o f social relationships that are mutually influencing. Thus, through rules, the interdependency o f members upon.each other is emphasized, arid collective goals are more likely to be attained. Yet , the mere existence o f rules does not assure their compliance. Between rules and observed behaviors lie the mental calculations o f individuals w h o make choices. Some strategies for making choices may result i n reciprocity between individuals, whereas some others may lead to 'free-rider' behavior, that is, when some individuals capitalize the benefits o f collective action without contributing to the collective effort (Oakerson, 1992). Therefore, central to both types o f strategies is the capacity o f the organizations to enforce the rules (Fortes, 1983). Enforcement and, by corollary, the breaking o f rules, is associated with a system o f inducements and punishments intended to make people comply wi th regulations. In this study the concept o f 'rule' w i l l be used concerning its regulatory connotation: a rule is a shared understanding o f how people should behave and what should be done i f someone behaves in a way that conflicts wi th that shared understanding (Edgerton, 1985). Rules are important because they reflect the character o f a group. Then, by identifying certain rules, it is possible to anticipate partially the likelihood o f a particular behavior i n the group (Buck, 1989). Perhaps the most important characteristic for group survival and improved performance is the extent 27 to which rules are known, recognized, accepted and uniformly internalized by all members o f the organization. A l s o important is the strength o f those rules to adaptation to changing extra-organizational conditions. Similarly, recognition and acceptance o f rules requires a high degree o f correspondence between personal motives and group goals. Thus, the success o f social organizations depends upon the extent to which they maximize the fit between personal goals and collective objectives through internal rules, to regulate the interrelationships o f members, and suitable structures to reach the objectives (Neal, 1971). III. 1.4.2. Organisational structure Broadly defined, an organizational structure is a social arrangement i n which the activities o f a group o f people are systematically planned by others i n order to achieve some goal. F r o m this definition^ it is apparent, that functional division operates within an organization. A central authority coordinates the implementation o f plans and rules, and the administration o f the material and financial capital. The plan is a set o f operations organized to achieve the organizational goals, and the capital is the equipment, buildings, experience, ,funds, and any other factor that can.be used for the operation o f the organization (Stinchcombe, 1967). Thus, an appropriate organizational structure is required for the collective action o f numerous individuals under similar working conditions. Flows o f information, group-decision processes, coordination, and enforcement call for a particular structure (Zusman, 1994). Without some group coordination or organization, no benefits can be obtained from the collective action (Olson, 1971). A n organizational consequence o f the need o f efficient information, coordination, and enforcement is some form o f hierarchy (Williamson, 1975). Likewise, Ross and Ross (1989) assert that these hierarchies are necessary to develop rules, roles and leadership according to the people involved, their collective goals, and the changing external circumstances. III.1.5 Organization of the chapter The next sections describe three different frameworks important for this chapter. The conceptual framework, using a graphical device, identifies the variables and shows their relationships. The theoretical framework explains the main theoretical approaches used to analyze the relationship between the variables. The context for analysis describes the typical organizational structure o f cooperatives and the legal rules designed for their operation i n Mexico . Next , the methodology section describes briefly the process o f collecting and analyzing the information, emphasizing the procedure used to estimate the number and strength o f rules and creating the categories o f organizational structures i n which the cooperatives were classified. The subsequent section then presents the results o f the qualitative and statistical analysis applied to answer the research question and the relationships found between rules and different cooperatives' organizational structures. This section also describes the individual group, and organizational decision-making situations faced at three levels o f decision within the cooperatives. The chapter concludes with a discussion on the results obtained, focusing on the influence o f official and traditional rules and corresponding formal and informal organizational structures, on the decision-making processes and, ultimately, on the performance o f the cooperatives. III.2 C O N C E P T U A L F R A M E W O R K Figure II. 1 depicts the conceptual framework employed, i n this study regarding the relationship between operational rules and performance. F o r analytical purposes and based on my empirical knowledge in the study area, I assume that operational rules influence the organizational structure, which is an intervening variable that also affects the performance o f cooperatives. 28 Variables Prior Independent Intervening Dependent Collective w Rules Organizational Performance goals W w structure w Figure III.l. Relationship between rules and performance The independent variable for this study comprises a set o f six operational rules along with a set o f ecologically related rules. The former set facilitates collective action and interpersonal relations, and is adapted from Buck (1989), who uses them to describe social relationships in situations where common property resources are at stake. Operational rules comprise the following kinds o f rules: * Eligibility, which refers to the conditions to be member o f a cooperative * Decision, which refers to the approaches and rules used for decision-making in collective actions * Position, which refers to the conditions that must be satisfied to hold a position i n the various committees * Payoff, which refers to the rewards or penalties assigned to actions or outcomes * Authority, which refers to the authorized actions members can take independendy, and * Information, which refers to the nature and quality o f information that members should share. The set o f ecologically related rules explores the cooperative's attitude towards the biophysical environment and fishing resources. The dependent variable is measured as the members' level o f satisfaction and the average total catch per cooperative from 1993 to 1997. III.3 T H E O R E T I C A L F R A M E W O R K The analysis approach adopted here assumes that rules and types o f organizational structure are intertwined: rules facilitate the rise o f specific structures, and these structures in turn determine the design and modification o f rules or the emergence o f new ones. Because o f this intertwined nature, rules and structures are analyzed from the perspective o f stxuctural-functional organization theories that are concerned wi th the relationships among positions o f authority, groups o f positions, and work processes. In these theories, the organization is the analytical unit and the central concerns are the structure and effectiveness (Hage, 1980). A structure-functional perspective focuses on the achievement o f established objectives through systems o f defined rules and formal authorities (Shafritz and Ott, 1992). In answering the basic question underlying this perspective (what forms o f organization are the most effective and what are the key structural variables influencing performance), I emphasize general variables that transcend cultural settings and. time. Thus, structure itself and rules are used to explain organizational goals. The biggest weakness o f structural functionalism, however, is its general lack o f attention to anything outside the organization (Hage, 1980), concentrating hence on the centralization o f power. In my study, I interpret centralization o f power to be the basis for defining the decision-making unit. The analysis i n this chapter also recognizes that organizations include formal and informal rules. The informal rules complement the formal organization by establishing traditional norms o f operation 29 within the cooperative. Therefore, it is necessary to have an understanding o f the parallel formal and informal elements o f the organizational structure (Blau and Scott, 1962). This analysis o f the organizational structures o f cooperatives also assumes the presence o f three levels o f task performance and decision-making: top or strategic, middle or administrative,. and bot tom or operational. Theorists recognize these levels in any complex organization; for example, Kleindorfer et al. (1993), describe strategic, tactical and routine decision levels! Similarly, Mintzberg (1979) recognizes a strategic apex, a middle line including • supportive administrative staff, and an operating core as components o f the flow o f formal authority in his five interdependent part organizational model. A t the top level o f coordination and decision, the managers are charged with the overall responsibility o f the organization. They have to ensure that the organization serves its mission in an effective way and fulfill the needs o f the whole membership. The formulation o f strategic decisions at this level involves the interpretation o f the environment and the design o f consistent patterns o f organizational behavior to deal wi th the environment. These strategies affect the well being and nature o f the organization. Al though leaders make strategic decisions, decisions can also be highly influenced by people at the other levels o f decision-making. People at the middle level o f formal authority coordinate mechanisms o f direct supervision. These persons pass information on the performance o f the lower to the top level, and help the latter to carry out supervisory activities over the lower level. Middle managers also intervene i n the flow o f resources that must be allocated among organizational areas. They also elaborate plans and operational rules. Kleindorfer et al. (1993) mention that decisions made at this level are tactical. They may contain strategic element, but largely such decisions do not impact the structure or alter the development o f the organization. However , the cumulative impact o f tactical decisions may be as great as that from strategic decisions. Finally, the lower level o f organizations comprises those members who perform the basic work related direcdy to the production and distribution o f products and services. The operational or technical core is the heart o f every organization; it produces the essential outputs that keep it alive. Therefore, it is what the organization seeks to protect through the standardization o f activities. Standardization means that activities are repetitive, local i n scope, minor in consequence, and guided by operational rules. III.4 C O N T E X T F O R ANALYSIS The legal boundaries within which the cooperatives operate i n Mexico are set out i n the General L a w o f Cooperative Organizations (1994). The law specifies, among others things, the basic organizational components in a cooperative, the positions and responsibilities held by members, the range o f activities i n which cooperatives can participate, and the lines o f communication to connect cooperatives to umbrella organizations and the government. This law describes briefly i n three sections the basic structure o f the operational rules described earlier. The three sections are about the cooperative's regulatory chart, the responsibilities o f the general assembly, and the duties and rights o f members. However, the description o f the rules is so vague that each cooperative may interpret these rules according to their own interests and experience, and complement them with traditional rules that do not contradict the official regulations. Some o f the most significant rules are those concerning eligibility (in three articles), wh ich outline the conditions for excluding members and how they can apply for reconsideration. The only decision rule that appears i n one article is the majority rule to make decisions during the general assembly. General discussion o f payoff, information, and position rules appear in two articles, and o f authority rules in one article. N o other type o f rule is specified in this law. 30 In this section, I also illustrate the basic structure o f a cooperative as defined by the law above mentioned. Figure II.2 shows graphically the levels at which decisions are undertaken within a cooperative, as well as their corresponding structural units. The bot tom level has no structural units and comprises all the members not holding a position. Strategic level General assembly Counc i l o f vigilance Counc i l o f administration Adininistrative level Bookkeeper Operational level Secretaries Technical Social Educat ion Arbitration control prevention committee committee committee committee. Membership Figure 111:2. Decisional levels in the organizational structure of fishing cooperatives in Mexico A t the top level, the general assembly ( G A ) , which is the gathering o f all o f the members, is recognized as the supreme authority. The G A analyzes the performance o f the cooperative during the most recent year, and discusses the goals and strategies for the upcoming year. Agreements undertaken i n the general assembly apply to all members. The G A attempts to solve all-important problems and may use traditional rules to shape the development o f the cooperative. These traditional rules have to agree with the official rules defined i n the cooperatives' charter. In the same top level, the board o f directors (BD) is the executive body o f the G A and wi l l represent the cooperatives i n the presence o f authorities, suppliers and buyers. Since the B D is a standing committee, it often has to make short-term strategic decisions whenever there is a problem but it is impossible to gather the G A . Members o f the B D can be in their position for five years and be reelected only once for the same period. Decisions at the top level include selecting the appropriate kind o f financial sources, defining strategies to control or have access over the harvesting, processing and trading, selecting the kind o f markets to deal with, and determining the model o f cooperative's growth (specialization or diversification). Another important committee at this level is the surveillance 31 committee, whose duties are to supervise all levels o f the cooperative. The committee is i n charge o f ensuring that all actions undertaken by any member comply with the regulations o f the cooperative. O n e or more committees and the hired administrative staff represent the middle organizational level. E a c h committee is formed by three members and can be i n charge o f technical control, cooperative education, social prevention (to prevent and attend health problems), and arbitration. Staff may include hired secretaries, bookkeepers, and administrators. Administrative decisions include where to purchase spare parts, how to allocate incomes to pay services, where and when to contact potential buyers, how to manage the bank accounts, and how to allocate economic benefits among the members according to their daily catches. Administrative decisions are related to situations that are repeated routinely every day. Finally, all members that are not holding a position at the top or middle levels represent the bottom organizational level where only technical operations are carried out o n a daily basis. These include securing the supply o f raw material for production, transforming the raw material into products, distributing the production to the buyers, and providing direct support (e.g. maintenance o f equipment) to the previous activities. There are no working units and all members have equal responsibilities and rights. III.5 M E T H O D O L O G Y III.5.1 Data collection Information regarding the independent variables, operational rules, was collected through a series o f face-to-face, semi-structured interviews with members o f boards o f directors o f 21 cooperatives. Questions focused on the kinds o f rules these cooperatives use to regulate the personal interaction o f members and to improve the compliance o f these rules. I was also interested i n learning what kinds o f organizational structures were designed to make the rules operational. Scores o f rules were estimated as described in Chapter II for each cooperative. The dependent variables regarding performance were measured in terms o f the stated satisfaction o f members as wel l as the total average catch per cooperative. I designed a questionnaire to measure the level o f members' satisfaction, as described in Chapter II. The level o f satisfaction was measured as the average o f overall satisfaction o f members within a cooperative regarding all aspects o f cooperative administration, using Likert-like scales ranging from 1 = very satisfied to 5 = very dissatisfied. The design o f the questionnaire and interviews was informed by Fowler Jr. (1995), and Czaja and Blair (1996). Information about the fish production per cooperative was obtained direcdy from the offices that the Secretariat o f Fisheries have in the seven Communities where the cooperatives are located. Catch records contained information on the amount o f K g per species, per month for each cooperative, from 1993 to 1997. I calculated an average annual catch per species for each cooperative to identify production strategies (diversification vs. specialization). A d d i n g the catch per species, I also estimated an average annual total catch per member as a measure o f effectiveness. HI.5.2 Qualitative data analysis The qualitative analysis o f the data is based on its reduction and interpretation. B y reduction and interpretation, I mean that I reduced a large amount o f information to few categories based o n the patterns o f appearance o f certain rules and organizational characteristics. I then analyzed and interpreted those categories to help answer the research questions. The methodology for reducing and interpreting the information involved five basic steps: (1) grouping similar or related answers into categories, (2) writing notes, (3) grouping on the basis for external and internal conditions, (4) creating categories, and (5) creating classes o f organizational structure. In the first step, I quickly read the transcripts from the interviews to gather first impressions from the data, 32 and make major groups o f answers. Groups were created after constandy comparing answers from different respondents to specific questions. Once I had these groups o f answers, I wrote several notes to associate thoughts as I read the interviews again, and to initiate the identification and grouping o f conditions emerging from the data, tracking them from the immediate answers from the respondents, to my notes and to these conditions. Condit ions are the situations required for improving the performance o f the cooperatives, and were grouped into general categories. T o facilitate the positioning o f cooperatives in each category, I developed sets o f sub-categories. Once I had the categories, I read the transcripts o f the interviews again, and compared them with the conditions created to accommodate the cooperatives presenting the same conditions i n different classes. These classes represent groups o f cooperatives that have created similar conditions to reach their objectives. III.5.3 Statistical data analysis Spearman's coefficient o f correlation analysis was applied to determine i f there is a relationship between operational rules and performance, that is, i f the second one increases as the first one does. Regression analysis was not attempted since the relationship between independent and dependent variables is not linear and no other relation was robust enough to allow this analysis. III.6 RESULTS 111.6.1 Data collection A s shown i n Table II.2, Chapter II, five cooperatives i n two communities, were not wil l ing to participate in the survey to measure the level o f satisfaction, therefore the questionnaires were applied to 155 members o f sixteen cooperatives, instead o f the target sample o f 164 members. A s these cooperatives represent two different kinds o f organizational structure, results on satisfaction should be considered with caution. The total average catch per cooperative during 1993 to 1997 shows dissimilar levels o f production, ranging from less than twenty tons per. year from barely operating cooperatives, to more than four hundred and fifty tons from the most productive ones. Catches are arranged and shown i n the statistical analysis subsection. 111.6.2 Qualitative analysis 111.6.2.1. Creation of conditions and categories The main category created regarding organizational issues was organizational control (see Table III.2). This category involves the control o f cooperative tasks through well-defined lines o f authority expressed by the presence o f different working units wi th specific responsibilities (Sub-category: structural units). Organizational control involves i n turn the assemblage o f different levels o f decision-making depending on the type o f decision situation faced (Sub-category: level o f decision-making), and a corresponding unit o f strategic decision-making (Sub-category: unit o f strategic decision-making). The 'structural units' sub-category is defined by several conditions that show the kinds o f administrative units that have been established by cooperatives to delegate authority and responsibilities for the achievement o f collective objectives. The kinds o f units included having no units at all, setting up the board o f directors and several cornmittees, devising an administrative unit and hiring secretaries and bookkeepers, and implementing processing, packing, and trading areas. Finally, categories were created to group cooperatives into those without any structural units, those that have some o f these units, and those that present almost all o f the units. The 'levels o f decision' category involves a bot tom level represented by members making only operational decisions concerning daily fishing activities, a middle level that involves several committees, 33 secretaries, and bookkeepers that make mainly administrative decisions, and a top level that is concerned with strategic decisions to solve very important problems that may affect the development and even the survival o f the cooperative. The top level focused on the next sub-category, the unit o f control, the one that makes the strategic decisions. Possible conditions ranged from no one making such decisions, or these being made by the board o f directors, the general assembly, or by an autocratic or supervisory leader. Table III.2 shows the classes o f cooperatives according to the conditions they have implemented to improve their effectiveness. Classes are described i n detail in the following subsection. T o make a rough estimation o f how well , or bad, cooperatives are doing, they were compared with an ideal democratic cooperative ( IDC) , which hypothetically should have the following conditions: 1. Setting up o f the board o f directors and four committees 2. Setting up o f an aa'ministrative unit, hiring secretaries and professional bookkeepers 3. Setting up o f a processing, packing, and trading unit 4. Making operational, administrative, and strategic decisions at the corresponding bottom, middle and top levels 5. Having democratic control 111.6.2.2. Organisational structures I defined three classes o f organizational structure based on the qualitative analysis o f information provided by the interviewees. I called these three classes permissive, democratic and authoritative (Table III.2). The three classes defined here, which follow the approach o f Ross and Ross (1989), are parallel to the institutional arrangements explored, by Orbel l and Wi lson II (1978) i n their study o f institutional solutions for N-prisoners' dilemma. These arrangements are uncoordinated individualism, majoritarian democracy, and selfish dictatorship. E a c h class i n my study contains two different structure types described on a control continuum. A t one extreme, laissez-aller (unrestricted freedom) cooperatives exert practically no control on their members: O n the other extreme, autocratic leaders exert total control over the other members o f their cooperatives. The following description o f the structures explains the different levels o f decision-making and the organizational units present i n each type o f structure. The description also identifies the unit o f control, and relies on the average score o f rules per type o f structure to emphasize what rules are the most significant for each type (see Table II.3). Finally, it shows the relationship between the number and type o f organizational elements and score o f rules. It is appropriate to recall that the hypothesis is that the cooperatives with higher scores o f rules have more structural units, make decisions at the three different levels, have a more democratic control, and therefore are more likely to be more successful. 34 co V eS <U a, w P > o- • t i eS u w . §* o u co U CO CO CS 73 o <u CO - a u ti .ti cs u „ cs <u CO - j eS « ti CO o § •g a o o 4» ^ ' ^  CO u ti *d o « '2 CO fl •fl § 5 u W> cS eS ti U -ti ' co la si ti o o CJ • t i cj o B u Q o w CS U Q CJ • t i CS u o O s CJ CS PH •a-3 CO ti O u u o y N CO U co S3, 'cs 5 8 + + + + + + + + + + + + + + + + + (J ti O CJ <U - t i o > o <u cs CJ i cs •a + + + + + CS C O • t i <S i-i S-I O a o •tl o 4-u de Xl a <u CO CO eS ISO <U <u a . & CJ + 9 + + + r-+ • a o •ti a o o u a u 4) CS . u l.s IT) J Table III.3 Average scores of operational rules among different organizational structures. Permissive Organizational structures Democratic Authoritative Rules Laissez -aller (N=3) Non-directive (N=3) Consultative (N=4) Participatory (N=3) Supervisory (N=3) Autocratic (N=5) Eligibility 15 11 Decision 0 10 14 If 12 1 Position Payoff Authority Information Ecological Total 11 33 41 56 46 14 N— the number o f cooperatives in each class III.6.2.2..1 Permissive cooperatives In this class, organizational control o f members' actions is minimal. Once this min imum o f organizational control is achieved, the cooperative focuses on mamtaining the status quo. There is practically no organizational structure. 111.6.2.2.. 1.1Laissez-aller cooperatives Three out o f twenty-one cooperatives in the sample are at this level o f control. Laissez-aller cooperatives exhibit the weakest type o f members' control. That is, they have devised the smallest number o f operational rules among cooperatives i n Yucatan. The total average score o f rules is eleven. Scores for decision and information rules is zero, and for position and authority rules are only two, reflecting the lack o f a board o f directors, committees, or any other organizational unit. This situation means that expectations and objectives o f the members can be satisfied wi th a low organizational level. These cooperatives avoid defining responsibilities and lines o f authority, their members make mosdy operational decisions and take adaptive actions to reduce the effects o f problems but without correcting them. Their only 'strategic' objective is to get fishing permits for catching lobster, but once the permit is obtained, each member works individually i n his own boat, and usually sells his catch to the buyer who finances the fishing permit fee. N o n e o f these cooperatives has administrative staff, assets or capital, and they do not hold any formal meetings. III.6.2.2..1.2 Non-directive cooperatives Non-directive cooperatives show a higher organizational level since their average score o f rules is thirty-three points, nineteen o f which are concentrated on eligibility and decision rules. The average scores for position, authority, payoff and information rules are o n average tAvo-three points, not too different from scores in laissez-aller cooperatives (see Table III.3). Therefore, these cooperatives are characterized by unclear lines o f authority, merely informative general assemblies, low members' participation, and weak patterns o f communication i n the decision making process. These cooperatives are focused on maintaining the status quo; this type o f control is efficient when there is no need for change. Objectives are reduced to provide members with a job opportunity and to accomplish min imum production expectations. There are no goals to increase production or level o f organization. 36 Three cooperatives operate with this organizational structure, in which the board o f directors performs the administrative tasks since there is no other supporting committee or staff. Assets include the boats, engines, gears, and basic equipment to keep the catch for one day and to transport it to the buyer processing facilities. III.6.2.2..2 Democratic cooperatives In democratic cooperatives, the general assembly is recognized as the supreme authority. Since the assembly is the gathering o f all the members, there is a more democratic control over the cooperatives' interests. Therefore, there is an increased level o f participation o f the members i n the development o f the cooperative. Members ' participation in decision-making is expressed through individual votes. III. 6.2.2:. 2.1 Consultative cooperatives In consultative cooperatives, there is a general increment in the different rules average score. The total average score is forty-one points, fourteen o f which are for decision rules. Despite the recognition o f the general assembly as the supreme authority, the board o f directors is the effective unit o f control over the decisions that affect the whole organization. The board o f directors is very influential as it receives information direcdy from the extra-organizational environment when representing the cooperative with the authorities and dealing with buyers and suppliers. This information is then used to influence the opinion and position o f other members regarding specific decisions. Al though patterns o f participation are higher than i n previous levels because members share the cooperatives' problems and provide ideas and suggestions, the final decisions made by the B D may not reflect the membership's inputs. This situation corresponds to the consultative level o f citizen participation described by Arnstein (1969) in which participants are asked for their opin ion regarding a specific issue but wh ich is finally solved without considering such opinion. The board tends to be ready to make changes when they are required, but without previous commitment to change. Four cooperatives exhibit a consultative level o f control wi th a number o f committees to back up the board o f directors. These cooperatives have hired secretaries and bookkeepers to perform the administrative duties. The value o f assets owned by consultative cooperatives is higher since gear, truck and catch-icing equipment are newer and bigger; each cooperative owns its own building to. ho ld meetings, and to accommodate administrative offices and storage rooms. III.6.2.2..2.2 Participatory cooperatives In participatory cooperatives, the participation o f members i n the management o f the cooperatives is at its maximum expression. Correspondingly, decision and eligibility rules scored eighteen and fifteen, respectively, are the highest scores among the cooperatives sampled. In general, members are more will ing to plan alternatives to achieve their objectives. Setting forward production goals and planning members' development i n advance are important elements for the progress o f these cooperatives. Besides regular meetings to monitor the directors' performance and to discuss any k ind o f problem affecting the organization, positions rules allow the set up o f committees to delegate responsibilities among members, which then have more participation i n the control o f the cooperative. Specialized staff carries out the administrative duties, always under the supervision o f the committees' members. Three cooperatives are at this organizational level, which has made it easier for them to own more varied and valuable assets. Fo r instance, one group has processing, packing, and freezing facilities, which allows it to sell direcdy to the national and international markets. Another cooperative manages its own gas station to supply about one thousand fishermen i n three fishing communities. III.6.2.2..3 Authoritative cooperatives In this class, the cooperatives' control depends almost entirely on one leader whose opinion is accepted by his authority inside the group. The structure o f the cooperatives reflects the structure o f the 37 corporate sector, since these groups are located i n the most developed fishing community that has a business-oriented atmosphere. Cooperatives try to copy the administrative structure o f the fishing firms located i n the community, although some o f them are inactive because the leaders exerted exclusive control over the organization, using it entirely to satisfy their personal interests. III.6.2.2..3.1 Supervisory cooperatives The organizational structure o f supervisory cooperatives is reduced to one leader, one general administrator, and administrative staff. Hence, position rules' scores represent only 8% o f the total score. D u e to the small size o f these groups (less than 20 members), no other committee is set up. The leader, holding the president position in the board o f directors over a course o f five to ten years, exerts general supervision on all the fishing processes; from preparing the vessels for catching to processing and trading o f the catches. Decis ion rules comprise 26% o f the total score. Because o f this concentration o f power, information, and responsibility, these groups are thought o f as the most efficient cooperatives because o f their firm-like structure. The leaders tend to plan their actions ahead o f time in order to achieve the cooperatives' objectives. Administrative staff usually includes one or two secretaries and a bookkeeper supervised all the time by the leader or the administrator. Despite the fact that the leaders define production goals and strategies, they consider members' information and input to assess or to generate alternative options. This feature increases the legitimacy o f decisions among the members. Three cooperatives are identified as supervisory, two o f them own large-scale vessels, vehicles, offices, and processing facilities; thus are technically and financially independent. IIL6.2.2..3.2 Autocratic cooperatives • . . ' In autocratic cooperatives, the tightest control is exerted over the members. However, rules scores are the second lowest, fourteen on average, because rules are highly personalized, thus constrained, to satisfy the leaders' interests. In these groups, the leader exercises a strict, close supervision o f the members and their tasks. The concentration o f authority and decision-making is the highest among all types o f cooperatives. The leaders make decisions without consulting or mforming the members. There is no delegation o f authority; therefore, the leader's personal interests override cooperatives' interests. Administrative staff is reduced to a single secretary. Assets included mainly large-scale ships that were acquired through bank credits, but had been lost because the financial administration directed the investments to satisfy the leaders' welfare. These cooperatives had no processing facilities, making them entirely dependent on the buyers to process and trade the catches. A l l o f the five autocratic cooperatives reported very low catches during the five-year period o f catches analyzed. III.6.3 Statistical analysis Table III.4 shows the results o f the average overall satisfaction, the average catch and the score o f rules per cooperative. A not-so-clear association was found between the scores o f rules and performance. F o r example, some cooperatives with scores o f rules ranging from 42 to 53 reported less satisfied members (average satisfaction = 2-3) than other cooperatives with lower scores o f rules ranging from 28 to 40 (average satisfaction = 1.7-1.9). Similarly, despite a tendency o f higher average catches matched with higher rule scores, there are some inconsistencies with this relationship. Fo r instance, less structured cooperatives (CP, E C , and R L ) recorded higher catches (343, 217, 337 tons respectively) than those having a more structured organization and higher scores o f rules ( T P M with 179 tons, PS wi th 133 tons, and C A with 17 tons). In the next section I discuss the causes o f these discrepancies. A l l other cooperatives have lower rules' scores and reported their members as dissatisfied (4) and very dissatisfied (5). 38 Table III.4 Summary of overall satisfaction, average catch (tons), and total score of operational rules of fishing cooperatives in Yucatan Cooperatives Id Organizational structure Average Satisfaction Average Catch (tons) Total of rules score RLP Participatory n.a. 433 • 64 SF Participatory 2.9 484 53 DB Participatory 2.0 318 52 TPM Supervisory n.a. 179 48 PS Supervisory n.a. 133 47 CA Supervisory 1.2 . 1 7 43 PG Consultative 2.7 100 43 CP Consultative 3.0 . 343 42 EC Consultative 1.7 217 40 PvL Consultative 1.7 337 40 CCB Non-directive n.a. 69 36 PD Non-directive n.a. • • -37 35 CPP Non-directive 1.9 68 28 PI Autocratic 5.0 5 18 DP Autocratic 5.0 1 17 PII Autocratic 5.0 19 , 13 PC Laissez-aller 5.0 0 12 PCH Autocratic 4.0 1 12 NK Autocratic 5.0 0 12 E Laissez-aller 4.0 2 10 B Laissez-aller 5.0 0 10 I estimated total catch per cooperative and catch per member as direct measure o f performance. However, all performance measures have some inherent biases and limitations. Tota l catch seems like a good measure but it ignores the different sizes o f membership o f cooperatives. . Catch per member seems reasonable, but it has disadvantages too. Us ing total catch, a ranking o f the cooperatives, from the most productive to the least productive, gives the following order: participatory, supervisory, consultative, non-directive, autocratic, and laissez-aller. O n the contrary, when using catch per member, the order is different: supervisory, non-directive, participatory, consultative, autocratic and laissez-aller. That is, i n comparison with the total catch per cooperative as indicator, catch per member switched the position o f non-directive' cooperatives to be more successful than democratic cooperatives. T o make productive each fishing trip, a crew o f at least two fishers, or even three when catching octopus, need to be present to operate the boats. I didn't use the catch per member as an indicator o f cooperatives' performance because in non-directive cooperatives the number o f members and boats is almost the same, indicating that there is only one member per boat. Therefore, non-members are required to operate the boats. This situation overestimates the catch per member i n non-directive cooperatives. Regarding the organizational structure, the cooperatives with the lowest number o f rules have the lowest control and hence the weakest organizational structure (none or few committees and administrative staff), whereas the cooperatives wi th higher structured organization (several committees and administrative staff) have higher rules' scores. O n one extreme, the three participatory 39 organizations (RP, SF, and D B ) accounted for higher scores o f rules, reflecting their democratic nature. A l l types o f rule are invoked during" the general assemblies and during the daily tasks to coordinate the operations o f committees, members and staff. O n the other extreme, all non-directive, laissez-aller, and autocratic cooperatives have no administrative units and staff, hence their structure needs fewer rules to maintain and operate. Supervisory and consultative cooperatives are i n an intermediate position, although the former shows a higher score o f rules. The difference is that supervisory cooperatives have implemented more structured rules to interact wi th intermediaries. The Spearman correlation coefficients estimated from the total score o f rules as independent variable and the satisfaction and average catch as dependent variables are Ro=0.68 for satisfaction and Ro : r : 0.86 for average catch. Because o f these coefficient values, it is possible to say, according to the sample analyzed, that there is a positive relationship between performance and operational rules. Put i n other words, it is possible to assert that there is a tendency for the cooperatives with higher score o f rules to have more satisfied members and to report higher levels o f production. III.6.4 Operational rules in action: a democratic decision-making I describe the way decisions should be made in a democratic cooperative organization to make the application o f operational rules more understandable. There are at least four decision-making situations that cooperatives i n Yucatan have to deal wi th depending on the type o f organizational structure. The situations can be: 1. organisational strategic when, important decisions are made during the general assembly, as in participatory cooperatives; 2. individual strategic when relevant decisions are made by individuals, as i n supervisory cooperatives; 3. group administrative when the board o f directors make mosdy administrative decisions, as in non-directive and consultative cooperatives, and 4. individual operational when members make only individual decisions related to their fishing activity, as in laissez-allure and autocratic cooperatives. . Therefore, the general assembly, the leaders, and the board o f directors can be considered as the units o f control in different cooperatives. The cooperatives making organizational and individual strategic decisions also make administrative and operational decisions at the corresponding middle and bottom levels. The cooperatives making group administrative decisions also make operational decisions at the bot tom level. The cooperatives making individual operational decisions make no other kind o f decision. I describe only organizational strategic decisions to illustrate the implementation o f operational rules. T h e other three types o f decision-making are described in detail i n Append ix E . 111.6A.1. Strategic organisational decision-making A descriptive model o f organizational decision-making explains how cooperatives make strategic decisions concerned wi th the achievement o f collective goals. The model assumes that the general assembly is recognized as the major authority. The model was developed based o n the descriptions made by the interviewees and o n the Ross and Ross (1989) and Fisher (1974) models. Figure II.3 depicts the three phases o f the decision-making process. In the first phase, before the general assembly, a problem is identified mainly concerning the failure o f achieving a specific collective goal. Information rules define the authorized channels o f communication between members o f the cooperative holding different positions. Information rules also specify the way information has to be transmitted (language and form) from those concerned with the identified problem to the board o f directors, and from this to the rest o f the members. 40 Next , using authority rules, the board o f directors has to set an agenda to discuss the problem, propose alternative solutions to it, and determine what structural units are going to implement the solution adopted. The same board carries out the procedure to call for the meeting, defining the date and time. In the second phase, during the assembly, there are i n turn three stages to reach a consensus and actually make a decision. The stages are information, discussion, and emergence o f a decision. In the information stage, the members take a tentative position because they might have a partial information or understanding o f the decision situation. Therefore, this stage serves to ask for and receive information, which has to be, under information rules, clear and reliable. Information should provide the members wi th directions and ideas to support or reject alternative solutions to the problem. In the discussion stage, at least three coalitions emerge: those who support and those who oppose the decision proposals, and a non-participatory coalition. Therefore, negative-positive interactions are always present in the development o f any cooperative. The non-participatory coalition does not actively engage in the discussion between the other, two coalitions, typically playing a spectator role. . However , this coalition can be gready important when it comprises most o f the members: i f they have to take a position and vote, they wi l l determine the final decision. Therefore, the 'pro' and 'con' coalitions have to be talented i n formulating convincing arguments i f they want to succeed i n the decision process. Still at the discussion stage, a consensus may arise regarding the setting o f the solution. Members may. realize that the solution can be found internally and that the cooperative has the means and resources to implement a specific solution. O n the contrary, members may find out that the solution is external to the cooperative, and they have to deal with the environment to reduce or eliminate the problem. It may happen as well that the solution has a combination o f both internal and external conditions i n which case mixed actions and means have to be implemented. Scope rules play an important role at this stage because these specify the set o f means and actions, and their costs, the cooperative considers as acceptable. I f the solution is internal, the problem may be divided into sub-problems and either assigning them to working units for specific solutions, or attending the sub-problems at different times. The first option is known as local rationality, whereas the second option as sequential attention (Cyert and March, 1963, i n Chen, 1984). In either case, distributional or temporal paths allow for the efficient use o f the means and resources that the cooperative has readily available to solve its problems. O n the other hand, i f the solution is external, the first action is to search for information to find the means, resources, and aid necessary to solve the problem. Authori ty rules are used at this point to decide the structural units (committee, aclministrative staff) that should take actions. Depending o n the severity o f the problem, the information search can be made simpler by seeking assistance from known sources at the local level. Complex information search involves looking for new sources o f assistance at the regional or national levels. Once identified, cooperatives have to negotiate with the sources o f assistance, which include political, legal, scientific, social and economic agents. The experience o f the members influences the success o f the searching and negotiation (Chen, 1984). The third stage in the second phase, during the assembly, is the decision emergence, when the coalitions have expressed both 'pro' and 'con' arguments and the cooperative moves close to consensus because members are changing their opinion or because they temporarily accept the other coalition's . opinion. Members make their position public regarding the decision situation at the end o f this stage in the voting process. Unanimity is not necessary to make a cooperative decision since the majority rule, a decision rule, has been agreed in most cases. The majority rule gives the consensual character o f 41 decision-making i n cooperatives. Once a decision has been made, the agreement is valid to all members, even those i n opposition and the absent ones. The final phase in the decision-making process, after the general assembly, implies the implementation o f the appropriate action to overcome the problem, according to the agreement reached. I f the solution proposed implies costs and benefits for the members, payoff rules wi l l help to define how these costs and benefits are to be distributed among members. In this phase, there is a prescriptive component o f the decision-making process regarding organizational learning. I f the problem is solved, the cooperative should reinforce or increase its knowledge about the definition and evaluation o f problems, and the implementation o f appropriate solution actions. The knowledge gained should then be applied to achieving other collective goals. I f the problem is not solved, a new meeting is called upon to reevaluate the problem and identify better solutions. This feedback mechanism may help to neutralize extra-organizational disturbances and the associated risk and uncertainty. In Chapter I V , I discuss i n more detail how cooperatives incorporate new knowledge to increase their ability to adapt to new extra-organizational circumstances and how it influences their performance. III.7 DISCUSSION A c t i o n within and performed by cooperative organizations. is collective action. Collective action implies an interdependent aggregation o f individual choices aimed to reach a c o m m o n goal. O f course, individuals may have different and often contradictory interests. In order to regulate the personal interaction o f self-oriented individuals and lead them towards the achievement o f c o m m o n goals, coordination mechanisms and rules have to be devised and implemented. Mechanisms and rules should focus on individual decision as wel l as on group structure and interaction. Other researchers have reviewed many formal theories and models o f collective action (Oliver, 1993). O n e model that seems relevant to this study is based on the general issue o f 'second order' problems o f collective action, such as the generation o f sanctioning and rule-creating systems. Heckathorn (1988, i n Oliver, 1993) models sanctioning systems i n which an external control agent imposes collective actions on a group: i f any member o f the group defects, the whole group is punished. The model shows that external sanctions can drive members either way, to enforce compliance or use their local sanctions to resist the external control agent. B y considering the central government as the external agent o f control, formal rules as the external sanctions, and locally developed sanctions as informal rules, it can be shown that fishing cooperatives i n Yucatan had imposed internal rules to force cooperation and reduce defection. I elaborate more on formal and informal rules below III.7.1 The nature of operational rules In this chapter, I am interested in a set o f operational rules used by more than one person to regulate decision-making and interpersonal relationships during interdependent collective actions. The character o f the set o f rules is defined as prescriptive and configurational. It is prescriptive because it refers to actions that are prohibited, permitted or required. In this way, rules structure particular situations. Since rules are variables that can be changed and are used to structure situations, it is then possible to modify these situations by changing the rules. Theoretically, operational rules may be modified i n order to change the structure and internal personal interrelationships o f any organization (see Ost rom, 1986). The set o f operational rules I analyzed i n this chapter is configurational because they joindy affect the structure o f situations. Configuration means that the operation o f one rule depends 43 upon the operation o f the other rules i n the set. Thus, authority rules that define delegation o f authority from the board o f directors to the administrative level to the operational level should be complemented wi th position rules to define what structural units should hold authority on a particular matter. Complex organizations, because, o f their size (democratic cooperatives) or their diversification (supervisory cooperatives), have set up more committees with authority to coordinate more complicated relationships among an increased number o f members wi th a more diversified range o f activities. Similarly, payoff and eligibility rules may act together as a barrier or an incentive for potential members. Harder eligibility criteria, small rewards and tougher penalties (as in democratic cooperatives) may prevent fishermen from joining a cooperative. Flexible eligibility criteria, large rewards and few or no penalties (as in laissez-aller cooperatives) may i n turn induce fishermen to participate in a cooperative. The methodological consequence o f the configurational character o f the operational rules is that a researcher needs to specify a set o f rules, instead o f a single rule, as the unit o f analysis. Operational rules are norms that can not be studied separately. Instead, when changing a rule, theoretically and practically, it is necessary to consider carefully which other rules may be affected or should be modified and how the outcome relationships or situations may change. Thus, when the question is how to change an organizational structure (as a particular situation) it is necessary to know which set o f operational rules determine, among other factors, that structure (see Ost rom, 1986). III.7.2 Rules, structures and performance The partially non-conforming results shown i n Table III.4 between rule scores and performance can be explained i n at least two ways. The first is that satisfaction o f members and collective goals may be achieved with a few operational rules and a lower organizational structure. Fo r instance, members o f non-directive cooperatives have reached individual goals with fewer, simpler rules, and have matched them with cooperative's goals. Routine activities o f members are focused on production and consequendy, decision-making rules are not directed to best outcomes, but to satisfactory ones. The administration o f these cooperatives is conducted in fact by the intermediary, whose administrative structure and capabilities are more developed. Transferring their administration to intermediaries provides less structured cooperatives a two-fold benefit. First, there is no need to set up committees or hire external staff; and second, being i n charge o f the processing arid commercialization o f the catches the buyer absorbs uncertainty from the market. Bo th situations allow the cooperatives to concentrate o n production and.to protect the operative tasks from disturbances. Consequendy, however, the connections between organizational levels are weak, developing a loosely coupled system (Weick, 1966, i n Hougland and Shepard, 1980), whose main, i f not the only, objective is to maintain a specific level o f production. The second factor that may explain why more structured organizations are apparendy less efficient is cooperatives' readiness to change. Fo r instance, the three supervisory cooperatives started their adaptation to a firm-like organizational structure in the early 1990s. In fact, one o f them re-structured its organization i n 1996. Re-strucmring was necessary since these cooperatives were performing poorly; it is since their re-stmcturing that catches have been steadily increasing. O n the contrary, the previous non-directive cooperatives have maintained their structure since their inception i n the early 1980s, which has allowed them to dominate their technical operations and keep constant catch records. 44 O n the other hand, organization size has a positive effect o n administrative intensity because the organization's structure becomes more elaborate, producing coordination problems for which the organization compensates by hiring additional admimstrative staff. Administrative intensity is defined as the relative size o f administrative personnel i n the organization (Freeman and Hannan, 1975). The participatory and consultative cooperatives are the biggest ones (100 - 200 members), thus having the necessity to create a higher number o f committees and hire professional and nonprofessional supportive staff at the middle level i n order to maintain their more complex democratic structure. Depending on the relative number and complexity o f operational rules, cooperatives depend, to a varying degree, on their own resources or external forces to shape their development. Internal and external dependency influences, in turn, the performance o f these groups. The market dependency o f consultative, non-directive, autocratic, and laissez-aller cooperatives is inversely proportional to the respective total rules' scores: the lower their scores, the higher their dependency. Autocratic and laissez-aller cooperatives depend totally on different buyers, transferring to them all strategic and administrative decisions. Consultative and non-directive cooperatives deal wi th the same buyer, but the reliance on more operational rules makes consultative cooperatives more independent than non-directive ones. O n the other hand, participatory cooperatives have established exchange relations wi th one or two buyers, but the higher number o f operational rules devised allow them to increase their influence on, and minimize the influence from the market. Therefore, the wider the range o f rules, decisions, and options available, the more independent a cooperative is from external regulations. O n the contrary, the more dependent it is on outsiders, the less autonomy on decision-making and rule devising. In summary, there is a general tendency o f Yucatan cooperatives to be less effective as their autonomy decreases. III.7.3 Informal and formal operational rules of cooperatives A s a formal organization, the cooperatives are shaped by formal rules that are designed by the central government and are stated i n the cooperatives' chart. Therefore, it is expected that all cooperatives wi l l comply wi th these rules^ A t the same time, there is a set o f customary, informal rules characteristic to each group that make them different in one way or another. Thus, the particular combination o f these two sets o f rules determine the structure o f the cooperatives in the way o f setting positions to be held by members, defining the conditions to enter to and exit from the group, and determining lines o f authority, information patterns, and payoff arrangements. The control that results from a combination o f rules and organizational structure gives each cooperative its distinct capabilities to achieve.its particular goals. Rules in general are important because the interdependence o f members upon one another is complex. I f collective goals have to be attained, effective control within voluntary associations needs to design patterns o f social relationships that are supportive and mutually reinforcing. Cont ro l is achieved through rules that have to be well understood by participants to be used i n any situation (Ostrom, 1986). Further, rules can be viewed as relations stiucmring these situations. In this situational analysis, rules are not seen as direcdy affecting the participants' behavior. Rather, members use rules to determine a set o f actions or outcomes from participating in a group. Individuals rarely expect only one outcome from being a member o f an organization (Ostrom, 1986). 45 T w o general types o f rules have governed personal interrelationships within cooperative organizations. One type includes informal or traditional rules, which have behind them the authority o f the society that have created them, increasing the compliance o f individuals on what is sanctioned. Informal rules are designed in a common language that is understandable to any individual. This fact facilitates incLividuals' participation i n the enforcement o f the rules. Dissemination is usually done through cultural practices, such as storytelling, performances, dances, and patterns o f behavior defined locally. Informal rules pervade even social organizations' boundaries because the practical performance o f organizations is determined by the social context within which they operate (Putnam, 1992). The other general type o f rules comprises formal rules, which are designed by experts that use a more technical language and have control or direct access to social structures with enforcement capabilities. D u e to the written nature o f formal rules, only literate people have direct access to them, but because they are fraught with technicalities, their correct interpretation is restricted to other specialists. The dissemination o f formal rules is transferred to a legal structure or a central administration. Formal rules are often equated to laws dictated and enforced only by central governments, embedded i n highly complex legal frameworks, and being increasingly ambiguous. These characteristics make formal rules hard to understand and adopt by individuals that have followed traditional rules for generations. It is hard to say which type o f rule has been more important for the development o f the cooperative sector i n Yucatan fisheries. What seems reasonable to accept, according to the interviews, is that the relative compliance o f cooperatives' members is positively related to the strength o f external, formal rules and the level o f control exerted by other members. Another external control agent that also imposes rules o n the behavior o f cooperatives is the market. Its influence has contributed to render interesting patterns o f distribution o f organizational structures along the coastal communities i n Yucatan. Spagnolo (1999) points out that cooperation becomes harder i n communities after they get i n touch with developed markets. However, the personal (or impersonal) relationship established direcdy between the community and its organizations, and the market agents (intermediaries) has to do also with the continuance or breakdown i n cooperation. F o r example, the five democratic cooperatives distributed i n the four easternmost communities have higher levels o f cooperation and compliance with official and market rules because members have traditionally based their personal interactions on strong social, production and resource control rules (Murphy and Solis, 1983). O n the contrary, laissez-aller cooperatives i n the westernmost community had responded to external control agents in an entirely different manner. Access to developed markets has brought an increase in freedom to engage in market exchange relations o n an individual basis and this has eroded cooperation. E a c h cooperative member has become free to interrupt his relation with the cooperative, to obtain credit from the intermediaries instead o f continuing to cooperate i n the credit relations o f the cooperative, and to seek particular buyers instead o f selling his catches to the cooperative. Loyalty to cooperative organizations has been drastically undermined. Market regulations have reduced the strength o f traditional rules and punishments, guaranteeing intermediaries a higher level o f production. Informal rules have been overcome by exchange transactions, reducing cooperation and collective action to the 46 point that traditional social and resource control relationships are not sustainable in the long-, term. The basic process through which community informal rules are transmitted into voluntary organizations, such as cooperatives, is by imitating the success o f other community members (see Zucker, 1987). Imitating the social reality o f the community within the organizations' structure is important because it increases the flow o f societal resources and enhances long-term social stability within (he organization. O n the other hand, the process by which formal rules are transmitted to voluntary organizations is through a normative transference o f legal rules. W h e n legal rules exert large pressure on the social organizations, these usually protect their operational activities by isolating them from the rest o f the organizational structure, reducing its efficiency by focusing on production (Meyer and Rowan, 1977). F o r instance, as changes i n the legal framework for exploiting fishing resources introduced the responsibility o f fishermen to manage and plan their production, most cooperatives focused only on production and transferred management and planning to the intermediaries. Finally, rules also arise within the organizations. Some internal regulations are readily "institutionalized", that is, codified into operational rules and maintained without further justification and elaboration, and are highly resistant to change (Zucker, 1987). Thus, understanding particular combinations o f formal and informal rules is important to understand the structure and performance o f cooperatives. 47 C H A P T E R IV A D A P T A T I O N A B I L I T Y A N D P E R F O R M A N C E I V . l I N T R O D U C T I O N Adaptation to change is a fundamental process by which entities thrive over time. Wi th in biology, adaptation refers to both physiological and evolutionary processes. Physiological adaptation is an organismic response. to variations in environmental parameters i n order to maintain homeostasis. Evolutionary adaptation in turn refers to genetically based changes across generations that may result i n more efficient use o f specific environments (Alland, 1975). Anthropologists have adopted these definitions to provide analogies o f human individual processes in cultural studies. Adaptation has also provided a framework based on evolution and natural selection that incorporates the heterogeneity o f individual and collective human behavior (Barlett, 1980). In organization theory, population ecology approaches focus on competition, selection, and survival o f the fittest in populations o f organizations. These approaches resemble Darwinian theory o f evolution i n that survival o f an organization depends on its ability to acquire adequate supplies o f critical resources (Shafritz and Ott, 1992). The term adaptation does not imply that there is a best, unique opt imum response to a specific environmental situation. O n the contrary, it conveys the idea that adaptation has enough positive features to re-establish equilibrium with the environment, but at the same time it also has negative features. Just as biological evolution is constrained by the inherited structure o f populations, human groups and individuals are affected by inherited cultural structures (Barlett, 1980). In fact, some authors have distinguished between individual and organizational adaptive strategies (Whitten and Whitten, 1972). The difference is that individual strategies are short-range choices to adjust to their environment, whereas long-range changes made by organizations are adaptive processes that involve structural reorganization. Adjustment strategies and adaptation processes are responses to different kinds o f crises between the individual or organization and the environment (Hage, 1980). Before responding to environmental changes, organizations must seek information helpful i n clarifying the choice o f response. The gap between the information the organization possesses and what is needed as a result o f a new relationship with the environment, generates levels o f uncertainty that l imit the ability o f the organization to plan and to make decisions (Galbraith, 1973). One o f the main objectives o f any organization is to close this gap and reduce uncertainty. Changes in the environment may be produced by different elements, which may be divided into two major categories, the technical-natural environment, and the social, political and economic environment (Barlett, 1980). Adaptation has been analyzed at the individual level (Payne et al. 1990; Dalsgaard, 1996), as wel l as at the collective level, such as i n higher education schools (Peck, 1984; Cameron 1984), firms (Cyert and Kumar , 1996), and other organizations (Whetten, 1987; Cyert and March , 1988). Studies o f fast adaptation responses have been supported by the military (Payne et al., 1993). A few studies have tried to understand the influence o f a set o f adaptive responses on cooperatives' performance when adjusting to environmental disturbances. M c C a y (1980) and Orbach (1980) have characterized cooperatives as an adaptive mechanism for improvement o f members' economic performance, especially when they depend financially on a monopolistic group o f intermediaries. O n e set o f cooperatives' adaptive approaches, as outlined by M c C a y (1980), includes investing i n facilities, purchasing supplies, and hiring professional managers. Adaptive strategies o f cooperatives to adjust to market demand and resource availability include specialization and diversification o f production (Vasquez-Leon, 1995). In addition to economic adaptive responses, Petterson (1980) analyzes the political and social adaptation o f fishing cooperatives on the pacific coast o f Mexico . Adaptive psycho-48 cultural characteristics, such as independence, have also been identified as mechanisms to help fishermen to cope with environmental uncertainty (Poggie, 1980). IV.1.1 Purpose of the chapter The purpose o f this study is to investigate how organizational factors influence the performance o f fishing cooperatives i n Yucatan, Mexico . Based on my empirical experience and my review o f relevant organizational literature, I concentrate i n this chapter on the adaptive ability o f cooperatives to respond to changes i n the extra-organizational environment as a means o f re-establishing its equilibrium with the external environment. I also analyze how these responses are determined by different organizational structures, and what aids and strategies cooperatives use for adaptation. T o achieve this analysis, I have developed a framework with several levels o f organizational adaptive ability J to classify cooperatives according to their ability to adapt. IV.1 .2 Research question I established two main research questions i n the first chapter. These were (1) what are the major factors influencing differences in performance o f cooperatives, and (2) how those factors affect cooperative performance. T o answer these questions, it is important to know what k ind o f dynamic relationships exist between the cooperatives and their social, economic, biophysical, and political surroundings. IV.1.3 Hypothesis T o guide the answer o f the research questions, I formulated the following operational hypothesis: The higher the adaptive ability o f a cooperative, the more satisfied its members and the more catch reported. IV. 1.4 Definition of terms TV. 1.4.1. Organisational adaptation, learning and development Al land (1975) defines adaptation as the ability o f a system to return to the previous state when conditions permit. External changes are usually discontinuous and require some sort o f response from the organization. F o r some responses there is no need to transform the organization from one type to another. These responses are regarded as adjustments. O n the contrary, Cameron (1984) argues that for real adaptation it is necessary to modify the organizational design or its components i n order to adapt to changes i n the external environment. Hage (1980) mentions that transformation occurs only when there is an imbalance between structure and performance. Thus, adjustments and adaptation as transformation o f structure wi l l be used i n this chapter to analyze the ability o f cooperatives to respond to extra-organizational changes and to describe two major adaptation phases i n their historical development in Yucatan. A brief distinction between organizational learning and organizational development is needed to distinguish differential characteristics o f organizational adaptation. It w i l l help to understand how these three processes proceed i n parallel throughout the 'history' o f any organization. A n organization follows a development plan to achieve its overall objective o f surviving. Organizational development focuses on changes motivated from within the organization and is oriented to assess the impact on individual attitudes and behaviors. It aims at keeping the actual direction and intensity o f development as planned (Goodman and Kurke , 1982, i n Cameron, 1984). O n the other hand, the main aspiration o f organizational learning is to improve the performance o f the organization, either from planned activities or from adaptation. Organizational learning is oriented to shape targets, such as success, which is measured by the difference between pre-established outcomes 49 and the aspiration o f the organization to those outcomes. Organizational learning is a process at the individual and organizational levels since both learn, have a collective memory and experience, and design mechanisms to disseminate that experience and learning (Levitt and March , 1988). Cooperatives also have to learn to assess their own performance and to draw lessons from attempts to adjust to environmental disturbances. IV.1.4.2. Environment There are at least two general conceptions o f the environment i n the organization theory literature. In one representation, the environment is the flow o f information perceived by members at the cooperative's boundaries. A n essential concept in this representation is uncertainty since the complexity and instability o f the environment flavors the information flowing into the cooperative with uncertainty. The information search and analysis o f this environment performed by the organization can generate uncertainty as well. In the second version the resources available represent the environment, paying less attention to the process by which members capture information. W h e n the environment is considered as a stock o f resources, an important concept is dependence o n external agents for resources (Aldrich and Pfeffer, 1976). It is intuitively appealing to expect that resources may vary from one community to another, and different structures and information systems may lead decision-makers to perceive reality differendy. Thus, the environment i n wh ich organizations operate can be considered in both ways: as a stock o f resources available and by the way organization's managers perceive reality. However , i n my study I considered the environment only as a supply o f resources (legal, financial, biological, market, and technological) that the cooperatives have to appropriate in different ways according to changes in this supply. Trying to understand the way managers perceive reality would have led the study to a microanalysis perspective. However , I mentioned i n the first chapter that this perspective was not considered because it wou ld have involved psychological and individual behavioral analyses. B o t h analyses are beyond the scope o f this study. IV.1.5 Organization of the chapter The remainder o f the chapter includes three different frameworks to conclude the introduction. The conceptual framework identifies the variables under analysis, that is, the adaptive ability o f cooperatives and their performance, and explains how these variables are interrelated. Fo r the explanation, the framework uses a graphic representation o f the interdependent variables. Then , the theoretical framework explains the different theoretical perspectives to analyze organizational adaptation. It w i l l explain two approaches to analyze the relationship organization-environment: when organizations make choices and design strategies to respond to environmental changes, and when the environment selects the fittest organizations and leads the weak ones to extinction. The operational framework wi l l describe the relevant characteristics within which cooperatives operate in Yucatan; the description wi l l help the reader to understand the environmental disturbances and the appropriateness o f the cooperatives' responses. In the methodology section I briefly describe how the information was collected, arranged and analyzed. The next section shows the qualitative and statistical results. The final section is the discussion that focuses on the phases o f adaptation at the cooperative's population level, the cooperatives' strategies and aids for adaptation, and the factors constraining the adaptation o f cooperatives. IV.2 C O N C E P T U A L F R A M E W O R K Figure I V . 1 depicts the conceptual model adopted i n this paper to characterize the relationship between adaptive ability, organizational learning and development, organizational structure, and performance. The variables' terminology described by Davis (1985), identifies variables prior to the 50 independent variables, and intervening variables between independent and dependent variables. Environmental disturbances are prior variables because they precede the independent variable i n time, and because. they define the adaptive ability o f cooperatives. T w o intervening variables, the organizational structure and the organizational development influence the adaptive ability. It means that cooperatives may respond differendy to the same stimuli depending on their own structure, developmental plan, methods and resources available to achieve that plan. Adaptive responses are actions and strategies that lead to either the achievement o f objectives or its failure. The level o f performance is ultimately the dependent variable under study. Whatever the performance is, cooperatives should be able to learn and apply this knowledge when adjusting to new extra-organizational changes; therefore, organizational learning may be referred to as a consequent or parallel variable. Parallel variable Organizational learning Prior variables Environmental disturbances Independent variable Adaptive responses Organizational structures Performance Dependent variable Organizational development Intervening variables Figure IV. l . Conceptual model for adaptation The independent variable, adaptive response to environmental disturbances, was classified according to the different adaptation strategies developed by cooperatives. Adaptive responses vary according to the type o f disturbance, the organizational structure, and the type o f decision-making unit. The ability o f the cooperative to respond to external changes implies knowing how the cooperative adapts to new circumstances, and how this ability has led to different performances. Adaptat ion requires a certain degree o f flexibility in the rules, internal control for organizational development, and organizational learning capability. N o less important, availability o f financial and material resources is necessary to implement adaptive actions. The dependent variable is measured i n two ways: the first one is as the stated members' level o f satisfaction with the general cooperative management, and the second one is the average total catch per cooperative during 1993 — 1997. IV.3 T H E O R E T I C A L F R A M E W O R K There are at least two approaches by which organization theory tries to explain the interaction between organizations and environment. The analytical device to view these approaches is an "influence continuum " i n which one end represents the power that organizational decision-making units have to adapt to ensure survival and improve performance. A t the other end, decision-making units have no 51 power to adapt; therefore, the continuance o f these organizations depends on the environment and its changing nature (Cameron, 1984). IV.3.1 Approaches assuming substantial influence from the decision-making units for adaptation In these approaches, organizations are assumed to have the power to act and influence their environment. Al though these models recognize the importance o f extra-organizational influence and the need for organization-environment equilibrium, the existence o f a number o f strategies available to decision-making units to modify the environment and determine the success or failure o f adaptation is assumed (Cameron, 1984). T h e literature on organizational adaptation based on decision-makers'.actions is divided i n two major perspectives. In the cybernetic-adaptive perspective, organizations are open, social systems with always changing processes o f interactions among organizational and environmental elements (Katz and K a h n 1966). Organizations are adaptive systems that are integral parts o f the environment; they must adjust to changes in their environment i f they are to survive. Wiener, (1948) developed a classic model o f an organization as an adaptive system by applying the concept o f cybernetics to mean multiple structures and functions o f control and information processes. The main concept o f cybernetics applied to adaptive organizations is self-regulation through biological, social, or technological systems that can identify problems, do something about them, and receive feedback to adjust themselves automatically (Shafritz and Ott 1992). This, perspective merges,.among others, a systems approach, strategic choice and organizational behavior. In strategic choice, organizations select alternative pathways to move from one state to another (Child 1972). In the organizational behavior, an organization is adaptive because it modifies its behavior according to its experience. Bu t it is also incompletely rational because it acts upon imperfect and incomplete information about alternatives and their consequences. Finally, the organization is a political coalition because it consists o f individuals and groups with different values and often-contradictory demands (Cyert and March , 1988). In these approaches, the environment is perceived as a stock o f resources available for the organization. T h e other perspective o f organizational adaptation is labeled "symbolic action". It focuses on the change o f symbols, interpretations and stories as opposed to changes i n the organizational structure and technology to appropriate resources. Here, the environment is perceived as a flow o f information apprehended by members at the boundaries o f the organization. Accord ing to this conception, organization members share common interpretations o f reality, common symbols and stories, creating a particular cultural making o f reality. Thus, adaptation comes when members change their language, rituals, and symbolic behavior. This type o f adaptation model , however, wi l l not be discussed further because the original,design o f the thesis did not consider this level o f the social psychology o f •cooperatives. However, it is considered as an interesting approach for future research. IV.3.2 Approaches assuming litde or no influence from the decision-making unit for adaptation These approaches are taken from the population ecology theory, which assumes that natural selection processes operate among organizations. These do not adapt to their changing environment by making decisions; instead, the environment selects among organizational forms. Population ecology theory is based i n the ecological concept o f niche, or the specific place i n the environment filled by a particular organization. The niche is the sub-unit o f the environment that supports the organization. The amount o f market, financial, legislative, technological and biological resources available to the organization determine its size. Its shape is defined by the organizational activities performed by the cooperative to appropriate those resources (see A l d r i c h and Pfeffer, 1976; Hannan and Freeman, 52 1977). Both , resource availability and the way o f appropriation determine the position and influence that a cooperative has with respect to other organizations within its "population". This ecology-sociologic analogy predicts that generalist organizations —the ones performing a wider range o f activities- have more adaptation capabilities when the shape o f the niche is transformed. O n the contrary, specialist organizations —those that focus to a narrow range o f activities- adapt better when the size o f the niche is altered. In other words, diversification is the strategy for successful adaptation when there is a change i n the way organizations appropriate resources, whereas specialization is the successful adaptive strategy when there is change i n the availability o f resources (Cameron, 1984). A final comment on population ecology is that adaptation is meaningful only at the population level o f analysis, and that there is a selection process o f the fittest organizations driven by their environment. IV.4 C O N T E X T F O R ANALYSIS Some of the most important elements o f the external environment in which fishing cooperatives operate i n Yucatan are the legislative framework, the market and financial settings, the technological level o f fishing, and the availability o f resources. A l l o f them are briefly introduced to provide a context for analyzing the adaptive responses to disturbances i n the external environment. It is important to note that these disturbances do not necessarily appear isolated and spontaneously. They may occur because o f intertwined factors. Hence, the adaptive responses may be progressive and have multiple unintended effects. Therefore, the following uni-dimensional disruption-response treatment is only a simplification for clarity. IV.4.1 Legal framework The Fisheries L a w o f Mexico has endured many modifications since it was first decreed in 1924. However, the most important changes occurred i n 1992, when a series o f modifications altered its basic nature (Legal Framework for Fisheries, 1992). Before 1992, all the Fisheries L a w versions reflected the 27 t h Constitutional article, which established that all natural resources are originally State-owned, and are given to individuals for a socially-orientated exploitation. Under this condition, fishing policies were oriented to elaborate regulations to ensure the rational exploitation, preservation and social orientation (giving priority to food production) i n the appropriation o f marine resources (Fisheries Law, Articles 1 and 2, 1986). The Secretariat o f Fisheries was vested with the obligation o f setting the scientific and technical basis to elaborate legal regulations. The central legal instrument to access the fisheries was the fishing permit, which was non-transferable and was valid for two years. Similarly, a non-transferable concession was also available. Eight o f the most valuable species were given for exclusive exploitation to fishing cooperatives (Fisheries Law, 1986). The situation changed drastically when the most recent Fisheries L a w was decreed in June 1992. T w o fundamental statements were erased from the previous version: 'the State has original property rights' and 'this L a w is o f public domain and social interest'. The juridical consequences are that the Secretariat o f Fisheries obligation o f regulating the exploitation o f marine resources is narrowed to the vague, ambiguous statement o f "establishing the allowable catch levels". The pivotal legal tool for accessing fisheries is now a transferable concession that can last from five to twenty years, or even fifty years in the case o f aquacultural practices (Chapter II, Articles 4, 6, and 8, Fisheries L a w , 1992) (Villamar, 1994). It seems. reasonable to view this extension as giving legal assurance to potential private investors, since the "exclusivity" condition for valuable resources was abrogated i n the new law, as it stated in its Art icle 7, Chapter II: 53 "The Secretariat of Fisheries could subject the granting of licenses and or permits to a process of competitive bidding for the utilization of an area, species or groups of species for commercial fishing" Other usual fishery regulations include closed seasons for lobster (March-June) and octopus (January-August), plus m i n i m u m legal sizes, protection o f egg-carrying females and use o f legal fishing gear for all species. In summary, legal changes made the concession the central mechanism to exploit species and fishing areas, opened the possibility to private investors to get a concession since it can be transferred as a commodity and, consequendy, increased the competition and pressure from the market toward the cooperative sector. IV.4.2 Market setting Before the creation o f the first cooperative in Yucatan in the second half o f the 1950s, markets for fishing products were developed at the local level, concentrating on sell o f fresh and dried products i n the coast and the capital city. A s production was increased and diversified i n the early 1960s, the new market opportunities were developed and expanded. The market response was i n turn a growing demand for fresh and processed species, especially lobster, grouper and octopus (see Sanchez, 1995, and Gonzalez et al., 1989). Expanding markets provided opportunities for investments in processing facilities, introduction o f technological innovations, and hiring personnel for marketing activities. However, (Medina 1988) argues that fishermen were unprepared to take over this new situation because they had traditionally concentrated on harvesting. A diverse group o f middlemen started buying fishermen's catches and selling them first regionally and then at the national level. The entry o f fish buyers redefined the local fishing market. Currendy, the market agents are fishermen, "small-scale" fish buyers, and fishing companies. O n l y 15% o f fishermen are associated in cooperatives and other similar associations. Small buyers acquire fish from individual fishermen and sell inexpensive species direcdy into the local market, whereas the most expensive ones are sold to big companies. These enterprises also buy the catches o f cooperatives and other fishermen associations, and possess their own fleets to ensure their fish supply, since they sell direcdy to the national and international markets (see Figure IV.2). Producers Cooperatives Other groups Processing and trading Fishing companies (85%) Small buyers (15%) Markets International (64%) Nat ional (30%) L o c a l (6%) Figure IV.2. Commercialization relationships in the fishing market in Yucatan, Mexico 54 Thus, fishermen are entangled i n a market structure i n which an oligopsonistic group o f middlemen has the power to influence the species' price according to their convenience. Middlemen control the demand, determine the way catches have to be handled onboard, and have access to the national and international markets' information (see Blomquist et al., 1990). Under this scheme, middlemen practice collusive price fixing to limit competition, and abuse their dominant position by setting low purchase prices and adopting strategic barriers to restrain entry o f new or outside fish buyers (see Acocel la , 1998). The major market exchanges are original expansion o f demand i n quantity and diversification i n catch composition, the latter concentration o f demand on basically three species, and the new relationships established wi th the fish buyers. IV.4.3 Financial sources W h e n cooperatives had to respond to the expanded fish product demand with increased productivity, they had to modernize their equipment. However , government loans were slow because o f bureaucratic processes, and expensive in terms o f the political compromise. The bank loans were expensive in terms o f the interest rates. The last resort was the middlemen, who provided fast credit wi th 'no interest', but under the condition o f exclusive right to buy cooperatives' catches, and to have preference i n setting the prices. Under this arrangement, most cooperatives were unable to accumulate enough capital to pay back their debts, then were forced to ask for more financial aid from the same buyers. This relationship has largely determined the market and financial situation o f most fishing cooperatives in Yucatan. The common financial sources that cooperatives should have are sales o f catches, financial holdings, and borrowing money, but imbalances among these three sources have led some cooperatives to cases o f financial restriction, total financial dependency, and even bankruptcy. Imbalances are described using the financial structure depicted by Dalsgaard (1996). The system is a series o f three boxes from which resource users can get money to carry on planned activities. The cash box is for ongoing cash payments, the assets box contains the current holding o f financial assets and outstanding accounts used for investment purposes, and the debt box comprises the current cooperative's debt. Imbalances can appear when any o f the boxes is much bigger than the other two. Fo r instance, putting a high, percentage o f the profits i n the assets box may reduce the cash box. W h e n the assets box is b ig enough to invest in durable possessions, it may cause inflexibility i n the purchasing o f short-span equipment. In summary, financial disturbances, which are mtimately linked to the market, stem from the original financial dependency on government, banks and middlemen and, more recendy, only o n middlemen. Table I V . l Principal technical characteristics of the cooperatives' fleet in Yucatan Characteristics Small-scale Middle-scale Large-scale Length (m) 7.3 10.1-16.7 1 8 . 3 - 2 0 . 0 Material Fiberglass Fiber glass Fiber glass, w o o d Gear H o o k and line, " j imba" Long-line L o n g line Engines Outboard Stationary Stationary Power (H.P.) 4 5 - 6 5 8 5 - 1 7 5 225 - 450 Catch-keeping system Ice Ice Ice — freezing Navigation system Loran i n few cases Loran , radar Loran , radar 55 IV.4.4 Technological level Only four out o f the twenty-one cooperatives sampled operate large and middle size long-liners, while the other seventeen cooperatives operate small-scale boats with multiple-purpose fishing equipment (i.e. suitable to catch several species). The main fleet technical characteristics are summarized i n Table rv.i: The level o f technological development o f cooperatives is influenced by the species behavior, the physical characteristics o f the environment, the availability o f financial assets to purchase equipment, and by the need to adapt to changes i n the market preferences. Before the 1960s, fishing methods were based on the traditional ecological knowledge produced through generations o f experience. Combin ing traditional knowledge about the target species and imagination, there was not any need for a sophisticated technology, which was more. efficient and would impact the natural processes o f the stock under exploitation. After the market expansion, fiber glass boats, outboard engines and nylon lines were introduced i n all coastal communities, plus the introduction in one community o f large vessels operated with advanced technology for navigation and harvesting. These have been the largest technological disturbances in fishing, besides a recent attempt made by the Secretariat o f Fisheries to ban a metallic stick that is used to catch lobster. IV.4.5 Resource availability The level o f resource exploitation varies for each species according to the market demand. In this way, octopus, lobster, and grouper are the species with higher demand and hence the fisheries wi th alarming symptoms o f over-exploitation and over-capitalization. Salas and Torres (1997) conducted an analysis o f the level o f marine resources use i n the Yucatan Peninsula based on the scientific literature. They concluded that there is no definitive information for assessing the condition o f most stocks other than the three most important species listed above. However, because o f increased exploitation, the catch per unit o f effort has been arminishing gradually. Accord ing to several studies i n the area, the distribution o f different species is assumed to be homogeneous along the region (Yanez-Arancibia, 1994), although catch composition i n each community may provide an index o f a differential species' distribution. Changes i n the abundance and distribution o f different species are considered the major disruptions to the resource. IV.5 METHODOLOGY IV.5.1 Data collection Information regarding the independent variable, adaptive ability, was collected through a series o f face-to-face, serni-structured interviews with members o f cooperatives' board o f directors. Questions focused the kinds o f responses the cooperative usually implements when there are disturbances i n the surrounding environment. I was also interested i n knowing what aids and strategies they use to implement the responses. The dependent variable, performance, was measured as the satisfaction o f members and as total average catch per cooperative. I designed a questionnaire to measure the level o f members' satisfaction, as described i n Chapter II. The design o f the questionnaires and interviews followed approaches outlined in Fowler Jr. (1995), and Czaja and Blair (1996). Information about the fish production per cooperative was obtained direcdy from the offices that the Secretariat o f Fisheries has i n the seven communities where cooperatives are located. Catch records contained information on the amount o f ¥Lg per species, per month for each cooperative, from 1993 to 1997. I calculated an average annual catch per species for each cooperative to identify production strategies (diversification vs. specialization). A d d i n g the catch per species, I also estimated an average annual total catch per member as efficiency measure. 56 IV.5.2 Qualitative data analysis The qualitative analysis o f the data regarding independent variables is based on its reduction and interpretation. I reduced a large amount o f information to a few categories based on the patterns o f appearance o f certain adaptive responses to extra-organizational changes. I then analyzed and interpreted those categories to help answer the research questions. The methodology for reducing and interpreting the information involved five basic steps: (1) grouping answers, (2) writing notes, (3) grouping for conditions, (4) creating categories, and (5) creating levels. In the first step, I quickly read the transcripts from the interviews, gathered first impressions from the data, and attempted some preliminary major groups o f answers. Groups were created after constandy comparing answers from different respondents to specific questions. Once I had these groups o f answers, I wrote several notes with two purposes. The first one was to associate thoughts as Tread the interviews again or while working on any other task o f my study. The second purpose o f note-writing was to initiate the identification o f conditions emerging from the data, tracking them from the immediate answers from the respondents, to my notes and to these conditions. Conditions are the situations required for improving the adaptive ability o f the cooperatives. Similar conditions were grouped into general categories and sub-categories. I then read the transcripts o f the interviews again, and compared them with the conditions identified in order to group together those cooperatives having similar conditions and hence having similar levels o f adaptation ability. A n additional, brief analysis identifying which cooperatives have developed a more autonomous decision-making format to choose their adaptation processes and which ones depend more on the external environment, specifically on the market (intermediaries) . component, was also done. This supplementary analysis was done by comparing their degree o f autonomy from intermediaries against their adaptive ability. IV.5.3 Statistical data analysis Correlation analysis was applied to determine i f there is a relationship between adaptive ability and performance, that is, i f the second one increases as the first one does. A n analysis o f the catches per species for each cooperative was performed to illustrate how different strategies have been developed to adapt to the changes i n the abundance o f resources, that is, i n the size o f the niche, as mentioned i n section IV.3.2. IV.6 RESULTS IV.6.1 Data collection Results on data collection are similar to those shown i n Chapter III,, that is, information for analyzing the independent variables was obtained from interviews wi th 21 members o f the board o f directors o f 21 cooperatives. The dependent variable was analyzed wi th information from the survey on satisfaction, i n which 155 members o f 16 cooperatives participated. T o measure the performance in terms o f production, the total average catch per cooperative was calculated from official records including 1993 to 1997. IV.6.2 Qualitative data analysis The major category created from the analysis o f the interviews is the ability to adapt, and includes several sub-categories according to different elements o f the extra-organizational environment. These sub-categories describe what conditions (responses, aids, and strategies) the cooperatives have devised to adapt to changes on these elements (see Table IV.2). In the case o f the relationship with the market, the responses for improving the performance are creating conditions such as having freedom to sell the catches, having influence on pricing the catches, searching for market information, and increasing 57 thek bargaining power. In the case o f the financial situation sub-category, the response conditions relate to the balance, o f the cooperative's financial system and its reinvestment policy. W h e n changes are i n the legislative arena, conditions created as response i n this sub-category are an active or a passive lobbying for those legal changes affecting the cooperative. In the technology sub-category, the only condition found was whether or not the cooperatives improve their catching technology. Regarding marine species, cooperatives may diversify or specialize i n the composition o f the catch, or they may propose measures to protect these species. In the aids and strategies sub-category, the types o f aid devised to improve adaptation include the creation o f scenarios to foresee what alternative settings look like and make decisions based on those scenarios. Another common aid is comparing themselves with other cooperatives' failures and successes to, evaluate their performance and identify how others have solved problems. Strategies refer to concrete actions aimed to achieve adaptation. Major strategies are those i n which it is necessary to negotiate with the environment, specifically with the market and the legal elements o f it, in which case responses are referred as political. T h e other adaptations are those :that are primarily internal, such as diversifying or specializing in the catch composition, and expanding operations. The latter implies either making structural changes pr devising parallel processes. In addition, internal adaptations reflect a cooperative's maturation process because routines are institutionalized as they prove to be efficient i n achieving adaptation. Routines include rules, procedures, strategies, technologies, beliefs, frameworks, paradigms and knowledge (Levitt and March , 1988). A l l cooperatives have to cope with the market element o f the environment. In doing so, adaptive strategies o f negotiating with the environment are basically dealing with the fish buyers, a relationship that determines to a great extent the financial, technological and biological changes in the extra-organizational surroundings. The other adaptive strategy is the political response to legal changes, wh ich also has influenced, and is influencing, the financial, technological and biological components. A s i n the previous chapter, to have an idea o f how wel l cooperatives are performing in response to changes i n the extra-organizational environment, they were compared to an ideal democratic cooperative (IDC) having the following conditions. Hypothetically, this ideal cooperative has every condition to adapt effectively to the external environment (considering the conditions o f Yucatan fisheries). 1. Hav ing freedom for selling the catches 2. Hav ing influence on pricing the catches ; 3. Searching for market information ' . 4. Increasing their bargaining power. 5. Balancing the cooperative's financial system 6. Reinvesting i n fishing equiprhent and other assets 7. Hav ing an active lobbying for legal changes . 8. Improving the catching technology 9. Diversifying or not the composition o f the catch 10. Proposing measures for protecting marine species 11. Creating scenarios for solving problems 12. C o m p a r i n g their performance with other cooperatives 13. Politically negotiating legal changes 14. Institutionalizing the expansion, diversification and specialization o f operations 58 IV.6.3 Levels for adaptive ability According to table IV.2, cooperatives are grouped into four different levels of adaptation: (1) low adaptation, (2) adaptation for survival, (3) adaptation for improvement, and (4) adaptation for expansion. Rather than displaying a series of sharply differentiated levels, this grouping represents an adaptation gradient where it is possible to identify the relative position of the fishing cooperatives. At the same time, responses. may adjust to more than one disruption providing intentional and unintentional results. IV. 6.3.1. Low adaptation 1 ' Cooperatives with low adaptation are the ones that depend more heavily on intermediaries. Because these cooperatives seek protection from middlemen to cope with the market uncertainty, they have no bargaining power; thus, they.cannot influence the price of their catches. Consequendy, their position makes it unnecessary for them to seek market information in order to look for better prices. In any case, they do not have capital or experience to search for information. Lack of capital is explained because the financial system is ill adapted to the market. The cash and assets boxes are so depleted that they lack financial reserves to be able to adjust. Put in other words, the borrowing capacity and the. ability to raise money at any rate are exhausted. Consequendy, there are no reinvestment plans. When there have been changes in the fishing legislation, these cooperatives adjust passively enough to keep their registration and to be eligible to obtain the fishing permits. 59 •s a o •0 5 + r-<u I U •c Si or s o •o 8*1 + •a a ° » 2 9 a, <« 3 + fit o O a X, • a o •o C4 3 & O M u I •§ CO s o • a <u .tr1 a o u o e C a '1 o co 13 J3 T3 13 a P o < T3 u U3 CO i •a .*> u & o u « co al l l o . v H o , !^ co a, hi 1' (5i O U u I s CO a o 8.1 tl "2 '3 o i u ts u i CO a o '•2 §01 13 u •d a-a o ••o u + 3 'So ts o Technologically, they have kept at the small-scale level, which allows them to catch only a reduced number o f species distributed close to the coast. Their fishing strategy regarding the resource availability is highly specialized since the catch composition concentrates more than 85% on one species (see cooperatives P C , R C , E , and N in Appendix D ) . Us ing the classification for cooperatives developed i n Chapter III, laissez-aller and autocratic cooperatives show low adaptation. Fo r these cooperatives, it has brought almost no organizational structure and catching is at the lowest level. Moreover, i n the latter cooperatives, adaptations were not as needed, showing that there are "bad" adaptations and that, despite the pervasiveness o f their negative consequences, there was no organizational learning to improve adjustment to future disruptions or even to correct the previous wrong one. M o s t autocratic groups are now out o f operation. YV.6.3.2. Adaptation for survival The cooperatives categorized as non-directive and consultative adapt just to keep their structure alive. Their responses to financial, legislative, and technological changes are almost the same as the previous cooperatives. Contrary to low adaptive groups, this type o f cooperative has a visible structure, and some assets, although reinvestment has concentrated in replacement o f fishing equipment. They also have diversified more in their catch composition, since more than 85% o f it is represented by three or four species. Non-directive cooperatives ( P D , C P P , and C C B ) catch between four and eight different species in lower proportion than 5%, whereas consultative cooperatives ( E C , C P , and R L ) catch between five and twenty-four other species (see table i n Append ix D ) . Diversification gives the opportunity to cooperatives to expand their production and to negotiate its price with the fish buyers, especially i n the case o f the expensive ones. Fo r instance, P D , C P P , and C C B cooperatives catch important percentages o f yellow tail snapper that is more expensive than the lower priced grouper. IV.6.3.3. Adaptation for improvement Groups i n the 'adaptation for improvement' category are more competitive than cooperatives in the previous categories since they can influence the prices paid i n their communities. Al though they sell almost their entire production to one buyer, they can get access to market information and have some power to negotiate prices with the buyer for the most valuable species. However , they have not been able to eliminate their historical financial dependency on middlemen. Their financial system is less unbalanced than i n the previous case, which allows for reinvestment i n equipment and facilities. Regarding changes in the fishing legislation, these cooperatives actively oppose the regulations when they are unfavorable for them. Interest in technological innovations is expressed by the fact that many boat owners use simple navigation equipment to mark the most productive fishing spots. These groups have diversified their production and have proposed protective measures besides official regulations, such as reducing the entrance o f new boats i n order to safeguard local resources. •IV.6.3.4. Adaptation for expansion These cooperatives display full competition because they o w n processing facilities and have experience in commercializing. Therefore, they have access to market information that is used to negotiate their catch price, mosdy wi th more than one buyer. In doing so, the groups do not depend entirely on one single buyer, i n .acquiring financial independence. In this way, liquidity allows cooperatives to keep a low debt and increases their readiness to adjust i f required. These groups lobby actively when proposed new regulations are likely to reduce the benefits and /or increase the costs o f their activity. Since efficiency is one o f the goals set by these cooperatives, they are more interested in exploring technological innovations in both harvesting and processing. In an attempt to balance the efficient use 61 o f resources and their conservation, these groups have proposed protective measures. Fishing strategies include diversification and specialization according to collective goals. Table IV.3 summarizes the responses and levels o f adaptation. Table IV. 3 Ability to adapt Market Financial - Legislative Technology Species' availability 1 Low adaptation Seek protection No influence on price No information searching No bargaining power Unbalanced Financial system No reinvestment Passive, limited to get permits Status quo Specialization 2 Adaptation for survival Seek protection Some influence on price No information searching Some bargaining power-Unbalanced financial system No reinvestment Passive, limited to get permits Status quo Diversification 3 Adaptation for improvement Seek independence Some influence on price Some information searching Some bargaining power Unbalanced financial system Reinvestment on equipment and facilities Active lobbying, opposing-supporting fishing policies Some interest in changing Diversification Protective measures 4 Adaptation for expansion Full competitiveness Influence on price Control information Bargaining power Balanced financial system Reinvestment on equipment and facilities Active lobbying, opposing— supporting fishing policies More interest in changing Diversification -specialization Protective measures IV.6.4 Cooperative influence on the adaptation process and adaptive ability I graphically associated the level o f adaptive ability and the control that cooperatives hold to choose and direct alternative ways to adapt to disturbances i n the external environment. I show i n Figure TV. 3 the relative position o f cooperatives i n Yucatan with regard to these two variables. The cooperatives that have more control in deciding what adaptive actions to. take are those i n which the unit o f control, whether an individual or the general assembly, makes strategic decisions enabling the survival and advancement o f the cooperative. O n the other hand, cooperatives with less control to adapt are those i n which the environment 'determines' their survival, because their dependency on different components o f the environment is higher. In this way, these cooperatives may miss advancement opportunities i f they do not take control over plans o f action when there is a disruption i n their relationship with the environment. Under this line o f analysis, participatory cooperatives and those with autocratic and supervisory leaders have substantial power to make adaptive decisions. However , autocratic cooperatives have lower level o f adaptation. These are cooperatives with no organizational resources (structure, rules, and adaptive ability) to respond to changes in the environment, and have a minimal influence over their surroundings. O n the other hand, laissez-aller cooperatives are the ones that are completely at the mercy o f the environment, because the market component o f the environment controls these groups. 62 This situation has made them to hold the slightest level o f adaptation, or it is sufficient only to satisfy their goals, which seems to be just for survival. Higher level (4) o f adaptive abilitv Lower control over the adaptive nrocess laissez-a^er non-directive supervisory participatory consultative Higher control over the adaptive resnonses autocratic Lower level (1) o f adaptive abilitv Figure IV.3. Relative position of cooperatives regarding their adaptive ability and control over the adaptation process IV.6.5 Statistical data analysis A positive correlation was found between the adaptive ability o f cooperatives and their performance. The Spearman's rho test gave the results shown i n Table IV.4. These results indicate strong positive relationship between the variables. Since the correlation coefficient measures the linearity o f the relationship, members' satisfaction and average catch wi l l i n general, be higher as the adaptive ability o f the cooperative increases, which allows me to accept the hypothesis stated i n Chapter I. Table IV.4 Overall satisfaction Average catch Adaptive ability 0.83 0.76 Significant at level (1-tailed) . 0.01 0.01 Number of cooperatives 16 21 The results also reflect a higher impact o f the cooperative adaptation responses o n the members' satisfaction than on the average catch. In fact, I found that some cooperatives with the higher level o f 63 • ability to adapt ( T P M , PS, and C A ) reported lower average catches than some wi th less adaptive ability. (CP, R L , and E C ) (see Table IV.5). Table rv.5 Summary of adaptive ability, satisfaction and average catch (tons) of fishing cooperatives in Yucatan Cooperatives Id Level of adaptive ability Average satisfaction Average catch (tons) R L P 4 N .a . 433 SF 3. 2.9 484 D B 3 2.0 318 T P M 4 N .a . 179 PS 4 N .a . 133 • C A 4 , 1.2 17 P G 3 2.7 100 . CP 3 3.0 343 E C 3 1.7 217 ' R L 3 1.7 337 C C B 2 . N . a . 69 P D 2 N .a . 37 CPP 2 1.9 68 PT 1 5.0 5 K K H 1 5,0 1 J M C 1 5.0 19 PC 1 • 5.0 0 P C H 1 4.0 1 N K 1 5.0 0 E 1 4.0 2-B 1 5.0 0 IV.7 DISCUSSION The approach o f analyzing cooperatives from an organization theory perspective assumes that they are open, dynamic systems that adapt to environmental disturbances both by the availability o f strategies to decision-making units and by the environmental influence (Hage 1980). In the first case, greater attention is directed to the internal political decision-making processes and to the idea that organizations seek to manage or strategically adapt to their environment. Regarding environmental influence, or natural selection model, it states that environmental factors select those organizational characteristics that best fit the environment (Aldrich and Pfeffer, 1976). In this section, I argue that the development o f the cooperatives' population i n Yucatan can be divided into two major phases, according to the source o f influence in modifying the cooperatives' structure. The first phase is characterized by a great environmental influence, which leads to the appearance o f homogeneous organizations, whereas the second one is distinguished by a major influence from within the same cooperatives. In this case, the results include the appearance o f six different organizational structures. After that, different levels o f ability o f cooperatives in Yucatan to adapt are compared, in light o f their 64 strategies and aids for adaptation. Then, the discussion is focused on constraints for adaptation, or o n non-responsiveness in adapting. IV.7.1 Phases of adaptation at the population level The rise o f a c o m m o n legal framework uniformly influenced cooperatives' organizational structure and behavior. The legal framework specified many aspects that characterized the inception stage o f the cooperatives' sector in Yucatan. A s a result, one could expect some consistency among cooperatives i n existence at that time. Cooperatives emerged as direct responses to government mandates, their technological level o f fishing, resource availability, and the development level o f the market. Those factors were consistendy influencing the newly formed cooperatives to adopt the same structure and to work at the same pace and intensity. This stage, when the external environment was substantially influential on cooperatives for adaptation, characterizes the 'coercive isomorphism' described by DiMagg io ' and Powel l (1983). This process arises from political, governmental influences and determines the appearance o f a homogeneous organizational structure i n all cooperatives at that time. Isomorphism is a consequence o f a stabilizing natural selection, in which the external environment directed the appearance o f similar cooperatives because o f homogeneous extra-organizational factors. Latter, a diversifying natural selection has favored the appearance o f a 'balanced polymorphism', which includes the emergence o f different structures i n noticeable proportions. This type o f selection involves extra and intra organizational factors, whose relevant role depends o n which one has more influence in determining adaptive responses. A s a result, there are cooperatives i n which the external environment has a substantial influence on adapting, while in others the environment has none or very little influence. Despite the initial similarities o f environmental factors and adaptive responses, it is reasonable to expect that socio-cultural differences emerge among cooperatives, even i n those located in the same community. It may also be reasonable to expect that environmental factors change over time. In these kinds o f changing conditions, different responses to specific environmental variations were developed by cooperatives seeking organizational stability (see D o u m a and Schreuder, 1998). A t the population level, adaptive responses led to several stable organizational forms being reached either sequentially or simultaneously. I f the process is simultaneous, it means that stable, gradual environmental changes are present. In the Yucatan context, cooperatives i n communities with homogeneous social structure coupled with a stable and protective market are more likely to develop isomorphic structures. This is the case o f the two communities on the West Coast, where laissez-aller and non-directive cooperatives (each type in one community) had emerged due mainly to an imitation process to cope with uncertainty. D iMagg io and Powel l (1983) refer to this process as a 'mimetic isomorphism, ' O n the other hand, stable organizational forms may be reached i n a sequential trend due to gradual adjustment o f environmental factors (e.g. slufting in demand, compliance o f the national legal framework with international agreements) to organizational traits (e.g. successive political power o f coalitions, emergence o f a leader). Fo r instance, the equilibrium is reached when the environmental condition A is matched to the organizational form A+. W h e n a new imbalance occurs, a cooperative may strive to return to the previous steady state or to move to the next environmental condition B, by adjusting its organizational structure to B+. It may be possible that some other cooperative designs a structure B*, which may be even more successful i n reaching equilibrium. The process stabilizes when organizational objectives are met and environmental variations do not force a change in the cooperative's structure. Therefore, different organizational forms may coexist i n the same community, each o f which-may make slight adjustments in order to preserve the equilibrium with the environment. 65 This situation has arisen i n the largest fishing community, where at least three different types o f cooperative's forms have emerged, namely participatory, supervisory, and autocratic. Therefore, combinations o f environmental conditions and organizational characteristics lead to viable organizational structures i n Yucatan cooperatives. It is also true that some other combinations are not viable, which is consistent wi th the strategic choice o f organizational orientation in the sense that there are alternative organizational forms, not just one suitable for any specific set o f environmental conditions (Hage, 1980). The viability o f these different forms affects one's ability to assess the concept o f adaptation efficiency i n this context. It becomes very difficult to determine which organizational structure has been more effective i n adapting to their particular environment. Under such circumstances, one can not easily answer i f " low adaptation" cooperatives are less efficient that the ones that adapt to expand their operations. O n e may think that survival is enough to exhibit adaptive efficiency i f survival satisfies members' aspirational level. The approach undertaken i n this study does not contend direcdy wi th those questions, but rather emphasizes the fact that organizations change to fit their environment better without necessarily involving the idea o f progress to complex or higher forms. o f organizational structure (see the natural selection model described by Ald r i ch and Pfeffer, 1976). In one extreme, low adaptation cooperatives do not respond to changes nor are prepared to adapt to new changes. N o n -responsiveness to change seems to be a successful survival strategy for cooperatives, which are still i n existence. O n the other extreme, cooperatives adapted for expansion are those that make gradual adjustments not only to adapt to current changes but to be ready for future ones, as long as these can be reasonably foreseen. ' V i e w i n g cooperatives at their population level, it can be said that different, simultaneous equilibria have been reached since six different organizational structures had previously been identified, although autocratic cooperatives' fate seems to be an unavoidable extinction. Mos t o f the autocratic cooperatives are now idle or operating at a very low level. A t this point, it is necessary to recall that different steady states with corresponding organization-environment relationships have come forth i n part because decision-making units have differential influence on adaptation. IV.7.2 Cooperatives' adaptive strategies and aids In this section, aids and strategies for adaptation are analyzed for each level o f ability to adapt. A s the Results section showed, laissez-aller and autocratic cooperatives had shown low adaptation because they depend largely on the environment for their performance, especially o n the market factor. In seeking for the fish buyer's. "buffering action", these cooperatives had established a mutualistically beneficial relationship: the fish buyer receives a supply o f fresh, raw material at low price, while the cooperatives receive the immediate sale o f their catches. In this way, cooperatives operate as a technical unit within a larger fishing firm, which has other units to process and trade the catches, and to perform admiriistrative tasks. In addition, the buyer has the prerogative o f defining the demand. Because they are concentrating exclusively on the technical task dimension (fishing), these low adaptive cooperatives do not have to deal wi th building up an organizational structure, defining authority lines and channels o f communication, performing administrative duties, making strategic decisions, nor adapting to the environment. O n the one hand, this condition is convenient for them because it brings stability at low price and effort. O n the other hand, the drawbacks are the impossibility o f accumulating capital for reinvestment, the lack o f freedom to make changes, and the shortage o f opportunities to spread out economic benefits into their communities. 66 The. aid these cooperatives use for supporting the adaptive strategy is simply comparing their performance with other's cooperatives. It is especially true i n the case o f laissez-aller cooperative since leaders expressed that it seemed that members o f the first cooperative that negotiated wi th the market were "doing well" . Thus, other groups imitated the former i n negotiating with fish.buyers for an identical relationship. The only routine institutionalized has been then specializing i n catching exclusively one species needed by the fish buyer. A s in the previous case, non-directive and consultative cooperatives exhibiting adaptation for survival had compared themselves for standard adaptive responses to the market environment, leading to a separate mimetic isomorphism, although these have two different strategies for adjusting to the environment. Non-directive cooperatives i n the West Coast o f Yucatan are highly homogeneous, so are consultative cooperatives in the East Coast. Adjusting strategies are the diversification o f the catch composition, and negotiating with the environment. In the case o f the market strategy, these cooperatives also seek protection from the buyer, although in this case the cooperatives have diversified their production. The dependency on the environment is more evident on non-directive groups' political strategy since they seek the governor's support through their federation, while, consultative cooperatives lobby actively in addition to their own federation, showing more interest for solving legislative disputes. Besides comparing themselves with others, participatory cooperatives that adapt for improvement employ 'best and . worse' scenarios before adapting. Interestingly, scenarios include many environmental factors. Management boards explained that gaining access to or controlling processing facilities, having technological aids (computers) for administrative tasks, increasing their participation in the design o f fishing policies, and improving their bargaining power, wou ld better the development o f their groups. A better condition was consistendy envisioned as increasing incomes to augment their members' and communities' well being. The insights obtained by this scenario construction, provides some basis for analysis o f the alternative consequences o f a proposed action. Negotiating with the market and political environment strategies are similar to those for the consultative cooperatives, although the political influence o f these cooperatives is higher than the previous ones. These tend to lead lobby actions and to make more proposals that are assertive when coping with legal changes. The other difference is the expanding o f operations: one o f the cooperatives got the concession to manage a gas station in its community. Al though it didn't imply a change i n the organizational structure, it brought the necessity o f vertically integrating the control and distribution o f fuel. H i r i n g members' relatives to operate the gas station and adding a new task to the administrative staff solved the situation.; Regarding cooperatives that adapt for expansion, i n addition to comparing themselves with other cooperatives and creating scenarios, these perform information searching for supporting decision-making. M o s t o f the information gathered is related to extra-regional markets, which is then compared wi th local conditions to be in a better position for bargaining. The searching experience and goals o f the cooperatives' members determined the information searching (Chen, 1984), and one could add by the searching options available to members. Market and political strategies are similar to those o f previous cooperatives. Expansion o f operations is done through vertical integration, which corresponds to their organizational development, since these cooperatives own processing facilities and have marketing experience. Under these conditions, they control the entire fishing process, from catching to selling, but they still want to expand their market through increasing their production's quality. A t the time o f my fieldwork, personnel o f these cooperatives were taking a course on improving the processing and hygiene o f their catches, since this is a requirement established i n the 67 N o r t h America Free Trade Agreement. Another institutionalized routine is the specialization on a few numbers o f species owing to the fact that they have direct access to the demand and thus know first hand the preferences o f the market.' IV.7.3 Factors constraining adaptation Success can be viewed as the agreement between what is expected and what can be done. I f a person achieves a desired objective with the resources available, that person can be thought o f as successful. Similarly, when an organization needs to adapt to a changing situation, resources have to be used to reestablish its equilibrium with the environment. I f resources are sufficient, appropriate, and used wisely, it is more likely that the adaptation wi l l be successful and the equilibrium reestablished. The opposite situation, or non-responsiveness to adaptation, occurs when there are not resources to accomplish the adaptive objective. Nevertheless, not only the lack o f resources may constrain adaptation. A series o f internal and external elements impinges upon a cooperative in the possibility o f adapting. Such factors include environmental constraints, like financial dependency, and internal organization factors, like decision-makers' psychological traits, rigidity and the very same organizational " structure (Hage 1980). One important factor i n analyzing the performance o f decision-makers is that there are limits to knowledge and cognition. Simon (1955) pointed out that decision-makers pursue 'bounded' rationality. Similarly, Gahs (1996) demonstrates that under conditions o f incomplete information, it is impossible for decision-makers to rationally order alternative actions. Other authors have shown that decision-makers use heuristics to make judgments. Heuristics are advantageous in that they reduce time and effort in making reasonable predictions from alternative ways o f action, although they can sometimes be misleading (Pious 1993). It was found through the interviews, that for most o f the management boards, incomplete approximations were enough before making a decision. This situation might be influenced by the fishers' educational level and, as corollary, the confidence they have i n their own experience. Leaders o f authoritative cooperatives located i n the community with the highest fishing industry development, feel that making decisions i n this way wi l l increase their stature before the other members. Management staff is non-existent i n all cooperatives, and directors may rely only on bookkeepers for administrative decisions. In cases where leaders have been guiding the development o f the cooperative for several years, allowing for increased experience and knowledge o f the environmental conditions, biases on judgements may be reduced (although not totally), i n supervisory cooperatives. It may also happen that decisions are biased i n a consistent way, resulting i n under or over estimation o f alternatives and their consequences. W h e n mistakes are more visible and cosdy, and resources are scarce, leaders may be isolated, ridiculed, blamed, and even sued (see Whetten, 1987). A t the same time that leaders credibility decreases, members' frustration increases, leading to a halt i n participation, communication, and the capacity for adaptation. This scenario describes what happened to the autocratic cooperatives, where leaders exceeded their management abilities and also failed to change the structure o f their organizations to reflect the dominant economic institutions (fishing firms) located i n their community. Al though there is not evidence to assess the accuracy o f group judgements, i n democratic cooperatives, where members' pattern o f participation is higher, collective memory and experience seems to increase the possibility o f reaching accurate judgements. However , other factors also have to be considered i n 68 judging the success o f group decision-making, such as the complexity o f the issue under consideration (Pious 1993). Another factor that impedes adaptation is instimtionalization o f success. W h e n cooperatives have adapted well to environmental changes and continue to adjust successfully, it is more difficult to change from what experience has shown to be the successful model o f responding. This situation was found in one participatory cooperative, coupled with me preeminence o f one coalition's values. The coalition is constituted by the founders o f the cooperative, and has been guiding its development, i n one way or another, since its inception i n > 1958. Considered as the guiding force o f one o f the most successful cooperatives i n the state, this group is hesitant in changing its approach to pursuing the cooperatives' goals and allowing new ideas i n management from younger members. N o major crisis has occurred because the environment has continued fairly stable, especially the market and the legislation. However, it would be interesting to see how well it does i f an imbalance emerges between the cooperative and its surroundings or among its working units. The most common reason for. lack o f adaptation is the lack o f resources, mainly capital, staff, and knowledge. There is an incompatibility between what is needed to be done and what can possibly be done. It may happen that the adaptation designed is the appropriate one, but due to the lack o f resource bases it can not be partly or completely implemented. This lack o f implementation could give the impression that there is no commitment to adapt, or that the response is wrong. The deficiency i n implementation may be due to scarce financial assets or to the lack o f trained personnel, as in the case when adaptation requires the purchase, import, and operation o f new technology. Extreme cases are when there is not enough money even to replace the same type o f fishing equipment. Knowledge is a necessary resource also when an information search is needed, or when environmental monitoring is required. Knowledge increases information feedback that eventually may lead to choice o f right action or adaptation. A l l cooperatives analyzed face, to a varying degree, a lack o f resource base. The scarcity o f capital is mtimately linked to the financial dependency on middlemen, and is considered to be highly important as shown in Chapter III, which deals wi th the relationship wi th the fish buyers. Knowledge deserves more attention owing to its connection with learning and adaptation. Learning is a source o f knowledge. Learning at the organizational level, as it was mentioned i n the introduction, is history-dependent, which means that it is based on the acknowledgement o f past experience. Learning can be done from one's own experience or from other people's experience (Levitt and March , 1988). W h e n it is from direct experience, or learning by doing, ah action may be chosen i f it is associated wi th success o f reaching the objective. The situation corresponds to the representativeness heuristic described by Tversky and Kahneman (1974), i n Pious (1993), which explains that people often make judgments "by the degree to which A is representative o f B , that is, by the degree to which A resembles B " . Inversely, an action won' t be chosen i f it is associated with failure. Learning by direct experience is the most common way o f increasing knowledge across the fishing cooperatives in Yucatan since most o f the interviewees, or i n informal conversations, made statements like "we won't follow this course o f action because it didn't work for us", or conversely "this strategy has been very useful, so we wi l l use it as much as possible". T h e other common source o f learning is other peoples' or organizations' experiences. Mechanisms o f diffusion o f experiences are described by Levit t and March (1988), although i n the case o f Yucatan the second mechanism seems to be the most important. It is the spreading o f experience or knowledge through the contact between members o f different organizations. The process is highly efficient especially when two or more cooperatives are located in the same community or in nearby 69 communities, and may contribute to the mimetic isomorphism described above (see D iMagg io and Powell , 1983). It also contributes to the ecologies o f learning; cooperatives are constituted by subgroups learning i n an environment where other cooperatives are adapting and learning at the same time. This circumstance offers an interesting approach for analyzing the organizational adaptation process, but escapes to the scope o f the present study. Nevertheless, diffusion is not problematic for Yucatan fishermen since there has been a high traffic o f people, and consequendy o f ideas, along the coast from pre-Hispanic times. . Finally, one factor that has not been sufficiendy addressed is setting learning as an objective rather than a by-product o f sharing experiences or information searching. Viewing learning consciously as a specific outcome to be pursued may help cooperatives to improve their structure o f knowing and experiencing. M o r e studies must be addressed to understand the obstacles and aids for improving organizational learning at both levels individual (leaders) and organizational (assemblies). 7 0 CHAPTER V T H E INFLUENCE OF INTERMEDIARIES O N T H E PERFORMANCE OF FISHING COOPERATIVES I N T R O D U C T I O N The role o f intermediaries i n the development o f fisheries, and other economic activities, has been amply documented (Desai and Baichwal, 1960; Stuster, 1980; Acheson , 1981; Mi l l e r , 1982; Har tman, 1986; Deutsch, 1995). Intermediaries have been regarded as corrupt (Oldenburg, 1987), triumphant entrepreneurs (Rosado and Rosado, 1995; Deutsch, 1995), and as uninterested i n the full development o f the producers (Desai and Baichwal , 1960). There are cases, however, i n wh ich intermediaries advance the performance o f producers. This is especially true when an intermediary depends entirely o n producers to meet marketing goals. I f the producer's performance is hampered, some intermediaries are likely to invest personnel, time and resources to increase that performance (Krause, 1999). However , intermediary standard behavior is to advance short-term loans to producers for purchasing short-lived production factors. A simple definition o f an intermediary states that the person is a trader w h o handles a commodi ty between producers and consumers. Under this definition, two important characteristics illustrate the type o f intermediary analyzed i n this study. O n e is the intermediary " i n between" posit ion, having direct contact wi th the two other parties and hence orienting the actions at h i s /her convenience. The other characteristic is that more than passing on a commodity, the intermediary may influence the social, cultural and economic development o f the marketing system, including the producers and consumers. Intermediaries' range o f activities includes marketing, money-lending, and provis ion o f necessary production inputs, and it provides them wi th a strong bargaining posit ion that helps them to concentrate on high economic margins (Hartman, 1986; Desai and Baichwal , I960). The range o f activities also eases long-lasting relationships wi th the producers because the latter can market their o w n production successfully, thus reducing market uncertainty (Acheson, 1981). The intermediaries dominant posi t ion is based also o n the fact that producers usually concentrate o n harvesting, making themselves financially, technically and administratively dependent. Because o f this situation, producers lack i) sufficient technical knowledge to improve their production's quality, ii) appropriate managerial skills, iii) financial capacity for capitalization to implement reinvestment and pricing policies, and iv) the capability to adapt adequately to environmental changes. V . l . l Purpose of the chapter Various types o f producers and intermediaries have established variations o f this general relationship, provid ing distinct market posit ion to both parties. The purpose o f this chapter is to explore and understand market factors that have contributed to differences i n the performance o f fishing cooperatives o f the Yucatan state, Mex ico . The chapter analyzes the relationship between the cooperatives and intermediaries from an economic perspective, to find out h o w this relationship has defined the development o f the cooperatives. The influence o f the relationship o n the performance o f cooperatives is expressed as the relative difference o n satisfaction o f cooperatives' members and the average catch reported by these organizations during a five-year period. T h e chapter also develops categories o f market posit ion to reflect the strategies for the achievement o f cooperative's goals. T h e central tool for data collection and analysis is a mixed-methods design that includes a survey, face-to-face interviews, personal observation, and secondary sources. The results 71 are discussed in terms of their empirical support for social exchange theories, their contribution of new theoretical insights into the study of cooperatives, and the implications for the management of natural resources. V.1.2 Research questions The heterogeneous performance of fishing cooperatives has led to two major research questions: what are the major sources of differential performance of cooperatives? And how do those sources affect performance? Emphasizing market influencing those sources, important questions include: What kinds of relationships exist between cooperatives and market agents? What are the strategies of cooperatives to confront such agents? What are the market systems in which cooperatives operate and what is the market influence on the performance of cooperatives? V.1.3 Hypothesis To help answer the research questions, I tested an operational hypothesis to represent a particular prediction of the relation that exists among the factors under analysis. The stronger the market position of a cooperative, the more satisfied its members and the more catch it reports. V.1.4 Definition of terms V.l.4.1. Intermediaries Intermediaries, besides buyers and sellers, are an essential component of any market. Intermediaries play an important role of facilitating trade between producers and consumers of goods and services. There are different types of intermediaries, such as retailers, brokers, and middlemen. In this study, I define intermediaries as those economic agents who handle fish-based products from their producer to their consumer, and that produce similar products as well. By handling I mean that intermediaries buy, process, pack, and sell the catch of the cooperatives. The basic difference with middle-persons is that these people buy and sell products but they do not produce (Li 1998). In this chapter, I do not refer to other intermediaries, that is, middlemen or retailers, because they do not make exchange relations with fishing cooperatives. V.l.4.2. Market position The position of a cooperative in the market refers here to its role as producer of raw material. The strength of the position depends on the cooperative's freedom to bargain its catches, the degree of dependency on intermediaries, and the intermediaries' willingness to improve the market position of the cooperatives. Cooperatives have established different relationships with the intermediaries, varying their strength to influence the price of their production. Thus, a cooperative has a stronger market position when it has more freedom to seek better prices and its dependency on other market agents is small; in cases of dependency, the intermediary may contribute to improve the efficiency of the cooperative. V.1.5 Organization of the chapter The remainder of the chapter describes three frameworks. The first one is a conceptual framework that graphically describes the presumed relationship between the independent and dependent variables. Then, the theoretical framework explains the theories used for analyzing the variables and their relationships. The last one is an operational framework that describes the relevant conditions of operation for the cooperatives in Yucatan. Next, the methodology includes details on the information gathering process and the analysis of the data. The results show the market position 72 categories and the influence o f intermediaries o n the performance o f cooperatives. Finally, the discussion focuses on the current exchange arrangements i n the fishing market systems. V .2 C O N C E P T U A L F R A M E W O R K I advance the fol lowing conceptual framework as a graphical and organizational device to structure the research problem and to identify the key variables and the presumed relationships among them. T h e factors influencing cooperatives' performance are referred to as the independent variables, whereas performance is referred to as the dependent variable. Figure V . l shows the relationship between the variables just defined. A m o n g other factors, the way i n wh ich the independent variables are understood, designed and implemented can influence the performance o f the cooperative. Market ing system Dependence relations Exchange strategies Figure V . l . Market factors affecting the performance of cooperatives in Yucatan. T h e independent variable is the market posit ion, wh ich was considered because it has been shown that the development o f cooperatives is often shaped by their financial dependency o n intermediaries (Acheson, 1981; Medina , 1988; Har tman, 1986). In general, dependent cooperatives have no chance to bargain over the price o f their catches, and no opportunity to seek better prices wi th other buyers. Consequendy, their capability to capitalize and reinvest i n product ion factors is l imited. O n the contrary, cooperatives that have access to market information and control over the processing and distribution o f their production have more options to negotiate better prices for their catches. V .2 T H E O R E T I C A L F R A M E W O R K T h e general analytical framework used to analyze the role o f intermediaries i n the development o f cooperatives is social exchange theory. This theory analyzes h o w the structure o f rewards and punishments in relationships affects patterns o f interaction ( M o l m , 1991). In order to be consistent w i th its terminology, I regard intermediaries as buyers and cooperatives as producers. F r o m the typology developed On different exchange relations by Befu (1977), the balanced exchange relation matches the market exchange association between intermediaries and cooperatives. In market or Market posi t ion Performance 73 balanced exchange, every tiling received has to be reciprocated by its customary equivalent i n a finite period (Sahlins, 1965, quoted by Befu, 1977). A special case o f balanced exchange is a relationship o f dependence and power dominated by one o f the participants. In this type o f relationship, the development and satisfaction o f one participant depends on his/her ability to adjust to the other participants' needs; the dependent participant may adjust by developing reciprocal and non-reciprocal strategies. In their traditional form, exchange theories were restricted to the exchange o f positive outcomes. However , the study o f relations o f dependence based on the control over negative outcomes is now widely accepted ( M o l m , 1987). Exchange o f positive and negative outcomes applies to relations invo lv ing economic agents. Based on the expectation o f reciprocity, dependence-power relations between functionally equivalent agents develop reciprocal strategies o f rewarding and punishing. O n the contrary, i n power-imbalance relations, the use o f a power advantage results i n a decrease i n reciprocity and an increase i n non-reciprocal strategies, i n wh ich the power holder withholds rewards to exercise such power ( M o l m , 1991). A special case o f the power-imbalance relation is the buyer-dominated relationship, i n wh ich the buyer dictates the development o f the producer. Buyers are active, proactive agents that determine the demand shifts. O n the contrary, suppliers are more or less passive and typically reactive; their development strategies traditionally are constrained to suit the buyer's economic development (Lilliecreutz, 1998). However , producers may.develop strategies to improve their market posit ion. Some o f these strategies are designed and implemented by the producers i n the form o f a supplier system (Churchman, 1968), whereas others involve an active role o f buyers to improve producers ' performance (Krause and E l l r a m , 1997; Krause, 1999). M y analysis also considers the lack o f producers' freedom as a major characteristic o f market exchange that constrains the development o f the producers i n the buyer-dominated relationships. T h e absence o f interference by others defines the freedom to engage i n exchange relations (Preston, 1984). This interference may be interpreted as market agreements reflecting a system o f manipulation and coercion that reduces the choice o f freedom. T h e solution to acquire freedom that Preston (1984) proposes is that besides absence o f interference, an individual, before decision and action, should possess the relevant capacities and conditions for deliberate choice regarding the particular matter under consideration. Capacities are the skills, abilities, and understanding wi th respect to particular choices, whereas conditions refers to factors i n a situation i n wh ich an individual makes deliberate decisions and actions possible (Preston, 1984). In this study, cooperatives' capacities refer to the understanding o f market demands and the fishing skills to maintain and increase their fish supply. Condi t ions , on the other hand, refer to previously established relationships wi th fish buyers and the level o f development o f the contract law. B o t h previous relations and contract law are constraining conditions for acquiring freedom. I mentioned earlier that an indirect way o f measuring cooperatives' performance is by assessing the satisfaction among members. A relevant prediction o f exchange theory is that satisfaction varies w i th the actual value o f outcomes received relative to ah expected value ( M o l m , 1991). The expected value is likely to depend o n the aspirational level o f each participant i n the exchange. In light o f this idea, l o w outcomes may be highly satisfying to an individual i f they are higher than h is /her aspirational value. Therefore, i f the relative impact . o f different outcomes depend o n expectations, then the relationship between outcomes and satisfaction should vary wi th the posit ion o f the participant i n the relationship (Lee, 1988, quoted by M o l m , 1991). Individuals i n a disadvantaged posit ion (producers) should not only receive lower outcomes, but also expect to 74 receive lower outcomes. Individuals entering a relationship i n a disadvantaged posit ion may still find it satisfying i f outcomes are higher than their aspirational level. Under the market exchange perspective described above, I show that the relationship between cooperatives and intermediaries i n Yucatan is a power-imbalance type o f social exchange, i n which one o f the economic agents (intermediaries) holds the power to control the exchange o f raw material. Therefore, the relationship involves power and dependence. D u e to their dependency, the cooperatives lack market freedom and legal support, show various degrees o f satisfaction, and report different levels o f production. Market strategies o f cooperatives vary depending on being either i n a balanced or unbalanced relationship. V.3 C O N T E X T F O R ANALYSIS This section presents the general fish marketing system i n which the cooperatives operate in Yucatan. The first part explains the general attributes o f the relationship between cooperatives and intermediaries; the second part briefly examines the legal settings for regulating such relationship. Finally, the third part explains the existence o f the fishing market i n wh ich producers and buyers engage i n exchange relations wi th each other and wi th the markets. V.4.1 Intermediaries-producers relationship Several characteristics describe the relationship that intermediaries have established wi th small-scale producers. T h e most striking is that the intermediary dominates the relationship. M o r e than a horizontal association it represents a vertical dependence o f the producer o n the intermediary. Technical and pricing inefficiencies i n the marketing system seem to account for this situation. F r o m the technical perspective, small-scale producers often are located far away from storage and processing facilities and communicat ion infrastructure is non-existent or insufficient. Low-quali ty production results f rom unsatisfactory handling during harvesting and landing, as wel l as from the long time spent before reaching the market, especially i n the case o f highly perishable products (Deutsch, 1995; Har tman, 1986). Ano the r characteristic is that production's backward (supply o f production factors) and forward linkages (processing and marketing) are more than often controlled by the intermediary. Pr ic ing inefficiencies arise from the intermediaries financial strength to provide work ing capital, consumer goods, and production inputs coupled wi th the producers' inadequacy o f obtaining credits and lack o f storage, preservation, transport, and processing facilities (Hartman, 1986; Desai and Baichwal, 1960). Consequendy, intermediaries are i n the posit ion to demand the mortgage o f the production or the exclusive right to buy a share o f it at the price they set (Miller, 1982). A second characteristic o f the relationship is the pervasive influence o f the intermediaries on all aspects related and non-related to the product ion process. Producers often borrow money for community and familial events, and the debt adds to the one related to the product ion activity. In the absence o f any other arrangements (lack o f official regulation), intermediaries may direct the economic and even the social development o f communities i n a region, as wel l as the character o f the local marketing system. A third characteristic is that the relationship continues for long periods to the advantage o f the buyers ensuring the supply o f raw material. Once a producer borrows from the buyer, it is extremely difficult to free the former f rom the economic dependence (Desai and Baichwal , 1960). The situation is worsened because small-scale producers usually have a l imited choice o f oudets for the sale o f (especially) highly perishable products (Hartman, 1986). O n the contrary, buyers tend to 75 operate i n a club-like economic organization on a collusive basis for price setting, facing no effective competit ion (Landa, 1979). V.4.2 Legal framework for economic regulation Regulation o f the market exchange relations between cooperatives and fish buyers in M e x i c o is very general artd ambiguous; hence, interpretation can be discretional. It is precisely this attribute o f the legal framework that has contributed to the strengthening o f the dominant posit ion o f intermediaries. This section briefly reviews three central aspects o f the market regulation i n Mex ico : antitrust legislation, taxation, and price control. The Federal L a w o f E c o n o m i c Competence regulates the contracting between economic agents wi th the purpose o f avoiding monopolist ic practices. T h e Federal Commiss ion o f Competence, depending administratively o n the Minis try o f Commerce and Industry, enforces this law. Acco rd ing to the law, contracts or associations whose objectives are to establish exclusive advantages to one o f the economic agents are not legal. The advantages may be in the form o f imposing prices or conditions o n producers to sell their goods. Alternatively, any other action wi th effects wh ich might arminish, damage, or hinder the free participation o f economic agents i n the market are forbidden to emanate from contracts or associations (Mexican Government official information web-site, www.cddhcu.gob.mx. accessed October 27, 1999). Equivalent legislation and regulatory agencies are found i n India (Desai and Baichwal , 1960), the U S A (Chen, 1984), and the European U n i o n (Acocella, 1998). Simultaneously, when trading their catches, cooperatives are obliged to comply wi th a (not necessarily written) contract. In general, contracts have to be bilateral (mutual agreement between the parties involved), reciprocal (both parties receive comparable benefits), and purposeful (benefits are certain from the begmning o f the contract). However , due to market and environmental uncertainty, the contracts might also be contingent (benefits depend o n an uncertain event) (Mexican C i v i l Code, Articles 11792 to 1859). In addition, the lack o f an efficient enforcement o f law has fostered the implementation o f two types o f contracts, which are not considered i n the current legislation. O n e o f these types is a verbal contract based o n mutual trust. In this contract, conditions, due dates, and penalties for breaking the contract rely o n the customary laws prevailing i n the region. The other types o f contracts are adherence contracts that are based on the condit ion that there is no previous agreement o n the object o f the contract and consent to its conditions. Since the dominant agent (the intermediary) fixes these conditions, the opt ion for the producer is only to adhere to them. Adherence contracts are characteristic o f monopolist ic markets, such as telephone service, credit cards and bank credits. The legal vacuum has made verbal and adherence contracts institutionalized i n the Yucatan fishing market without the arbitration o f any official agency. Taxat ion o f cooperatives is the second legal issue that creates confusion. So far, cooperatives can apply for tax deductions for their constitution and general operations (General L a w o f Cooperative Societies) and for the purchase o f product ion factors. Since the federal government has been trying to tax an increased number o f sectors o f the populat ion and their activities, cooperatives are extremely secretive wi th respect to their economic performance. This is one o f the main reasons why it is difficult to obtain reliable economic information from them. The last form o f market regulation is price control, wh ich is a measure o f direct control that involves setting max imum and m i n i m u m prices, depending o n the objective o f the government. I f the objective is to guarantee a given income to the producer o f a good or service, the government may set a m i n i m u m price. I f the objective is to avoid the creation o f monopolies, a max imum selling 76 price may be set. B o t h mechanisms are instrurnents for increasing the allocative efficiency (Acocella, 1998). In M e x i c o , however, the Federal L a w o f E c o n o m i c Competence regulates only the setting o f max imum prices (Mexican Government official information web-site, www.cddhcu.gob.mx. accessed October. 27, 1999). The lack o f regulation on m i n i m u m prices has created economic dependency o f cooperatives o n fish buyers as the latter fix prices l ow enough to maintain the debt o f the former. V.4.3 Fish marketing in Yucatan The analysis o f the fish marketing system (FMS) is o f primary importance i n order to understand the economic, articulation o f fishing cooperatives to broader socio-economic systems, such as the national and international markets. Figure V . 2 shows the typical exchange arrangements operating i n the study area. Cooperatives connect to the national and international markets through the intermediaries because o f intermediaries' control o f the areas o f processing and marketing. T h e members o f the cooperatives, and at lower level non-members, determine the complete supply o f the cooperatives. Secrecy about catches bought from non-members makes it almost impossible to assess the percentage o f the reported production coming from outsiders. Records f rom one cooperative i n 1997, however, showed this percentage as 30% o f its production rate. Therefore, the economic behavior o f cooperatives allows viewing them as intermediaries, buying catches f rom fishermen and selling them to other intermediaries. F i sh buyers and cooperatives are not the only intermediaries i n Yucatan. Table V . l shows the p o o l o f intermediaries that operate i n the overall F M S . The scale o f operations and the range o f activities is the base o f the hierarchization. T o have an idea o f the different scale at wh ich private and social sectors operate, f rom 1993 to 1997 the former caught 82.1% o f the total catch, cooperatives caught 8.2%, while other organizations caught the remaining 9.7%. Fishing firms concentrate almost the entire fish product ion o f the state for commercialization. In 1997 they processed about 41,500 tons o f fish-based products, representing a landing value close to $570 mi l l ion pesos ( S E M A R N A P , 1998). A t the first level, private fishing firms are i n control o f the whole fishing process. Some engage i n the supply o f necessary product ion inputs and money lending to fishermen, specifically those firms whose fleets are reduced to a few boats that depend substantially o n the producers for their supply o f fish. O n the contrary, fishing firms owning large-scale fleets depend entirely o n their o w n harvesting assets, thus money-lending is u n c o m m o n and limited to the financing o f producers ' fishing trips and recovered immediately after the catches are sold. Table V. l Fishing intermediaries, and their range of activity, in Yucatan Level Type of intermediary Activity range First Fishing firms • Large fleet • Small fleet Harvesting, transporting, freezing, processing, exporting; money-lending Second Small buyers • Individual buyers • Fishermen's organizations Harvesting, ice-storing, transporting, trading; money-lending Third Retailers • Public market vendors • Street vendors Trading 77 Extra regional markets Fish buyers N o n -members _ t ~ " Members Figure V.2. Typical fishing exchange arrangements in fishermen organizations in Yucatan Small fish buyers represent the second level and include individuals and social sector fishing organizations. In both cases, the range o f activities is reduced to money lending, ice storing, transporting and trading the catches with first level intermediaries. The main differences between individual and collective small buyers are that individual buyers work alone and do not o w n their boats, engage i n trading for. capital accumulation, and lend money (charging an interest wh ich is recovered through fixing the price o f the catches). Cooperatives and other fishing associations, on the other hand, are organizations owning their boats and fishing equipment, engaging i n trading to finance the satisfaction o f the members' daily needs, and lending money to members without charging any interest. Retailers constitute the third level and include public markets and street vendors. The former buys fresh fish products every morning and sells them the same day. E a c h vendor i n the public market sells approximately 100 K g at most per day. Street vendors are an interesting phenomenon whose presence has increased since the beginning o f the 1990s, and whose origin can be traced back to the two westernmost fishing communities i n the coast o f Yucatan. W o m e n from these two communities buy different species o f fish direcdy from fishermen after their daily fishing trip. A l though there is not a clear pattern o f kinship, it seems that the w o m e n engage i n a long lasting relationship wi th specific fishermen for ordering their supply. The fish are processed, stored, iced at the household level, and sold the next morning in the capital city. Vendors transport the filets i n buckets by bus, and offer them door by door. The scale o f these operations is obviously low, between fifteen and twenty ki lo a day. The number, o f vendors work ing at this level is unknown, as this type o f activity still remains unregulated. The connection that intermediaries carry out between producers and consumers is different at each level (see Figure V .3 ) . The role o f retailers is to connect individual fishermen to the local market; relative to the total product ion, the sale through this type o f intermediary is insignificant, accounting for 1.7% o f the total. Small buyers and most social sector organizations relate to the national and international markets through first level middlemen (fishing firms). A d d i n g their o w n production, the latter concentrate 82% o f the harvesting, and process and commercialize more than 9 5 % o f the total production. O n l y two cooperatives sell regularly and direcdy to the national market and sell a minor proport ion to the local market. Fishing organizations 78 Producers Intermediaries Consumers Individual fishermen Cooperative members Private firms Retailers Small buyers Cooperatives I Private firms Nat ional International Figure V.3. Articulation between producers and consumers through intermediaries (thicker arrows concentrate production and commercialization) V.5 METHODOLOGY IV.5.1 Data collection Information regarding the independent variable, market posit ion, was collected through a series o f face-to-face, semi-structured interviews wi th members o f cooperatives' board o f directors. Questions focused o n what type o f relationship the cooperatives have established wi th market agents, especially wi th intermediaries. I was also interested i n knowing the market strategies developed by these groups. Through the analysis o f secondary sources o f information, I wanted to identify the fishing marketing system operating i n Yucatan. Regarding the dependent variable, performance, it was measured as the satisfaction o f members and as total average catch per cooperative. I designed a questionnaire to measure the level o f members ' satisfaction, as described i n Chapter I. The design o f the questionnaires and interviews was done fol lowing Fowler Jr. (1995) and Czaja and Blai r (1996). Information about the fish product ion per cooperative was obtained direcdy from the offices that the Secretariat o f Fisheries has i n the seven communities where cooperatives are located. Catch records contained information o n the amount o f K g per species, per month for each cooperative, f rom 1993 to 1997. I calculated an average annual catch per species for each cooperative. IV.5.2 Qualitative data analysis T h e qualitative analysis o f the data is based o n a process o f reduction and interpretation. B y reduction and interpretation, I mean that I reduced a large amount o f information to few categories based on the patterns o f appearance o f certain characteristics o f cooperatives regarding their posit ion i n the fish market in Yucatan. I then analyzed and interpreted those categories to help answer the research questions. 79 The methodology for reducing and interpreting the information involved five basic steps: (1) grouping answers, (2) wri t ing notes, (3) grouping for conditions, (4) creating categories, and (5) creating levels. In the first step, I read quickly the transcripts from the interviews to have first impressions from the data, and make major groups o f answers. Groups were created after constandy comparing answers from different respondents to specific questions. Once I have these groups o f answers, I wrote several notes to initiate the generation o f conditions that emerged from the data, tracking them from the immediate answers from the respondents, to my notes and to these conditions. Condit ions are the situations required to improve the performance o f the cooperatives, and were grouped into general categories. O n c e I had the categories, I read the transcripts o f the interviews again and compared them wi th the conditions created to accommodate the cooperatives presenting the same conditions into different levels. These levels represent groups o f cooperatives that have created similar types o f conditions to reach their objectives hence having different market position. IV. 5.3 Statistical data analysis The statistical analysis o f the data collected involved the application o f correlation analysis to determine i f there is a relationship between market posit ion and performance, that is, i f the second one increases as the first one does. V.6 RESULTS Different patterns o f exploitation o f marine resources, besides their distribution and abundance, depend on the technological advancement o f the fishing equipment and the relationship established among economic agents wi th in the fishing industry (Medina, 1988). Fishers have played a reactive role that has eased the intermediaries influence, influencing the development o f the cooperatives as wel l as the fishing marketing system. Different groups o f intermediaries dominate the relationship wi th cooperatives in particular fishing communities, determining patterns o f market exchange and fish market systems. This section presents the assessment o f the level o f satisfaction and fishing performance for each cooperative according to four strategies for exchange association between first level intermediaries and fishing cooperatives i n Yucatan. These strategies were equated to the market posit ion o f the cooperatives. T w o marketing systems are described to frame these fishing exchange relations. The next subsection describes the role that, as intermediary, the Mex ican government had i n recent years, according to the leaders o f two cooperatives. The last part o f the section presents the statistical analysis o f the data. V. 6.1 Data collection Information to analyze the independent variable was collected from twenty-one interviews wi th representatives o f the same number o f cooperatives. In the case o f the dependent variable, to measure the level o f satisfaction, 155 questionnaires were applied to members o f sixteen cooperatives. Five cooperatives i n two communities, representing two different types o f organizational structure, were not wi l l ing to participate i n the survey. Therefore, results o n satisfaction should be considered with.caution. The total average catch per cooperative during 1993 to 1997 shows a^ssimilar levels o f product ion, ranging from very few annual tons from barely operating cooperatives, to more than four hundred and fifty tons from the most productive ones. Catches are arranged and shown i n the statistical analysis section. 80 V . 6 . 2 Qualitative data analysis V.6.2.1. General characteristics of the fish market A n oligopsonistic market structure and the coexistence o f a group o f capital-intensive industries and many labor-intensive social organizations characterize the fishery sector i n Yucatan. T h e industries are family-based owned and different first level intermediaries manage each o f them. Rather than investing direcdy i n developing the state's fishing infrastructure, intermediaries have invested i n technologically a'dvanced product ion factors to ensure their personal control over the whole fishing process (see Rosado and Rosado, 1995). BuUding access roads, docks, fishing refuges, light houses, power lines and water pipelines has been the government's responsibility. Because the government built the infrastructure to facilitate the movement o f raw material to the capital city and to the most developed coastal community, there is no horizontal articulation among the other fishing communities (Villanueva, 1990). The commercial orientation o f the fishery started i n the beginning o f the 1950s wi th a series o f legal changes that sought to increase the control o f the fisheries by Mexican individuals and enterprises. A s the demand increased, diversified, and expanded to extra-regional markets, the producers had to rely on intermediaries to join those markets. Intermediaries emerged exogenously (government) and endogenously (local intermediaries) as a response to the lack o f articulation between the producers and extra-regional markets. The relationships established between intermediaries and cooperatives have been i n most o f the cases unbalanced. Because o f their large-scale fleet, fishing firms catch larger fish inhabit ing deeper waters. This fact, coupled wi th higher quality i n handling and processing, supports their externally oriented business. This situation allows the intermediaries to manipulate market information and gives them advantage to monopol ize pricing. The dominant posit ion o f intermediaries i n the fishing market results i n an irrational exploitation scheme where only few species are exploited at high rates, whereas more that twenty-five species with real or potential market value are under exploited. Intermediaries are more interested i n satisfying foreign consumers demand (mosdy La t in and Asian) wh ich have a strong preference for lobster, groupers, octopus and snappers (Rosado and Rosado, 1995). The demand, concentrated on these species, is then transmitted to the fishermen. F r o m the early 1970s to the late 1980s, state-owned agencies practiced external intermediation to increase employment, allocate resources efficiently, and promote regional development, operating alongside local private fishing firms under a mixed oligopsony. Publ ic intervention was thought to make possible the achievement o f an efficient allocation o f resources, wh ich the local intermediaries were unable to guarantee. However , as I showed previously, public intermediation failed because it did not generate enough economic surplus to finance efficient cooperatives. This misallocation o f resources was the result o f inefficient management caused by constraints imposed by policy makers (they were more concerned wi th profit maximizat ion through exportation), and improper relationships between outside managers and local producers (Pare and Fraga, 1994). Besides, none o f the official measures gave fishers the appropriate knowledge and experience to articulate direcdy to the markets. The orientation o f public enterprises as not seeking profit (and even operating at a loss) was not pursued (see Acoce l la , 1998). Endogenous intermediation emerged during the 1950s and has continued up to n o w for three reasons. The first reason is economic; the intermediaries could economize o n the transaction costs associated to bilateral exchanges. Transaction costs most frequendy involved i n exchange relations are searching for the good or service, negotiating an agreeable price, moni tor ing the compliance o f the agreement, and enforcing the traders to comply wi th the agreement (Clower et al., 1988). The 81 second reason is technical because intermediaries were more efficient in establishing contact wi th consumers and producers, than consumers and producers were i n making contact direcdy wi th each other. Efficiency i n making contact among traders was due i n part to the fact that all the resources o f intermediaries were concentrated on intermediating, not i n producing. The advantage o f the intermediaries in the beginning was i n trading, not i n production. In fact, the intermediaries' profit f rom selling at a higher price than the price they pay for the commodi ty i n exchange ( L i 1998). T h e third reason is the way the society is structured i n Yucatan. The main characteristic o f the social structure is the possibility o f creating highly personalized relationships that makes it easier to contact producers, especially i n isolated fishing communities.. Yucatan's society has a legal framework which is poorly developed; hence, high transaction costs or externalities associated wi th contract uncertainty impede or make it difficult in formal exchange. The answer to this impersonal socio-economic structure, where bilateral exchange predominates, is personalism or particularism. Enter ing in personalistic exchange relations wi th those traders k n o w n as trustworthy or reliable i n honor ing contracts reduces uncertainty (Landa, 1979). Personal exchange relations are facilitated by the fact that individuals are embedded in a social structure wi th rules that serve to constrain their behavior. The social structure, thus, has provided a solid ground to the economic and technical factors for the emergence o f local intermediation. In advanced economies wi th well-developed legal frameworks for contract enforcement, the institutions o f contract law facilitate impersonal exchange because o f reducing contract uncertainty. These economies portray traders as egoistic individuals who are completely indifferent to the interest or identity o f their trading partners. Standard theories o f exchange depict competitive trade as an impersonal process o f exchange that sets aside the transmission o f altruistic impulses between traders (Landa, 1979, Befu, 1977). F o r example, Jevens has proposed a. " law o f indifference" that states that it is indifferent to the buyer or the seller wi th w h o m they do business as long as they obtain an homogeneous commodity at a customary price (Jevens, 1999). Furthermore, Wicksteed's principle o f "non- t ru ism" states that altruism has no place in economic transactions (Landa, 1979). The social structure inherent to the market exchange i n Yucatan implies the existence o f norms for regulating the behavior o f intermediaries and producers, taking elements from their o w n socio-cultural contexts to bu i ld this structure. Intermediaries, mainly from the Capital Ci ty and the primary coastal community, traveled along the coast to buy fresh fish. v A s the exchange was consolidating, personal interactions started to be recurrent and regular, and norms for regulating the behavior emerged. The cooperative and the fish buyers set the norms o f reciprocity and rules for exchange. F o r organizational development purposes, cooperatives urged their trading partners to behave based on a n o r m o f reciprocity, appealing to the fish buyers' moral duty o f rerarning the preference o f cooperatives i n selling their production to the fish buyers. Rules o f exchange were specifically set to govern what should be given i n return i n each particular situation between trade participants. However , according to the interviewees, fish buyers have always applied the non-truism principle when accepting to increase the price o f the species. Th is behavior is associated wi th the seasonal availability o f the species. W h e n the cooperatives demand a higher price for the less abundant species at specific times o f the year, the fish buyers agree but simultaneously reduce the price o f the most abundant species. W i l s o n (1980) documents a similar behavior o f fish buyers on the East Coast o f U S A . N o t all relations, however, were established in the same way. It is reasonable to expect that traders used a discriminatory screening to reduce, from all possible partners, the ones regarded as the most trustworthy. Relations then evolved based on the partners w h o reduced uncertainty and transactions costs, but increased mutual trust, aid, and reciprocity. It d id not impede, however, 82 some relations f rom evolving to power-dependence associations, i n wh ich usually the fish buyer had the power over the cooperatives. This power has been used to force, influence or coerce compliance or agreement. The amount o f power is a function o f the availability o f alternative resources from which the dependent partner can obtain the resources needed (Befu, 1977). Alternative resources include opportunities o f employment, processing service, connections to and information from extra-regional markets, capital, and other material resources on wh ich the subordinated are dependent but do not have direct access to. E v e n though the members o f the cooperatives had skills, experience and the exclusive right to catch the most valuable species, their degree o f dependence is high from the beginning given their lack o f processing facilities and marketing experience, which made it easier the fish buyers to increase their market posit ion. V.6.2.2. Market position of cooperatives After performing the qualitative analysis o f the data, I found that the major category regarding market issues was the position o f cooperatives within this market (see Table V.2) . N o sub-categories were created i n this case. I identified five conditions that contribute to the position o f the cooperatives i n the market. The first one is whether the cooperative has the capability to negotiate the price o f its catches. This means that some cooperatives have to accept the prices fixed by the intermediaries, whereas some others may fight for higher prices. M o r e over, some are capable o f fixing the price to their convenience. The next condi t ion is the signing o f a contract for selling the catch previous to the season o f a ' particular species. Some cooperatives compromise their catches before the fishing season based o n verbal agreements, some others do sign a contract for the most valuable species, and even others expand the contract to all the species they catch. The pre-season contract or agreement is l inked to the next two market conditions. O n e is that the contract or the verbal agreement often gives the fish buyer the exclusive right to buy the catch o f the cooperative; therefore, only some groups have complete freedom to sell to who ever offers the better conditions o f buying. The other related condi t ion is that the buyer or the cooperative and the buyer have the right to enforce the exchange agreement. In some cases, this right is exclusive to the buyers, i n some others to both parties. T o my knowledge, there is no situation i n wh ich the cooperative has the exclusive right to enforce the agreement. Finally, there is a condi t ion i n wh ich cooperatives may negotiate the price o f their catches collectively or individually. Ideal democratic cooperatives ( IDC) are assumed to be those that exhibit the fol lowing market conditions: 1. H a v i n g the capability o f negotiating the price o f their catches 2. Signing a pre-season contract to sell all the species they catch 3. H a v i n g the freedom to sell their catch to the buyers offering higher prices 4. H a v i n g the right to enforce the contract i f the buyer does not comply wi th it 5. Collectively negotiating the price o f their catches Thus , cooperatives having equal sets o f conditions were grouped i n four different market positions. These are the same as the strategies for market exchange described i n the fol lowing subsection. V. 6.2.3. Cooperatives'strategies for market exchange In the D F M S the fish buyer relies on social sector fishing organizations for his supply. H e has financed the cooperatives to acquire boats, engines, nets, and trucks for transporting the catches to the processing facilities located in the capital city. Through financing, the buyer has been able to establish dependence-power relations to various degrees with different cooperatives, which i n turn have had to 83 develop non-reciprocal strategies to adapt to this type o f relations. In the two communities participating in the I F M S , first level intermediaries o w n their fleets, so they self-supply their fishing firms, except for lobster, which is still caught exclusively by cooperatives. Patterns o f interaction wi th social sector organizations and individual fishermen vary among the two communities. Cooperatives have also developed different non-reciprocal and reciprocal strategies. The following subsections describe these strategies, summarized in Table V . 3 . Table V.2 Summary of the conditions determining the market position of cooperatives, Yucatan Price-takers Price-negotiators Price-fixers IDC Category: Market position Weak Strong Negotiat ion o f the catches' price + + + + Pre-seasonal selling contract + + + + Freedom to sell catches + Enforcement o f exchange agreement + + Collective negotiation + + Total 0+ 2+ 3+ 4+ 5+ V.6.2.3..1 Non-reciprocal exchange strategies There are two non-reciprocal strategies, wh ich are adopted by the majority o f cooperatives to adjust their market posit ion. The first is known as the price-negotiator strategy. Three characteristics distinguish price negotiators. First, both parties negotiate the price o f all species, but the buyer has the exclusive right to buy the total catch o f each cooperative. Second, there is a pre-season contract only for the most valuable species, whereas the price o f other species is agreed verbally. T h i r d , the fish buyer has the right to enforce exchange agreements. Enforcement is interpreted as the power to provide rewards or apply punishments. The fish buyer usually manipulates rewards and punishments through rising and lowering prices, and giving or wi thholding loans. E igh t cooperatives dealing wi th the same fish buyer i n the D F M S described earlier have developed non-reciprocal strategies i n two different ways. The three non-directive cooperatives located i n (S) have the weaker bargaining posit ion due to three main factors. First, they deal individually wi th the buyer, giving h i m the chance to manipulate rewards and punishments on a one-to-one basis. Second, their annual level o f operations is lower, between thirty-seven and sixty-eight tons, which represent 12% o f the product ion this buyer gets f rom the eight cooperatives. T h i r d , these cooperatives do not o w n any infrastructure; catches are kept i n ice overnight i n one-ton capacity boxes. Consequendy, catches must be sold the next day from where they are landed. Other four cooperatives, one participatory i n (SF), the two consultative i n (RL) and another consultative i n (EC) display a stronger non-reciprocal, price-negotiator strategy. They handle their exchange relation wi th the fish buyer as a group, as they are organized as a federation o f cooperatives. Negotiations are carried out between the intermediary, the management units o f the cooperatives, and the federation. The rewards system is more balanced because this group o f four cooperatives had caught 50% o f the active cooperatives' average product ion considered i n this study. This high productivity is a resource base that allows these cooperatives to increase their bargaining power. The group is regarded as a supplier system. Churchman (1968) describes a supplier system as a group o f components that interact wi th each other to fulfill a set o f superior goals. Lilliecreutz (1998) notes that a supplier system is a survival strategy; however, i n this case the strategy has helped the cooperatives not only to survive, but also to advance their organizational 84 development. F o r example, all o f them have at least two trucks to transport the catches, offices, premises for social events, ice-storage facilities wi th varying capacity up to five tons, and an ice-making facility and one gas station. However , the buyer has pardy financed these assets. Table V.3 Market strategies developed by cooperatives in different fishing market systems Markets Reciprocal Strategies Non-reciprocal strategies IFMS Price-fixers (1) Price-takers (4) DFMS (*) Price-negotiators: Supplier's system (strong) (2) Individual supplier (weak) (3) (*)No cooperative found with reciprocal strategy in this market system Numbers in parenthesis were used to apply the correlation analysis F r o m the perspective o f the buyer, financing the advancement o f the stronger cooperatives is an advantageous investment. He lp ing these cooperatives to acquire product ion factors guarantees h i m more efficient and reliable suppliers. T h e fish buyer has built upon the organizing capabilities o f these cooperatives (which is not the case i n the three previous weaker cooperatives), by provid ing them wi th sufficient equipment and facilities to increase the quantity and quality o f their fishing performance. Finally, another participatory coop i n (DB) is also categorized as a strong price-negotiator, although it has been able negotiate by itself wi th the fish buyer. The reason why this cooperative is not included in the suppliers' system is that it is registered to another federation o f cooperatives. The second non-reciprocal exchange strategy is called price-taker, and is found i n the I F M S model , i n the five inactive autocratic cooperatives in (P), and the three laissez-aller cooperatives barely operating in (C). Characteristics o f price-takers are: a) the buyer fixes the price o f all species and has exclusive right to buy the catches; b) there is no contract to formalize any exchange agreement, and c) the buyer has the only power to enforce the agreements. Enforcement, rewards, and punishments are interpreted as before. T h e cooperatives i n (P) developed this strategy according to the leaders o f two o f those cooperatives because the intermediary was the government; for this reason, i n subsection V.6.2.4 I explain their situation as a special case. O n the other hand, the laissez-aller cooperatives i n (C) seem to have the weakest market posit ion; they have an even worse performance than the non-directive cooperatives. Besides dealing individually wi th the buyer, their level o f operation is the lowest, reporting only 2.4% o f the total product ion o f cooperatives. They own practically no assets and the boats that they operate belong to the fish buyer. Unl ike the strong price-negotiators, price-takers have not developed a supplier system to strengthen their bargaining power, nor do they have the support from the fish buyer to improve their performance. V.6.2.3..2 Reciprocal exchange strategies Reciprocal strategies, i n a broad sense, refer to contingencies between functionally equivalent behaviors. Thus, providing rewards depends o n the partner's pr ior rewarding. Similarly, applying punishment depends o n the partner's previous punishment ( M o l m , 1991). In this study, fish buyers and three cooperatives i n the I F M S located i n (P) are functionally equivalent economic agents i n the 85 f sense that their market posit ion is comparable when trading catches. The resource o f the buyers (capital) is used to adjust their bargaining posi t ion i n a similar way as the resource o f the suppliers (catches). Aga in , since the contract law is underdeveloped, reciprocity is based o n mutual respect, trust, and help. The cooperatives applying the reciprocal exchange strategy are called price-fixers, since they have the possibility to negotiate and fix the prices o f all the species they catch. Major characteristics o f price-fixers are: a) bo th parties negotiate the prices o f all species; b) the intermediary has no exclusive right to buy the total catch o f the cooperative; c) there is a pre-season contract or verbal agreement for all the species, and d) both parties have the right to enforce exchange agreements. These cooperatives are the only ones that have the facilities to control the whole fishing process, including direct trade wi th either market (national and international), and can gain financial independence. In fact, one supervisory cooperative (RLP) from its inception i n the late 1950s established its financial independence as a strategy for organizational development. T h e other two price-fixer cooperatives ( T P M and PS) set the same strategy at the beginning o f the 1990s when they learned the fate o f other cooperatives i n the same community (P) due to their financial dependence on fish buyers. Other strategies have contributed to the financial independence o f these cooperatives as well . Some o f the strategies include keeping the fleet operating continuously, being receptive to technical innovations, seeking control o f all phases o f the fishery, and specializing i n catching one or two valuable species. The product ion o f the three cooperatives, although representing only 16.8% o f the total catch o f the cooperatives, is wor th 12.7% o f the total landing value. The high value is due to the quality o f the handling and processing, making the catches a gready appreciated commodi ty i n extra-regional markets. A c c o r d i n g to the interviewees, no credit relation forces the cooperatives to accept prices fixed by the fish buyers, nor have the fish buyers the right to mortgage the catches. Since these cooperatives o w n their o w n processing facilities, their financial situation seems to be the strongest amongst the cooperatives i n Yucatan, although no detailed information was disclosed to confirm this assumption. V.6.2.3. Marketing systems The fish marketing system (FMS) i n Yucatan has deviant geographical patterns compared to an ideal market economy based o n the central place theory (see Smith, 1974). T w o models o f the F M S were identified i n the present study and were used to understand the (1) uneven channels o f commercialization, (2) grouped-trade relationships between fishing. communities and fishing firms located i n urbanized communities, and (3) limitations on the articulation o f cooperatives to the market imposed by fish buyers and by the inherent development problems o f the fishing communities (see Chapter I). W i t h i n the two F M S models, there are three market centers where the production is concentrated and then distributed to extra regional markets. V.6.2.3..1 Dendritic marketing system The first mode l is called the dendritic fishing marketing system ( D F M S ) , after the dendritic model described by Johnson (1970). D F M S involves five primary communities and a tertiary community. Figure V . 4 shows that the geographical distribution o f the primary communities i n this model occupy mainly the easternmost side o f the coast ( D B , SF , R L , and E C ) . O n l y one community is located i n the west (S). These five communities are connected vertically to the concentrating, high-level market center located i n the capital city. Transport routes l inking fishing communities to urban settings have developed i n a linear way, becoming a separate branch-like system from which the D F M S model takes its name. Cooperatives transport their catches to the processing facilities o f the single fishing firm i n the heardand, to be processed, packed, and distributed to the extra regional markets. The owner o f the firm gets complete information o n prices from the fishing communities 86 and the national and international markets.On the other hand, cooperatives obtain regional price information from a single source: the same intermediary. This fish buyer controls the product ion o f eight cooperatives' representing 70% (in weight and landing value) o f the product ion o f the cooperative sector. Taken at the state level, however, the production o f these cooperatives represents only 6%. T h e advantage for this intermediary is that he concentrates the product ion o f all small buyers and many other fishing organizations i n the western community. H i s fishing firm has been considered as one o f the three fishing firms wi th the highest level o f industrialization (processing capacity), out o f twenty two fishing firms registered i n the local F ishing Industry Chamber in 1995 (Rosado and Rosado, 1995). Information obtained during the fieldwork i n 1998 suggests that its posi t ion has not changed much since then. Figure V.4. Dendritic fishing marketing system V . 6 . 2 . 3 . . 2 In-site marketing system The second F M S mode l i n wh ich cooperatives are engaged i n is called the in-site fishery marketing system (IFMS) where producers and intermediaries are located i n the same community. Figure V . 5 shows that there are two communities wi th this spatial distribution; one is a secondary community (C), and the other a tertiary community (P) (see Chapter I). In this model , transportation costs are reduced to a m i n i m u m since the catches are practically landed at the processing facilities. Hence, the time spent between landing (supervised by employees o f the buyer) and processing is minimized, increasing the quality o f fish products. In the fishing community (P) closest to the capital city, first level intermediaries rely more on their own large-scale fleet for fish supplying than on cooperatives. It is reflected i n the fact that cooperatives' product ion that is channeled through fishing firms represents only 1% o f the total produced by these organizations. E igh t cooperatives out o f the twenty-one analyzed are located i n this community. F r o m those eight, three direcdy control their o w n exchange relations. The other five have established a financial dependency on the fish buyers to complete their trips. The same condit ion o f monopolis t ic pricing and catch mortgage i n D F M S applies i n I F M S . However , cooperatives in the latter have better access to market information either, via consulting direcdy to an official ttading agency or via Internet. The I F M S is also found i n the community (C). The most 87 important difference between the only three active cooperatives i n this community and those i n community (P) is that the former trade wi th a single fish buyer only during July and August when they catch and sell lobster. International Figure V . 5 . In-site fishing marketing system First level intermediaries concentrate and trade 98.6% o f the total fishing product ion i n Yucatan; the remaining 1.4% is traded by the cooperatives. That is, they trade only 17% o f the cooperatives' product ion. A final comment o n the marketing system is that intermediaries wi th small fleets justify purchasing catches from fishing organizations because their product ion is cheaper, because social sector capital is subsidized and has lower labor and technology costs. V.6.2 .4 . Government as intermediary T h e Mex ican government implemented several measures i n order to improve the market posit ion o f the cooperatives. The most important measures were creating and sponsoring credit mstitutions to provide soft credit loans, conducting marketing operations by state-owned agencies, and providing fish processing facilities to fishermen organizations. T h e infrastructure needed for the development o f the fishery as a relevant economic activity i n the state was built during the 1970s (Villanueva, 1990). A t the same time that freezing and processing facilities were completed and operated by social sector organizations, the construction o f roads, docks, fishing refuges, and the supply o f energy and water to those lodgings, benefited the whole fishing sector i n general, mcluding the private firms. D u r i n g this time, two important state-sponsored firms were in charge o f commercializing catches. O n e specialized i n trading low-value species for domestic consumption, and the other focused on exporting high value species, such as shrimp and lobster, to international markets. Unforeseen problems such as incompatible work ing hours between fishermen and unionized plant workers, and the lack o f experience on how to handle perishable products by managers hired by the government, among other things, led to an inefficient operation o f these two firms. B y the end o f the 80s the government finally decided to privatize the fishing firm (Sanchez 1995). The exporting firm, although still under state supervision, is barely operating i n Yucatan, where it exports lobster to the U S A . A n example o f how this firm operates is 88 used here to demonstrate how state intervention indeed hampered the development o f the cooperative sector, leading to the demise o f some groups. In 1972 the government granted loans to cooperatives to purchase the (until then) private shrimp fleet (Vasquez-Leon, 1995). However , o ld and technologically inefficient shrimp trawlers, insufficient catches to cover trip costs, monopo ly pr ic ing by the official agency, and high interest rates made it impossible for the cooperatives to recover enough capital to pay the loans. Table V . 4 shows the monthly distribution o f costs and benefits o f operating a shrimp trawler i n (P). A s a fishing trip lasted twenty days, it is assumed here that twelve trips were carried out each year. The average catch was 0.5 tons per trip. The low level o f product ion plus the high operational costs and interest rates resulted i n a hardly payable deficit. Table V.4 Distribution of costs and benefits per trip of a shrimp trawler in Yucatan, 1997 ($ pesos) Item Operation Costs Discounts M o n t h l y interest payment n / a 14,000 Trading agency discounts n / a 1,261 Expor t i ng commission n / a 1,102 Exchange commission n / a 804 F ixed costs 2,820 n / a Variable costs 14,625 n / a Subtotals 17,445 17,167 Tota l (costs + discounts) 34,612 Catch value 14,500 n / a M o n t h l y deficit 20,112 n / a Annual deficit 241,344 n / a n / a = not applicable O n l y after the exporting agency was able to sell the catch, was the payment to the cooperative made. T h e agency usually discounted between 7.6 and 8.7% o f the total value as an exporting commission. I f the trawler was purchased with a loan from the Nat iona l Fishing Bank, the check issued by the exporting firm could be cashed only at that bank, w h i c h charged a 6% exchange commission; the bank controlled the exchange currency (from U S D into pesos). The bank also discounted 40% o f the catch value for principal and interest payments. Finally, i f the coop d id not have processing facilities, it had to pay $0.55 U S D per pound o f shrimp processed. Under these circumstances, at least five cooperatives i n Progreso ceased operating as the results were totally opposite to the objectives o f the policy o f providing product ion factors sufficient for capital accumulation, reinvestment, and improvement o f the market posi t ion o f the cooperatives. V.6.3 Statistical data analysis A s predicted, there is a significant positive correlation between the performance and the market posit ion o f cooperatives (see Table V.5) . The lower coefficient value for satisfaction seems to be due to the human variability i n responding, differendy to the same stimuli, making it difficult to find a higher correlation. 89 Table V . 5 . Spearman's correlation coefficients for market position with satisfaction and catch per cooperative Satisfaction Average catch Per cooperative Market position 0.663 0.879 Correlation was significant in both cases at the 0.01 level (1-tailed); sample size = 155 fishermen The market posit ion i n this analysis reflects the strategy for exchange. The bargaining power gained through the market posit ion is higher for price-fixers, whereas price-takers have the weakest bargaining power. In an intermediate posit ion, price-negotiators are divided as weak and strong negotiators, depending on the way they negotiate, that is, as a system supplier or individually. Table V.6 shows the results derived from the strategies followed by the cooperatives i n their exchange Table V.6 Market position expressed by exchange strategies and their numeric value, and performance per cooperative COOPERATIVES MARKET POSITION AVERAGE SATISFACTION AVERAGE CATCH(tons) N U M E R I C V A L U E STRATEGIES RLP 1 Fixer n/a 433 .11 SF 2 Negotiator (s) 2.9 484 . 38 D B 2 Negotiator (s) . 2.0 318 . 39 T P M 1 Fixer n/a 178.88 PS 1 Fixer n / a 133.33 C A 1 3 Negotiator (w) 1.2 16.8 P G 3 Negotiator (w) 1.7 100.50 CP 2 Negotiator (s) 2.0 343 .48 E C 2 Negotiator (s) 1.7 217 .51 R L 2 Negotiator (s) 1.9 337 . 10 C C B 3 Negotiator (w) n / a . 68 .84 PD 3 Negotiator (w) n/a 37 .15 CPP 3 Negotiator (w) 1.9 67 .68 P T 4 Taker 5.0 4 .90* K K H 4 Taker 5.0 0 .70* J M C 4 Taker 5.0 18.73 PC 4 Taker 5.0 0.00 P C H 4 Taker 4.0 0 . 81* N K 4 Taker 5.0 0.00 E 4 Taker 4.0 2.48 B 4 Taker 5.0 0 (s) = strong; (w) = weak; *=one-year production; n/a=not available 90 relations. A s predicted, members i n cooperatives wi th a higher market posit ion tend to be more satisfied and report higher average catches than members in cooperatives wi th weaker or no bargaining power. However , due to the lack o f results for price-fixers cooperatives, it remains to be seen i f their members qualify for the highest value for satisfaction. V.7 DISCUSSION The fol lowing discussion draws from the previous description o f the different market systems found i n Yucatan. T h e first part deals wi th the sources o f power o f intermediaries and h o w they influence the performance o f cooperatives. In the second part, I analyze the performance according to the exchange strategy and the market system i n which cooperatives are operating. A final comment is made on the cultural context o f Yucatan and how it influences exchange relations i n the fisheries. V.7.1 The resource-power of the intermediaries The alternative resources that fish buyers most frequendy use to control the relationship are employment opportunities, information, and financing. Fo r instance, regarding employment oppormnities, i n the westernmost communities (C) there is a large p o o l o f unemployed peasants l iving i n nearby rural communities. They have litde experience and skills i n fishing, but a huge economic need. W h e n local fishermen are recalcitrant to the rules o f the intermediaries, they send a bus to the rural communities to hire more obedient workers who are wi l l ing to go fishing longer and receive less payment. Since the boats and gear belong to the buyers, the peasants receive only a small commission o f the landed value. A s a result, local fishermen then are forced to accept the conditions o f the buyers i f they want to have a regular income. This situation explains i n part the weakness o f the price-taker cooperatives and their inability to negotiate fair prices for their catches. Intermediaries play a special role i n the case o f market information. They use their particular knowledge about demand and quality o f goods to buy and sell i n the market. The i r advantage is i n terms o f information, especially when it is restricted to a few intermediaries. L i (1998) assumes that intermediaries improve the efficiency wi th in a market by inducing the producers to supply high-quality goods and br ing them to consumers, who might not realize the trading oppormnities without the intermediaries. W h e n information about fish-based product demand is not accessible to producers, and supply information is not available to consumers, it is difficult to carry out the trading o f these products. Intermediaries then, play a market-improvement role. However , intermediaries may also find it profitable to trade low-quality fish products and sell them to uninformed consumers when market information is scarce and hence consumers and producers cannot play a disciplinary role to restrain the behavior o f the intermediaries. Thus, the intermediaries may manipulate market information to profit from the selling o f a l ow quality commodity to consumers, and to induce producers to unfair agreements, reducing the freedom o f producers to seek more fair exchange relations. The most important resource by wh ich fish buyers dominate their relation wi th cooperatives is their financial surplus. The benefits to the cooperatives from the financial assistance o f the intermediaries include elirninating or reducing the need for self-financing investments and insuring the producers against random liquidity needs. B y screening and moni tor ing the investment behavior o f the producers, financial intervention certifies the producers and their investment quality, improv ing the welfare o f the local market because it selects the most efficient and trustworthy producers to finance their product ion factors that should improve the quantity and the quality o f their producing 91 (Bencivenga and Smith, 1991; Acocel la , 1998). Results o f financing cooperatives, however, have been mixed in Yucatan, and are discussed i n the next subsection. V.7.2 Financial dependency and non-reciprocal exchange strategies in the IFMS and DFMS T h e general characteristics o f non-reciprocal exchange strategies present i n the D F M S result i n a complete control o f the production factors by the intermediaries i n (C, S, D B , SF , R L , and E C ) . A l t h o u g h fishermen have access to trucks, boats, engines, nets, and other fishing equipment, they are distributed through credit schemes. In this way, the intermediaries control the technical level and the amount o f equipment distributed wi th in the cooperatives, giving the fishermen the faulty perception that they are the ones controll ing the product ion factors. Under such circumstances, fishermen bear operation, maintenance, replacement, and insurance costs. A t the same time, through this arrangement, the fish buyers transfer the investment risks (sinking) to the fishermen and the depreciation o f the equipment. These types o f arrangements are not exclusive o f Yucatan but have been described i n other areas (Norr , 1975). Thus , there is a difference between real and perceived operation costs. The difference represents a surplus to the fish buyer and a deficit to the cooperatives; this implies that the latter are unable to pay back the loans and are continuously i n need o f re-financing. This situation determines the long-lasting relationship between cooperatives and fish buyers. It makes it very difficult for the fishermen to save up and reinvest i n fixed assets (buildings, offices, processing facilities) or even to pay back their personal debts. T h e surplus capital o f the intermediaries ensures a continuous financing o f the fishermen as the lifespan o f the production factors is short and because fish buyers and fishermen have different time horizons to pay back the loans. T h e loan, or direct credit, is a financial instrument that fish buyers use to transfer purchasing power to fishermen who have deficits. The buyers seek to lengthen the maturity o f the loan by encouraging the fishermen to acquire gear wi th a short lifespan and by fixing a l ow price for the catches. The price however has to be high enough to reduce the risk o f insolvency, but l ow enough to keep the fishermen i n need o f financing. Thus, fishermen are still often i n debt when they have to repair or replace their gear.. Fishermen, on the contrary, prefer short maturities o f their loans and a high price for their catches to avoid being re-financed under disadvantageous conditions. T h e fish buyers increase the price o f the loans by manipulating the price o f the catches unti l the loan's maturity expires. In this case, credit becomes very cosdy for the fishermen. In short, fish buyers use direct credit to hamper the market position o f the fishermen through mortgaging their catch thereby reducing their freedom to find more fair exchange conditions. Similar situations o f coercion by fish buyers are described by Alexander (1979) i n Sri Lanka , Faris (1972) i n Newfoundland, and Lofgren, 1979) i n Sweden. Furthermore, since all equipment is either built i n the capital city (boats) or has to be imported (engines, nets), fishermen are not only suppliers o f raw material but also dependent o n products manufactured outside their communities by members o f the same group o f intermediaries. Therefore, fish buyers concentrate capital within this relationship by: a) buying catches at prices they fix, b) selling product ion factors, c) charging interest by money-lending, and d) controll ing the commercialization o f the catches. A t the same time, they save on the organization and training costs, since these costs have become the responsibility o f the government. M o r e savings are due to the fact that contract law is underdeveloped and verbal agreement reduces moni tor ing and enforcing costs to their m i n i m u m value. 92 V.7.3 Financial dependency and reciprocal exchange strategies in the IFMS In this study I found that the exchange strategies i n the I F M S i n (P) are reciprocal since intermediaries and cooperatives have control on the entire fishing activity. Thus, intermediaries' dependence o n the production o f the cooperatives is minimal . In return, the cooperatives had had no necessity o f asking for large financial support, except i n those cases where cooperatives engaged i n exchange relations with state-owned trading agencies. Those cooperatives, however, are now inactive. The three cooperative organizations ranked as price-fixers, that is, wi th the best market posit ion, are located i n this community. T h e most evident influence from intermediaries on these operating cooperatives. is the 'business atmosphere' i n this community, wh ich was ranked as displaying primary, secondary and tertiary activities. (P) is the most important fishing community o n the coast because the fishing infrastructure here is the most advanced and efficient i n the state. M o r e than 50% o f the fishing companies are located here, all wi th a medium or high level o f industrialization (processing capacity) (Rosado and Rosado, 1995). O f the three cooperatives mentioned, two o f them ( T P M and PS) were considered the most dynamic social organizations from 1993 to 1997, i n terms o f a high number o f catches. Since the beginning o f the 1990s, they have reflected the structure o f a fishing firm. There is a supervisory leader who makes the strategic decisions, a manager who is i n charge o f the administrative tasks and is supported by professional bookkeepers, a group o f efficient skippers w h o direcdy administer the budget o f the vessels they operate, and a membership base that is highly skillful during the fishing season. This situation provides empirical support to the previous evidence that people can learn by experience and by imitating the success o f others. The impact o f good decision-makers (first level intermediaries) o n price-fixer cooperatives has been larger than the impact o f bad decision-makers (leaders o f other cooperatives wi th weaker market position). Organizations led by bad decision-makers are less successful and are more likely to disappear from the market because these organizations go bankrupt. O n the contrary, organizations led by good decision-makers are more successful and tend to survive and expand i n the market (Offerman and Sonnemans, 1998). V.7.3 Exchange relations and socio-cultural context A special remark o n the emergence o f hierarchical relations wi th in power dependence associations refers to the socio-cultural context wi th in wh ich a mode l o f exchange relations is built. N o exchange model can operate i n a cultural vacuum. Specification o f the cultural context is what brings life to the mode l (Befu, 1977). A s it was mentioned earlier, the social structure presupposes the existence o f social institutions that regulate and organize the behavior o f interacting individuals (Landa, 1979). The cultural context i n which social institations have emerged i n M e x i c o i n general, and i n Yucatan i n particular, can be traced back to its colonial legacy. After independence, the country inherited, f rom the late medieval Spain, its centralized authoritarism, regional poli t ical bossism, and clientelism. This legacy bestowed upon all La t in Amer i can societies traditions o f vertical dependence and exploitation. Pu tnam (1992) states that historically derived social contexts present individuals wi th a different set o f opportunities and incentives. After three hundred years o f Spanish dominat ion and almost two hundred years o f centralized decision-making, it is not surprising that inhabitants o f fishing communities view their posi t ion i n exchange relations as subordinated and dependent, first wi th respect to the government and then to the fish buyers. It also makes it easier for people wi th foreign origin to be among the most important fish buyers (Rosado and Rosado, 1995). 93 A decisive factor wi th in the post-colonial legacy that facilitated the emergence o f hierarchical structures is Cathol ic ism, wh ich is laden wi th symbol ism and emotionalism (Ekeh, 1974). It predicts that social exchange w i l l develop upon human sentiment. N o r m s and institutions to interact wi th others arouse f rom individual behavior, and are maintained and supported only i f they are able to satisfy the 'spiritual' needs o f individuals (Befu, 1977). Accordingly , most o f the members o f the cooperatives mentioned that they were satisfied wi th the behavior o f the fish buyers because they had been able to develop a personal, even emotional, relationship wi th them i n contrast to the impersonal treatment received from private banks and the government. 94 CHAPTER VI T H E CUMULATIVE EFFECT OF INDEPENDENT VARIABLES ON PERFORMANCE V I . l I N T R O D U C T I O N Fishing cooperatives have been amply studied from different perspecdves. Some o f the topics o f interest in these studies have included the socio-cultural aspects o f their members (Poggie and Fierro, 1986; Pollnac, 1985; Acheson , 1981), the cooperatives' potential as promoters o f local development (Pollnac, 1988), emphasizing economic development (Lorendahl, 1996), or as channels to implement fisheries management regulations (Kurien, 1988; Jentoft, 1989; Pol lanc, 1994). However , most o f these studies are descriptive and the analyses are qualitative. O n l y i n a few cases have the studies tried to explore the relationship o f several factors and their influence on the performance o f the cooperatives by applying statistical analyses (Lubis, 1992; Poggie et al., 1988; Baticados, 1998). F o r example, Poggie et al. (1988) analyzed community services, cooperatives' assets, and cooperative membership and management as factors influencing the success, or failure, o f fishermen's cooperatives i n Ecuador . A l l these factors were analyzed through factor analysis w i th orthogonal rotation. Major findings o f that study were that cooperative's facilities, assets, and social solidarity are the most important predictors o f cooperatives' success. O n the other hand, Baticados (1998) used such statistical analyses as correlation, A N O V A , factor analysis and multiple regression analysis to analyze their field data from Central Phillipines. They found that the major factors affecting the success o f cooperatives i n that area are background, membership, management, and economic factors. These examples show that statistical analyses may be a powerful analytical tool to understand the factors that affect the performance o f organizations i n general, and cooperatives i n particular. Multivariate statistical methods provide ways to analyze phenomena where many independent and dependent variables correlated with one another to varying degrees. Multivariate statistical techniques reveal and assess complex interrelationships among variables i n statistical inference (Tabachnick and Fidel l , 1996). In this chapter, as I d id i n previous ones, I have defined the independent variables but had no control on the assignment o f cooperatives to levels o f these variables. The independent variables were defined based o n naturally occurring differences among cooperatives, and such differences were used to predict some other non-experimental (dependent) variables, such as catch and satisfaction. The distinction between independent and dependent variables was arbitrary; therefore, I d id not attempt to attribute causality to any independent variable. VI.1.1 Purpose of the chapter T h e major purpose o f this chapter is to identify whether there is a cumulative effect o f the independent variables o n the performance o f Yucatan cooperative organizations. I analyzed these variables separately i n the previous chapter and found that each o f them has at least a positive correlation wi th the dependent variable. However , it is reasonable to expect that they have some k ind o f additive effect o n the performance o f cooperatives. That is, there may be a combinat ion o f effects between the number o f rules, the ability to adapt, and the market strategies i n a way that performance is augmented i f the effect is positive, or diminished i f the effect is deleterious. 95 VI.1.2 Research questions The research questions made i n this chapter are: Is there a combined effect o f the three independent variables o n the performance o f the cooperatives? I f so, which o f these variables is more important i n predicting the variability on performance? VI.1.3 Hypothesis The more operational rules, higher ability to adapt and autonomous market posit ion, the more likely the cooperative w i l l be successful i n terms o f average catch. VI.1.4 Conceptual framework The conceptual framework, Figure V I . 1, assumes that an increased number o f operational rules relate to a higher organizational development that allows a cooperative to increase its ability to adapt to the changing external environment. These rules also facilitate the development and implementation o f more effective market strategies that provide the cooperative wi th enough autonomy to establish reciprocal relationships wi th other market agents. Thus, operational rules, ability to adapt, and market position together influence the performance o f the cooperatives. VI.2 M E T H O D S The methods used to analyze the effect o f the three independent variables o n the performance o f cooperatives are multivariate methods. I chose multivariate analysis because I needed it to analyze several related variables simultaneously, considering each variable equally important at the beginning o f the analysis. Multivariate statistical methods allowed me to study the joint relationships o f variables that are positively correlated, as I showed i n previous chapters. I selected specific multivariate methods to classify and order the data from the survey, and to predict and infer f rom this information certain characteristics from the sample to the populat ion o f cooperatives i n the study area. T h e methods are: correlation analysis to measure the strength o f a potential linear relationship between variables; cluster analysis to classify the cooperatives into hierarchical categories based o n their similarities; multidimensional scaling to construct a 'map' to show the relationships between the number o f cooperatives given only a table o f similarities among them (see Manly , 1992); and multiple regression to predict the response o f the dependent variable as the independent variables change their values. Table V I . 1 shows the variables entered i n each multivariate method. VI.2.1 Data screening and correlation The first step I took i n the multivariate analysis o f the variables influencing performance was screening the data from the surveys and interviews. This step consisted o f plott ing a matrix o f bivariate scatter diagrams between independent and dependent variables and checking for normality, linearity and the presence o f out-liers. I used the values o f the variables summarized i n Table V I . 2. Since I d id not f ind an intuitively reasonably linear association o f categorical variables (adaptive ability, market posi t ion and average satisfaction), I transformed these variables into their natural log value, plotted them and checked again for normality, linearity and out-liers. However , categorical variables can not be linearlized after transformation (Norusis 1997). Since ransformations do not reorder the data values, the categories remain the same after transformation. F o r this reason, nonlinear methods were used to interpret the association between variables. F o r example, I chose Spearman's rho correlation analysis or rank correlation because its computation is not sensitive to asymmetrical distributions or to the presence o f outliers. Th is analysis uses the rank order o f each data value, and the assumption o f normality is not required. 96 d es CU > • H • i-t u cs £ t « o H3 a CU CO co l-H cs •c > u O • i H U P H C CO' •B 0 ^ <-> H co ci >^ -*—* a •is .a s ° cj a CU CO a o a •d CU CL, 15 CU Q 6 f J CU x t l 13 on CO CU •a ci • tu o cS £P CO O C3 a O co cu 2 a, O g CO o 15 a LIU <3 n cl CU Org CU •Bg CS • H n cs > d <u S' CT1 CU CO a O O « CO - T - j -*-» ci 3 CO 3 cU N S3 . G a, a G o • i H •»-> CS l - H <H •(-> - d G OS r\ CO CU •c ,4> • i H Table VI.l . Summary of the multivariate methods used for statistical analysis Method Purpose Introduced variables Measurement scale Correlation Measure • Organizational structure • Ord ina l association • Score o f rules • Ratio Cluster analysis Ordinat ion • Adapt ive ability • Ord ina l • Market posit ion • Ord ina l Multidimensional Ordinat ion • Average catch • Ratio scaling Multiple regression Inference A s I V : • Organizational structure • Ord ina l . • Score o f rules • Ratio • Adapt ive ability • Ord ina l • Market posit ion • Ord ina l A s D V : • Average catch • Ratio VI.2.2 Cluster analysis T h e next step was to disclose the grouping structure o f the cooperatives relative to each other based-o n their attributes. I used cluster analysis and mult idimensional analysis to place the cooperatives i n a graphic representation o f such positions. The goal o f applying cluster analysis was to identify homogeneous groups, or clusters, o f cooperatives. F o r grouping i n cluster analysis, group membership for all cases is unknown, that is, knowing to w h i c h group a cooperative belongs is not a necessary condit ion to perform the analysis. There are several methods for grouping cases into clusters. I used a method called 'agglomerative hierarchical cluster analysis', wh ich groups cases (cooperatives) into bigger and bigger clusters until all cooperatives are members o f a single, biggest cluster. T h e criterion I chose for deciding which cooperatives or clusters should be grouped at each step was a 'single linkage' or 'nearest neighbor technique' and is based on a matrix o f similarities between pairs o f cooperatives. W i t h this technique, the first two cooperatives combined were those having the largest similarity. The similarity between the new cluster and individual cooperatives is then calculated as the largest similarity between an individual cooperative and another cooperative i n the cluster. A t every step, the similarity between two groups o f cooperatives is the similarity between their two more similar cooperatives (Norusis, 1997). VI.2.3 Multidimensional scaling A s introduced earlier, multidimensional scaling ( M D S ) was also used to indicate the degree o f similarity between two or more cooperatives, although i n this case a point i n a multidimensional space represents each cooperative. T w o points that are close together represent two similar cooperatives, and two points that are far apart represent two cussimilar cooperatives. T h e space is traditionally two- or three-dimensional space, but it can have more dimensions. I considered several factors to decide wh ich type o f M D S to use. T h e first factor was the scale o f measurement o f the data. Since I measured the independent variables i n an ordinal scale, I used a 'nonmetric M D S ' . Ano the r factor related to the data is their shape, which can be square' and rectangular. In the first one, rows and columns refer to the same 98 cases or objects, whereas in the second shape rows and columns represent different sets o f items. I used a 'rectangular shape' o f data because I have a single rectangular matrix i n which columns represented the cooperatives and the rows represented the variables. Different items i n the rows and columns lead to the next factor for choosing a type o f M D S , that is, the conditionality o f the data. W h e n data are 'matrix conditional ' the numbers w i d i i n the matrix are o n the same measurement scale; when data are ' row conditional ' these numbers are on a different measurement scale. I used the matrix conditionality because the variables i n the rows represented the variables measured o n an ordinal scale, that is, the organizational structure, the ability to adapt, market strategies, and satisfaction. VI.2.4 Multiple regression analysis Before attempting to apply multiple regression analysis to find an equation to predict the dependent variable values according to changes i n the independent variables, I made several transformations to the market posit ion and adaptive ability variables. Since these variables have only four categories or values, the dependent variable values concentrated in four groups along the independent variable axis. Therefore, f rom the original data, market posit ion and ability to adapt did not yield a linear association wi th the performance o f the cooperatives. I transformed these variables into their logarithm, quadratic and weighted least square values to linearalize and re-examine them. In every transformation, however, the coefficient o f determination (R 2) was smaller than 0.5, that is, the resulting equations explained less than 50% o f the dependent variable variability. That is, transformations d id not linearize the relationship between these variables. Nevertheless, I applied multiple regression analysis to all the variables since I still strongly considered that all o f them have an influence o n the performance o f the cooperatives. I used a type o f regression k n o w n as statistical regression (stepwise) to bui ld a mode l to predict the response o f the dependent variable. In this type o f regression, the order o f entry o f variables is based on statistical criteria to avoid subjective bias i n their selection (see (Tabachnick and Fidel l , 1996). In stepwise variable selection, after entering a new variable i n the model , any variable already i n it that is no longer a significant predictor is removed. That is, variables whose importance diminishes are removed as additional predictors are added. Hence, there is one criterion to enter a variable and one to remove a variable. F o r entering a variable, first the two variables wi th the highest R 2 are selected. A t each additional step, the variable that results i n the largest increase i n multiple R 2 is added. Enter ing variables stop when there are no more variables that result i n a significant increase i n R 2 . In order to remove a variable, the variables i n the mode l are examined at each step to remove those variables that change R 2 least. Remov ing variables stops when removal o f any variable results i n a significant change. VI.3 RESULTS VI.3.1 Correlation Table V I . 3 shows the non-parametric correlation between all variables. I excluded two cooperatives wi th extreme values o f average catch (outliers), therefore the sample size is 19 cooperatives when considering catch and 14 when considering satisfaction. A l l correlation coefficients are statistically significant at 0.01 level (1-tailed). T h e table shows that the correlation between the independent variables and the average catch is stronger than wi th the satisfaction, especially i n the case o f organizational structure and scores o f rules. F o r adaptive ability and market position, their correlation coefficients wi th catch and satisfaction are more similar. Because o f the correlation coefficient values, it is possible to say that small values o f the independent variables are, in general, associated wi th small values o f the dependent variable. The same applies to the larger values. 99 -° a es cs H a a> a 5T •a c o 1 •(-> B CS O a CS u 8 £ CS _Q cS co <4H a cs HH cs a O V cs c N CJ 1 2 CS -w 6J0 « o CU <-> cs S> CH o o u 00 CO 00 -3-I CO 00 00 oo oo c O CO CO CO 00 t o o 00 I "1 CN r--co ( O I oo 00 VO c O 00 |vo ivo -X-o Cv X o <o oo o o 00 o o o o 00 CN © 0\ CN o CN CN CN O CO p L O O L O O L O l o LO o p L O l o o L O CN CN CM CN CN CN CN CO CO CO CN CO CO i CN CN CN CO CO CO vo co L O CN L O 00 "3- t--c O c O CN ^h o -<s-VO CO LO CO 00 CN 00 CO CN CN CN CN CN CN CO CO c o CO vO vo o -*-> CS CU 'u u OS PH o tS •d u , ^ 0 •4—' OS a< O •d u CS PH CU CU d o CU leg o CO cu a, leg CU o U CU OS o u •d CS a o U CJ CS cu •d u l# a o Z CU •d u CU a o CU •d o. u •d CS t-i o O -w 1-3 o •d OS u u o <! u •d CS u o 0 -*-» CU .c« N CU cs i - l u o o -W u •d CS u u o CU I M H I N CU CU N CU c< t-1 PH C/3 CH H C/3 PH u PH U u CQ U U Q PH PH PH o PH u PH o o Table VI.3 Non-parametric correlation (Spearman's rho) between all variables (1) (2) (3) (4) (5) (6) Organizational (1) structure 1.00 Score of rules (2) 0.94 1.00 Adaptive ability (3) 0.98 0.93 1.00 Market position (4) 0.97 0.91 0.98 1.00 Average satisfaction (5) 0.79 0.66 0.85 . 0.85 1.00 Total catch (6) 0.86 0.90 0.87 0.88 0.76 1.00 T h e correlation between independent variables is also strong, anticipating a potential mul t i -collinearity problem for the multiple regression analysis. Multi-coll ineari ty means that there are redundant variables that may not be needed because diey may weaken the analysis (they inflate the size o f the error terms). Fo r most multivariate analysis, it is not recommendable to include variables wi th a bivariate correlation o f 0.70 or higher in the same analysis (Tabachnick and Fidel l , 1996). VI.3.2 Cluster analysis Since five cooperatives did not participate i n the survey to measure members ' satisfaction, and since the SPSS cluster analysis estimates the statistics using only cases wi th no missing values for any variable entered, I used only the average catch as a measure o f cooperatives' performance. I also decided to exclude two cooperatives wi th extreme catch values, thus analyzing 19 out o f 21 cooperatives. I visually represented the results o f the cluster analysis wi th a 'dendrogram' (Figure VI .2 ) . Th is display identifies the combined clusters and the values o f the coefficients (the squared Eucl idean distance between two cooperatives) at each step. (Actually, the dendrogram i n Figure V I . 2 does not display the actual similarity estimates, but a scale from 0 to 25. However , the ratio o f the similarities between steps is preserved). The dendrogram has to be interpreted from left to right, and the vertical lines join clusters at the distances indicated o n the scale. It is hard to tell the sequence i n w h i c h the first clusters are formed at the beginning because there are five clusters with scale value equal to one. Starting from the top, the first included cooperatives from 15 to 11. There are three more clusters wi th two cooperatives (5 and 6, 4 and 8, and 1 and 2), and one grouping three more cooperatives. However , at the fol lowing stages the similarities between these groups are smaller thus it is easier to identify clusters. It seems that the analysis identifies three different groups o f cooperatives. U s i n g the label o f the cases, the first cluster (scale value = 1) groups ten cooperatives wi th laissez-aller (E, B and P C ) , non-directive ( C C B , C P P and P D ) , and autocratic ( N K , P C H , P T , and K K H ) structures. T h e second cluster (scale value = 2) groups two supervisory (PS and T P M ) and two consultative ( P G and E C ) cooperatives. Th is second cluster and the first one form a more (hssimilar cluster, wi th a scale value o f 5. 1 T h e third cluster (scale value = 4) groups two more consultative cooperatives (CP and R L ) wi th the participatory cooperatives ( D B , R L P and SF). These five organizations are democratic and have the highest dissimilar value wi th the rest o f the cooperatives. It seems that the factor that is influencing the way cooperatives cluster the most is the average catch reported i n the five-year period under analysis. T h e order o f the cooperatives, from top to bottom, o n the left o f the dendrogram goes from the least to the most productive cooperatives in Yucatan. In fact, the last five cooperatives are the ones that reported more than 300 tons per year from 1993 to 1997. 101 CO a, 3 O u a .3 a o U u w H-> to u u a T3 JO o CO <u LT) CM O CM in o in i i i i i i i i + i •  i i i . i i i i i o + o w CO Q) U XX as J I I I I in u) oo m m i H H CN in <£> ^ oo r- cr> ro CN u « X PQ CU o E-< U PH Q CO CU W CQ U U PH PH S Cu O C U U C U J C Q J P L , P n E H W U r n Q C c J c o CU W) cS • •r=i CU . bjo cs <-i cU SS 6* a CA a cS u W> O a Q CC 'co >v CS a cS-«-i cU H-» CO j3 O cj u <-i •<S • CJ CU 3 VI.3.3 Multidimensional scaling I checked three measures to determine how wel l M D S describes the original data. The 'S-stress' is a measure o f fit that ranges f rom 1 (worst possible fit) to 0 (perfect fit). The s-stress is calculated iteratively to check the improvement o f the s-stress value at each iterate. The calculations are based on the estimated Eucl idean squared distances between observations (see SPSS for more detail i n calculating Eucl idean distances). T h e s-stress value obtained i n this case is 0.021, wh ich is much closer to 0 than to 1, describing a very good fit between the original data and the similarities created by the model (Kruskal and W i s h , 1978). The next measure o f fit is the Kruskal ' s stress measure, wh ich is defined i n the same fashion as the s-stress, except that distances are used instead o f squared distances. The criteria to define the worse and best fit are similar as i n s-stress measure. T h e Kruskal 's stress value was 0.027, which is similar to the previous value leading to a similar conclusion on the goodness o f fit. The last measure o f fit is the squared correlation coefficient (RSQ) which is the squared simple correlation between the original similarities among cooperatives and the distances among points calculated by the analysis. R S Q represents the best fit when its value is equal to 1. The value obtained in this study is R Q S = 0.999, which is 'an almost perfect fit. The near perfect fit defined by the three fit measures is represented in Figure V I . 3 , wh ich is scatter plot o f the raw data i n the horizontal axis, against the calculated distances i n the vertical axis. The scatter plot shows some dispersion around the fit line that goes from the lower left to the upper right, more precisely around number 2 i n the horizontal axis. The near perfect fit occurs because the data have essentially no error and also imply that a two-dimensional space may be sufficient to explain the similarities among cooperatives. 6 i 1 • a 5 • tP • 4 • CO CO g • • B 2 J u • 1 m | 1 2 3 4 5 6 Disparities Figure VI .3 . Scatter-plot of linear fit A s introduced earlier, the purpose o f M D S is to construct a map o f the positions o f cases or objects relative to each other. Thei r corresponding independent and dependent variables' values are the information used to specify h o w different they are. Figure V I . 4 represents the 'map' o f the similarities among cooperatives, a point representing each cooperative. The distance from one 103 point to another represents how similar or cUssimilar they are regarding operational rules, adaptive ability, market strategies, and performance. A s it happened wi th cluster analysis, there are some 'neighborhoods' that group similar cooperatives. F o r example, i n the upper part o f the up-right quadrant the participatory cooperatives are concentrated, whereas some autocratic (only J M C is illustrated) and laissez-aller (only P C is illustrated) are located i n the up-left quadrant. Closer to participatory cooperatives are supervisory ( C A , T P M ) and consultative ( E C , C P ) cooperatives. Non-direct ive cooperatives ( C C B , C P P ) are grouped close to the zero line o f dimension 1. A l o n g this dimension, the posit ion o f the cooperatives seems to reflect, from right to left, their level o f product ion and organizational structure. That is, the posit ioning goes from the most productive and organized cooperatives to the leas 1.5-1.0 CM • J o (fl c cu E Q 0.0 -1.0 e t • jmc i jxl_ pc cx I pg sf rip cp d z ' tp- ec Dimension 1 Figure VI .4. Multidimensional scaling 'map' of cooperatives Figure V I . 4 also shows a rather striking yet usual phenomenon k n o w n as 'horseshoe'. A l though the graph is two-dimensional, it is apparent that the data are arranged in a very special configuration. It consists o f a nearly one-dimensional configuration which has been 'bent' around into a horseshoe shape. It seems that only one curvilinear dimension is sufficient to give a reasonable description o f the data, and my interpretation is that this dimension represents cooperatives' performance expressed i n terms o f product ion or average catch. The arrangement o f the points along the dimension 2 is less clear, and it may be a result o f the combinat ion o f the other variables. T h e horseshoe phenomenon is not entirely understood, thus the only clue available for interpretation is the posit ion o f the cooperatives along the horseshoe curve (see K r u s k a l and W i s h , 1978). 104 VI.3.4 Multiple regression analysis Table V I . 4 shows the summary o f the statistics f rom the stepwise multiple regression. In the row o f mode l 1 it shows that only one predictive variable (scores o f rules) meet the criteria for selection. This variable explains 7 1 % o f the dependent variable variability, the average catch o f cooperatives. T h e regression coefficients for the model are shown i n Table V I . 5 . The observed significance level for the predictive variable is less than 0.01, whereas the significance level for the constant is less than 0.05. , Table VI.4 Summary of the multiple regression model Model Correlation coefficient (R) Coefficient of determination (R2) Adjusted R 2 1 0.843 0.710 0.693 Table VI.5 Summary of regression coefficients of multiple regression analysis Model 1 B Std. Error Standard Coefficient t Sig. Collinearity Tolerance Constant -117.34 45.45 -2.582 0.019 Score of rules 8.007 1.24 0.843 6.452 0.00 1.00 T h e other three variables (organizational structure, adaptive ability and market position) were excluded because they d id not change R 2 enough to be statistically significant (Table VI .6 ) . Table VI.6 Summary of the excluded variables from stepwise regression Model 1 Beta ln T Sig. Partial correlation Collinearity Tolerance Organiz ational structure 0.003 0.009 0.993 0.002 0.212 Adaptive ability 0.118 0.299 0.769 0.075 0.116 Market position -0.183 -0.440 0.666 -0.109 0.104 T h e values for the standardized regression coefficients are shown i n the co lumn labeled 'Beta In'. T h e / statistic for testing that the coefficients are 0 and their observed significance level, are shown i n the columns / and Sig. The levels o f significance for the excluded variables are too small, indicating that there is a high probability for those coefficients to be similar to 0. T h e partial correlation coefficients show a very small absolute value, indicating that these variables have almost no information to contribute to the model or equation. Finally, in the 'collinearity statistics' co lumn, 105 the 'tolerance' is the smallest tolerance for any independent variable in the model , that is, the mode l w i l l not enter a variable i f it results i n a very small tolerance for any independent variable. Tolerance measures the strength o f linear relationships among independent variables. F o r each independent variable, the tolerance is the proport ion o f variability o f that variable that is not explained by its linear relationship wi th the other independent variables in the model . Thus, a value close to 1 indicates that an independent variable's variability is almost not explained by the other independent variables, as is the case o f score o f rules, wh ich tolerance is rounded to 1. O n the other hand, a value close to 0 indicates that a variable is almost a linear combinat ion o f the other independent variables (see tolerance values for the other independent variables i n Table VI .6) . These variables are called multi-collinear. SPSS has default values for tolerance (rninimum tolerance) that protect against the inclusion o f multi-collinear independent variables. Independent variables that are very highly correlated wi th independent variables already i n the equation are not entered. Check i n Table V I . 1 that correlations between score o f rules and organizational structure, market posit ion and adaptive ability are higher than 0.90. Statistically, the three latter variables may inflate the regression coefficients, and logically they are not needed because o f their correlation wi th scores o f rules (see Tabachnick and Fidel l , 1996). The equation to predict performance o f cooperatives i n terms o f average catch is then defined by the fol lowing formula: P = SR * (8.0) -117.34 Where P = performance expressed as average catch, and S R = score o f operational rules for each cooperative. I obtained exacdy the same equation using a backward multiple regression. I also used a standard regression including all independent variables. A l though R 2 increased to 0.77 (independent variables explain 77% o f the variability o f performance), the tolerance values were close to 0, indicating a strong collinearity between variables. These results show that operational rules seem to be the most influential variable on the performance o f cooperatives i n this study. VI.4 DISCUSSION T o answer the research questions i n this chapter, Table V I . 2 shows that there is a general tendency o f high scores o f rules, adaptive ability and market posit ion to be associated wi th higher satisfaction and average catch. This is especially true for participatory cooperatives, although stated satisfaction o f members was not the highest. The other democratic cooperatives, the consultative ones, are the next most productive, but their market posit ion and ability to adapt are less developed. Supervisory cooperatives are an interesting case o f recendy adapted organizations that respond more effectively to their particular external environment. This condit ion has improved their market posit ion, that is, they have enough autonomy to sell their catches to the buyer and at prices most convenient for them. Ye t , their product ion is not as high as i n democratic cooperatives. A possible explanation is that membership and, consequendy, fishing effort is smaller than i n supervisory cooperatives. A similar association among variables is evident for their lower values, that is, l o w scores o f rules, market posit ion and adaptive ability are associated to low satisfaction and average catch. N o n -directive, autocratic and laissez-aller cooperatives share these low values, being the less organized, wi th the weakest market posit ion, less able to adapt to the external environment, and consequendy, are the less productive among the cooperatives i n Yucatan. 106 In light o f these results, it is possible to say that the three independent variables are correlated to the performance o f the cooperatives. However , the results from the multi-variate statistical analyses show that the most influential independent variable is the score o f operational rules. A t the same time, there does not seem to be a statistically significant influence o f the market and adaptation o n performance. However , I am certain, because o f my work ing experience i n the study area, that these variables have a significant influence o n the way fishing cooperatives perform. M y interpretation o f the results obtained here is that the scale o f measurement o f the variables influences these results. I used an ordinal scale to measure the level o f adaptive ability, market posit ion, and satisfaction. In the first two variables, I defined only four categories. This fact concentrated the corresponding dependent variable values for each cooperative i n four groups, making it difficult to find a linear association among independent and dependent variables. It makes it especially difficult to use multiple regression analysis to yield a linear relationship among variables, and it poses problems o f lack o f normality o f data and collinearity among variables. Ord ina l data are the most frequent, and sometimes the only reliable information available i n non-experimental research. The ordering o f cases, although lacking a unit o f measurement, permits a comparison o f cases to identify which one is less or lower than the other(s) (Hildebrand et al., 1977). In this study, the scale I devised defines, for instance, that supervisory cooperatives are more able to adapt than consultative cooperatives, but it does not say how much more able. T o k n o w how much, it is necessary to develop an interval or ratio scale o f measurement. I used an ordinal scale o f measurement because no other type o f information was available to bui ld another scale to measure market posit ion and adaptive ability. In addition, for coding interview data, I felt that a small number o f ordered categories were enough to describe the differences among cooperatives. I also believed that ordering the cooperatives i n a qualitative way was enough and that numerical values were not important. However , I recognize that it is useful to assign numerical values to different states o f an ordinal variable, although these numbers are only to indicate the rank o f the variable state i n the ordering, without any other significance. In the case o f collinearity among the independent variables, it is because all o f the cooperatives have the same values for market posit ion and adaptive ability. It w o u l d have been more convenient to develop a ratio scale o f measurement by getting economic information i n the case o f market posit ion and designing another scoring system to measure the factors that determine the ability o f cooperatives to adapt. In both cases, as I mentioned, I had to make the analysis wi th the only information available. Cluster analysis and M D S complement each other since the groups o f cooperatives i n the first analysis and the 'neighborhoods' i n the second analysis group the cooperatives i n a very similar way. In both cases, most productive cooperatives (participatory) are grouped together i n a cluster or neighborhood, wh ich the highest similarity measures. Nex t , less productive but still wi th large score o f rules are the consultative and supervisory cooperatives. B o t h analyses group together the least productive cooperatives as a separate cluster or neighborhood. In this way, cluster analysis and M D S seem to conf i rm the results from the multiple regression analysis i n terms o f considering the scores o f rules as the most important factor underlying the grouping o f the cooperatives. Nevertheless, I still strongly believe that the number o f rules reflects the organizational level o f a cooperative, and that a higher organizational structure facilitates the necessary, ability o f the cooperative to respond effectively to changes occurring i n the surroundings, either social, economic, political, technological or biophysical. A m i d s t this multi-factorial external environment, the 107 cooperative wi th a well structured organization is more likely to have more autonomy i n developing more reciprocal exchange relationship wi th other market agents (intermediaries). A u t o n o m y also means freedom to design and implement new rules or to modify traditional ones i n order to maintain and expand the cooperative's operations, by either increasing or diversifying its product ion. 108 C H A P T E R VII G E N E R A L C O N C L U S I O N S In this chapter, I advance a number o f conclusions from the preceding chapters regarding the influence o f the operational rules, adaptive ability and market posi t ion on the performance o f cooperative organizations. . I also discuss the implications o f such influence o n fisheries management. Then , I discuss which o f my results may be considered as contribution to the theories used i n my analysis, emphasizing potential new approaches for the study o f this type o f organization. I found a general positive correlation between number o f rules implemented by the cooperatives, their adaptive ability, their market strategies, and their.performance. Besides the statistical evidence, I drew the following conclusions incorporating my previous knowledge o f the study area. VII.1.1 Operational rules, organizational structures and performance The operational rules implemented by the cooperatives define their organizational design, which i n turn influences their performance. This cause-effect relation is established as follows. Clearly defined and well-understood operational rules and organizational structures allow major participation o f all cooperatives' members. Several benefits may arise from increased participation. The first one is consistent agreement on proposals reached by the majority. The next one is commitment to the decision reached (see Fisher, 1974), expressed either by compliance or internalization. Compliance refers to the fact that a person follows the rest o f the group without being convinced by the decision made by the group. Several fishermen mentioned that sometimes they agreed with regulations because o f loyalty to the group, not because they were convinced that that was the best choice. O n the other hand, internalization means that a person is convinced that the group has adopted the best solution. Members internalize when the decision reflects their initial posit ion or the fact that they have been convinced by other members' arguments (see Brigham, 1986, o n compliance and internalization). Increased participation o f all members also expands the legitimacy o f the agreements. I f members feel that decision-making takes into account their inputs, they may increase their commitment to respect and comply with resulting agreements more readily. A s a concurrent consequence, communication improves because all members know the problems the cooperative is facing and because they can express their concerns. Communicat ion facilitates the transit o f ideas, which, i f done properly, can improve understanding and may result i n the generation o f innovative alternatives for decision-makers. V iewing organizations as networks o f information processing units, where decision-making is determined by the organization's communication structure, has been studied by-Visser (2000). This author, found out that a hierarchy tends to perform better (make better decisions) i n tough environments, and that a polyarchy makes better decisions i n friendly environments. Bor rowing his terminology, authoritative cooperatives may be seen as hierarchies where the top level o f the organization makes final decisions, and the tough environment is characterized by highly competitive rival organizations, as it occurs in the community where these cooperatives are located. O n the contrary, polyarchies would be represented by democratic cooperatives where decisions are reached by majority, and their environment is friendly i n terms that i f they do not undertake an action, it is not undertaken by rival cooperatives because they are the only social organizations i n their communities or because other cooperatives cannot take either such action. The communication structure o f authoritative cooperatives makes it unnecessary for all members to be informed i n order to make 109 decisions, whereas i n democratic cooperatives it is essential that all members are informed before making a collective decision. -Participation o f all members also simplifies the delegation o f authority to councils and committees. Members i n these working units are committed to accept responsibility for performing specific tasks and to be accountable for their actions. T o delegate authority in an efficient way, lines o f authority must be wel l defined and understood. There is an authority rariking inside any cooperative and each level has specific responsibilities to the next higher rank. W h e n authority hierarchies are clear to everyone, the delegation o f authority is more efficient because everybody knows what to do and what is expected from them. In participatory cooperatives, all members participate i n the definition o f objectives and strategies, so they are certain about what the cooperative is after. Hence, fishermen w i l l devote their efforts and energy to the achievement o f such objectives by following die defined strategies. The resulting overall structure increases performance when it links to the cooperatives' goals. It is also true that the structure, when it becomes too rigid, decreases success i f it prevents the cooperative from perceiving more efficient ways o f production and organization. Democratic control is less evident in consultative and supervisory cooperatives, so do patterns o f participation. Since consultative cooperatives have a similar structure to participatory ones, it would be easier to increase their level o f participation by promoting solidarity and democratic control. VII .1 .2 Adaptive ability and performance Cooperative organizations design different structures to operationalize their mediating role between their members and larger systems such as communities, the market or the government (see V a n Wart, 1998). Thus, cooperatives may adapt to create a segmented organizational structure to protect technical activities, such as fishing, as it happens i n autocratic and non-directive cooperatives. O r to create an organic structure to adapt successfully to the environment, like i n supervisory groups (see Hougland and Shepard, 1980). The design o f cooperatives' organizational structure i n Yucatan has had mixed results since some structures are comparatively more efficient for adaptation than others. Accord ing to the survey's results, all cooperatives are associations o f persons united voluntarily, for which the main purpose is to meet at least economic needs, plus cultural and social ones. However , devising an 'autonomy continuum', I can accommodate the cooperatives from the least to the most autonomous as follows: laissez-aller, autocratic, non-directive, consultative, participatory, and supervisory. N o n e o f the first five ones is completely autonomous from other market agents, and all o f the six depend on government agencies at least to be legally recognized and to have a fishing permit. There is an empirical relationship between the level o f autonomy and the ability to adapt. The more independent an organization is, the more adaptability it has. There are several types o f structural adjustments induced by the environment. F o r example, laissez-aller cooperatives have no autonomy and they have to adjust totally to the intermediaries' demands, concentrating their fishing effort only on one or two species despite the fact that other cooperatives catch at least six other valuable species in the same fishing area. These cooperatives exist only i n the official records, since their members never carry out any collective action; they have no assets, no liability, and they fish and sell their catches independendy from each other. In a similar way, non-directive cooperatives, having a more structured organization than laissez-aller, respond to a similar extra-organizational element to determine what species to catch. In both types o f cooperatives, satisfying the demand for particular species makes it unnecessary for these cooperatives to make any further adaptation to survive. A t the same time, other cooperatives stricdy respect more intra-organizational and community norms, seeking to counterbalance hindering market and legal influence. F o r instance, consultative and participatory cooperatives strongly comply with traditional arrangements emerged from long-lasting 110 local patterns o f personal interaction. In these democratic cooperatives, the influence from the decision unit to adjust varies and gives them more autonomy from the external environment. Consultative cooperatives are more influenced by the environment than participatory ones. In the latter, the members have more voice i n determining the development o f the whole group, and their inputs are considered during the adjustment process. This situation allows the cooperative to resist environmental influence. Participatory cooperatives are those i n which ownership is o n a mutual basis and decisions are reached by consensus more often. This fact has strengthened them since are among the most productive cooperatives in the state. Regarding authoritative cooperatives, the leaders have substantial influence to adjust their cooperatives i n the way it is required. The difference between autocratic and supervisory cooperatives is that i n the former the centralized control in decision-making led leaders' personal interests to overcome collective interests. A s these leaders are financially dependent on intermediaries, their cooperatives lose independence to adjust. O n the contrary, supervisory cooperatives regard their collective objectives as more important than leader's personal goals although he has substantial influence i n adjusting the cooperative to disruptions. This factor increases their adaptive ability. Supervisory cooperatives are located i n the fishing community where most o f the stronger fishing companies are located as well. O n e o f the most remarkable realizations o f these cooperatives is the necessity o f being an organized enterprise operating i n the market. This recognition was the starting point to adapt their structure to control the production, processing, packing, distribution and export o f fish products from the begmning o f the 1990s. VII.1.3 Intermediaries and performance A m o n g the external environmental conditions that constrain cooperatives' performance, one o f the most important is the role o f local intermediaries: The over-exploitation o f a small number o f species and the under exploitation o f many others is the result o f the specialization i n the catch composit ion demanded by the intermediaries i n Yucatan. Intermediaries have previous compromises with* the international market, and these compromises translate into an irrational demand on local resources from extra-regional economic agents. That is, fish resources do not satisfy local needs and the lack o f diversification applies not only i n the catch but also i n the way fish-based products are processed. The major demand is for fresh raw material with rninimum processing, impeding added value and hence economic benefit to the fishermen. Fishes are reduced to fillets and lobsters to 'tails', assigning zero added value to the rest o f the organisms' body. O n e o f the most important conclusions o f this study is that most o f the cooperatives lack autonomy to various degrees. Their financial dependency on intermediaries has determined the catch composit ion, their investment policies and capital accumulation patterns. The intermediaries' influence has expanded to non-related fishing activities, such as personal and familial issues, adding moral obligation to financial dependency. The intermediaries assure loyalty o f fishermen and the supply o f valuable raw material at low prices. The dependency has made cooperatives miss opportunities to enter new, more profitable markets, to seek technological innovation, and to diversify and expand their production. VII.2 IMPACTS O F T H E FACTORS A F F E C T I N G COOPERATIVES' P E R F O R M A N C E T O FISHERIES M A N A G E M E N T The general objectives o f fisheries management are opt imizing the biological and economic yield, mamtaining a particular level o f population level, protecting the marine and coastal environments, and providing various social and economic benefits to the fishing communities (King , 1995). I l l However, some o f these objectives have been incompletely satisfied when considering fishing cooperatives i n Yucatan. Instead o f optimization o f biological yield, there are a few overexploited species, whereas many others are under exploited and they could potentially increase the provision o f food for local people and other fish-based products for exportation. M o s t cooperatives concentrate between 80% and 90% o f their catches on two or three species. Extreme cases are represented by cooperatives exclusively catching one species. Besides the disparities o f biological yield by specific resources, overexploitation o f few species may necessarily affect the composit ion and structure o f the marine communities. W h e n overexploitation decreases the population number o f few species, the natural balance o f marine communities may be altered i n unpredictable ways, especially because predation and competition relationships among species have insufficiendy been studied i n the Yucatan. Under these conditions, it is hard to say i f the objective o f maintaining particular levels o f fish populations has been reached A l o n g the same line, it is also hard to estimate whether optimization o f economic yield has been reached. Arguing 'business strategy', private enterprises have never been wil l ing to disclose their total investment i n fisheries. The general perception is that fisheries are overcapitalized, but under current conditions it is not possible to assess by how much. In this context, cooperatives have contributed a very small percentage to the overall economic rent o f the Yucatan fishing resources. The contribution o f cooperatives has been, on average from 1993 to 1997, about 10% o f the total landed value ( S E M A R N A P , 1998). A t the fishermen level, economic information is not available from cooperatives. Based on information provided by fishermen i n coundess informal conversations and media reports, the common statement is that the capture per fishing effort has constandy been diminishing since the beginning o f the 1960s when commercial orientation o f the fisheries intensified. A t the same time, production costs have been steadily increasing, but catch prices have increased only slighdy. A s a result, net incomes have been dropping, hence dirnimshing the economic rent o f the fishery, at least for cooperatives' members. Regarding protection o f resources and environment, participatory and supervisory cooperatives, the ones with higher adaptability to the changing environment, have proposed several measures to support the protection o f marine resources. A m o n g these measures are the implementation o f a marine protected area and the extension o f closed seasons for some species i n identified nursing areas. Surveillance on members' behavior is a regular practice among these cooperatives. Unfortunately, less that one third o f the cooperatives analyzed have adopted these protective measures. Simultaneously, other cooperatives have been unwill ing or incapable to adapt to more successful and compromised organizations. The idea o f cooperatives as an ideal vehicle to deliver fishing policies (Baticados, 1998) is not fulfilled by laissez-aller, autocratic, and non-directive cooperatives, since these lack respect forc losed seasons, m in imum legal size, legal fishing gear, and fishing reports. Economic and social benefits for the communities are rninimal since many cooperatives' objectives are concentrated o n the economic benefit o f their members. This situation results i n part from the imposition o f formal,, rigid and homogeneous structures for the delivery and implementation o f fisheries development programs. Problems include loss o f traditional knowledge accumulated through generations by fishermen, loss o f innovative management practices since the decision-making is centralized, controlled and bounded by governmental agencies, reduction or loss o f stability o f resource utilization, and loss o f economic benefits to the community (see Dyer and Leard, 1994). There are, however, some benefits to complementing traditional and official schemes. F o r instance, some traditional practices have 'conservative' effects, whereas formal regulations may prevent the continuation o f 'bad' traditional practices, such the lack o f strict enforcement o f regulations. Therefore, i f implemented correcdy, both types o f regulations have the potential for generating more 112 sustainable production than the government or the community would generate individually (Dyer and Leard, 1994). A t the onset o f the cooperative sector, the government promoted, among their members, collective action, diversification o f the catch composit ion, and the satisfaction o f social concerns i n their communities. However , because o f the lack o f managerial skills and freedom for market exchange, cooperatives entered dependence power relations holding subordinated positions. Consequendy, the general behavior o f fishermen has been shifting towards individualization i n their personal interaction, specialization o f fishing i n a small number o f species, and maximization o f profit to pay financial debts. D u e to their financial dependency, paying the loans to the intermediaries has become one the most important priorities to fishermen. The dependency is so strong that they have no saving capabilities, hence having to fish practically every day to have capital to support their families. Ignoring this reality has reduced the impact o f fishing policy objectives. Fo r instance, training goals have often not been achieved due to low attendance by fishermen because they have no savings to stop fishing for one single day. VII.2.1 Position of cooperatives vis-a-vis intermediaries arid the government The autonomy o f action o f local fishing firms as intermediaries also has an effect on the way cooperatives comply wi th fishing regulations. Intermediaries main market strategy is collusion for pricing and keeping other buyers from entering the local market. Their organization makes a; remarkable contrast to the lack o f coordination between municipal, state and federal agencies. Whereas the federal Ministry o f Natural Resources, Environment and Fisheries has been reducing and even canceling the issuing o f fishing permits to reduce the fishing effort, the state Ministry of ' Industrial Development has promoted the operation o f more high-technology processing and packing facilities. The rational conclusion o f fishermen is that i f there are new fishing plants, there is still someone who wi l l buy their catches; thus, new and traditional fishermen wi l l maintain or even increase the fishing pressure over targeted marine resources. Bureaucratically designed fishery management policies are centralized and traditionally their implementation is ' top-down', without considering local characteristics o f resources and users. Policy-makers, and consequendy policies, have a simplistic image o f fishermen because they expect fishermen to react automatically to the official regulations, without considering sociak econotnic and cultural conditions o f cooperatives, their members and communities. Moreover, fishermen are the simplistic representation o f resource depletion. Policy-makers have blamed fishermen coundess times for the decrease i n biological yield. However , there is not explicit recognition o f the irrational definition o f . the demand made by the market, and consequendy, the government has not proposed measures to reduce the impact o f such demand. * Contradictory laws worsen this situation, so does the fact that often field officers and administrative personnel i n official agencies do not understand these laws. A s an illustrative example, the .General L a w o f Cooperative Organizations was enforced by the Ministry o f Employment and the Ministry o f Natural Resources, sometimes i n a discretionary way, creating too much confusion for fishermen and delaying the permission for operating a.new cooperative by up to a year. The lack o f coordination among agencies, their lack o f qualified personnel, and the misunderstanding and misapplication o f the fishing law among field officers arid fishermen cause inefficient and unfair enforcement. It is inefficient because it does not properly address the set o f market incentives that induce non-compliance (the financial dependence o f cooperatives and their lack o f freedom to engage i n equitable market exchange). Enforcement is unfair as wel l because it targets mosdy low-income 113 fishermen, but simultaneously facilitates the intermediaries to trade practically any marine resource. In view o f the insufficient number o f field inspectors, it seems to be more efficient to exert surveillance on the fishing firms because most o f the catch are concentrated at the end (see Sutinen et al., 1990). I f the government agencies do not effectively assume their regulatory role and allow the emergence and continuance o f oligopsonistic practices; i f they do not enforce evenly and fairly the fishing regulations, and i f they do not recognize the economic, social, and cultural motivation o f the cooperatives, it is more likely that the participation o f intermediaries w i l l continue to determine the subordinated market position o f the cooperatives, impeding their integral development as economic and social agents. VII.3 C O N T R I B U T I O N S T O T H E O R Y It is expected that this study w i l l stimulate further discussion on cooperatives by comparing their structure and decision-making processes. M o r e precisely, it w i l l be an empirical contribution to the adaptive and interpretative models o f decision-making (Chaffee, 1984). The adaptive model interprets the organization as an entity wi th its own goals and coherent, goal-oriented actions. Democrat ic and supervisory cooperatives fit more i n this model to a varying degree, wi th the supervisory ones at the extreme o f adapting themselves to changes i n the environment to maintain or increase the flow o f resources into the cooperatives. Permissive and autocratic cooperatives fit more i n the interpretative model. It portrays the organization as a network o f participants who use their association to pursue their individual goals, wi th the laissez-aller cooperatives at the extreme o f comprising a network o f highly self-interested members. VII.3.1The measurement of success In Chapter I, I introduced i n the idea that success, as an expression o f performance, is the achievement o f objectives. The only objectives that were explicidy recognized and used to measure the performance o f the cooperatives were satisfaction and production (average catch). These two represent mdirect and direct indicators and methods for measuring the achievement o f objectives by cooperatives. The mdirect or person-related approach is useful and necessary to measure imprecise, non-operational elements from a set o f objectives. The direct or performance-related methods o f success measurement, are used to determine an objective achievement o f objectives (Blumle, 1985). It is important for studies on cooperatives to define from the beginning how performance is going to be measured, because it affects the k ind o f information needed and the methodology used to collect such information. Besides, depending on the approach, cooperatives may be successful or not. Thus, it is recommended to integrate both methods o f measurement to support a comprehensive evaluation o f success The basic difference between direct and indirect indicators is that they measure operational and non-operational elements o f the system o f objectives. Indirect indicators are helpful i n cases where members o f cooperatives are not aware, most o f the time, o f operational elements, such as profitability, sales or costs. I found that most o f the members i n Yucatan cooperatives are concerned with non-operational elements, such as attitude to the cooperative, willingness to participate i n the setdement o f conflicts, and agreement about the principles o f management. In this study, I used satisfaction as an mdirect measure o f success. The measurement is based on evaluating the subjectively perceived fulfillment o f objectives by cooperative members. Satisfaction was ascertained by direcdy asking fishermen to express their level o f subjectively perceived objective's achievement through their opinion on the general adrninistration o f their cooperatives.. A t the same time, within this indirect measurement o f success, there are indirect indicators as well. I evaluated 114 these by observing the behavior o f members as members (willingness to participate i n assemblies and get involved i n the management o f the cooperative), and as clients (using die basic cooperative's services). I used observation o f behavior to confirm stated satisfaction o f members o f different cooperatives. The most useful direct indicators o f success are those that show the achievement direcdy, as profit, market share, and turnover. In this study, the direct indicator o f success is the average catch per cooperative. Other indicators that provide indirect information o n objective's achievement are adaptability and market position, although I used them as independent variables measured with categorical scales. The system or set o f objectives I have been referring to includes those stated i n the cooperative's chart and those expressed by the members during the interviews. The general objectives that the cooperatives should aim for are: a) Ensure the preservation or survival o f the cooperative. This means that the cooperative should be able to preserve and increase its assets in the long-term. For this, they need to maintain or increase their level o f income or profitability. b) Increase profitability, which means increase productivity and competitiveness in the market and, at the same time, reduce costs o f production through economies o f scale. c) Provide services tailored to the members' needs. The cooperative must offer services to members so they can meet their economic, social and cultural aspirations. It seems that the use o f one direct and one indirect method/indicator to measure performance o f Yucatan cooperatives is adequate to make a comprehensive assessment o f their performance. VII.3.2 On the organizational framework The major hurdle seems to be the problem o f building a suitable organizational framework, which is viable and dependable i n the face o f the competitive environment. Th is problem stems largely from the very nature o f the cooperative organization. A s a business organization, it should attain operational efficiency like any other private enterprise. A s a social organization, it has to be designed to function for the social and economic improvement o f its members. In the case o f Yucatan cooperatives, those with a supervisory organizational structure have oriented their management to increase their competence i n running the cooperative as an economically viable unit. Leaders had understood the economies o f scale o f cooperation and had been able to exploit the oppormnities i n the environment for the development o f the members and the cooperatives. Fo r example, they are the only leaders that have adopted the new official regulation that allows them to be up to five years o n the board o f directors. There is also the possibility o f reelection. Supervisory cooperatives have been able to adapt their structure to face greater challenges from the market environment. Their new structure has been built up to meet the emerging needs, and can be thought o f as a hybrid structure that seeks to mix a business culture with democratic values. One important consideration is that growth and diversification o f the range o f activities to be competitive is closely linked to risk-prone, systematic diinking, motivated leaders (see Seetharaman and Mohanan, 1985). In the case o f participatory, consultative, and non-directive cooperatives, the board o f directors keeps a constant interaction with the members. This interaction is favored by the rotation i n managerial functions, that is, the board o f directors and committees change every three years. Al though this fact 115 increases interaction between management and members, and enhances awareness o f organizational and individual goals, it hinders management because members gaining experience and knowledge at the board level have to leave their position to other members that may not have any experience in management. Participatory, consultative, and non-directive cooperatives kept more attached to the cooperative development policy o f the state. The policy created a single structure and forced cooperatives to adopt it (institutional isomorphism). The state offered cheap credits, privileges in the distribution o f the catches, exclusive rights to exploit scarce, valuable species, managerial subsidy, and asked cooperatives for shared capital participation, recognition o f the members' general meeting as the supreme body o f the cooperative, and majority rules for participatory decision-making. The original stated purpose o f the cooperative development policy was to implement governmental social and economic programs. However, the evolution o f these cooperatives shows that only participatory groups have continued with the original structure and an increased level o f participation and democratic control o f their operations. Democrat ic practices and participatory patterns o f members' behavior are less apparent in consultative cooperatives. In the case o f non-directive cooperatives, their operations mostly help a few leaders who take the benefits that accrue from the cooperatives (autocratic leaders have taken this situation to its extreme expression). M o s t o f the members seldom participate i n a democratic decision-making process, and the cooperatives have become a mere instrument i n the hands o f the intermediaries. VII.3.3 On theoretical frameworks These contrasting differences between supervisory and democratic cooperatives make it difficult to define a suitable strategy i n the search for the right type o f cooperative organizational framework. The search may be an elusive task i f concern focuses only on finding the right type o f organizational structure. It is probably more promising in the short term to use as many suitable perspectives from organization theory as needed to explain the reality o f the cooperatives in Yucatan. W i t h these perspectives, more knowledge may be generated though further studies and one may then develop a more suitable framework for the analysis o f cooperatives. Therefore, there is a need for considerable theoretical development and experimentation for identifying alternative types o f organizations to properly. analyze cooperatives. The mainstream o f organization theory has generated paradigms and hypothesis for other organizational forms, mainly big corporations and official sectors (Stryjan, 1989). It has been hard to prove the democratic nature o f cooperatives due to the strong influence o f the ' I ron L a w o f Oligarchy' (Michels, 1915 i n May, 1985), which points out that even organizations with the highest cornmitment for democracy end up controlled by a few members. A l s o most o f the cooperatives i n Mexico had followed, through institutional isomorphism, the Weber's bureaucratic model , which emphasizes rational decision-making, job appointment by merit, reliance upon written rules, and graded hierarchies. The model has been dominant i n part because cooperatives have made almost no attempt to create innovative organizational designs for more membership involvement and control. M y standpoint is that self-managed organizations need special designs to conduct i n different ways, apart from 'classical' organizations. A t the same time, researchers may develop a new theory that may enrich current organization theory. Therefore, a theory o f cooperatives and other self-managed organizations should proceed from organizational practice to theory. The starting point is to recognize that established organizational theory cannot entirely explain cooperatives. F o r instance, to my knowledge, there is no approach that can explain the unique characteristic o f cooperatives consisting o f all members at the top, aclministrative and operational levels sharing the supreme authority for strategic decision-making. A l s o , it is necessary to acknowledge that is rather impossible to find a unitary model o f organizational design to describe all types o f cooperatives' structure, or to which all 116 organizations should aim. It is necessary to recognize the complexity o f reality and to avoid focusing all research efforts on the philosophical traditions o f reification, reductionism, and hierarchization. The propensity to convert abstract concepts into hard entities for measurement purposes, the desire to explain random and irreductible complex phenomena by deterministic behavior o f small constituent parts, and the inclination to order items by ranking them into a linear series o f increasing worth, are useful ways to help explain reality.. However , its interpretation.should go beyond analytical tools to accommodate theory' to reality, not the other way around. In this study, I have used an eclectic approach i n the sense o f using as many organizational 'theories' as needed to understand the real situation o f cooperative organizations i n a rather small region. I used this approach because I identified at least six structural designs that may need different approaches to explain why the cooperatives are performing differentiy. I think this is precisely the orientation for further research: to find alternative explanations to understand various current organizational structures o f a type o f organization that theoretically should be homogeneous. Alternative explanations must be directed to the micro (personal), meso (organizational), and macro (external environment) levels to develop a comprehensive understanding o f cooperative organizations. < 117 REFERENCES CHAPTER I Acheson , J . M . (1981). 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What are the conditions to expel a member? 3. Does a member have any oppormnity to appeal when he has been expelled? .Yes N o . 4. I f yes, please explain the appealing process Decision. The formulas used for decision-making i n collective actions 5. What are the general assembly duties? . 6. H o w are agreements undertaken wi thin this cooperative? 7. H o w are the cooperative incomes and costs distributed among the members? 8. H o w is the annual yield distributed among the members? Position. What posit ion members may ho ld wi th in the cooperative. 9. What are the boards and commissions i n wh ich members o f this cooperative can participate? 10. H o w long can a member be i n the boards? years 11. What are the conditions to keep being member o f the committee? Payoff. The rewards or penalties wh ich may be assigned to actions or outcomes 12. What are the reasons for being member o f a cooperative? 13. H o w is the members 'behavior constrained? 14. H o w is the members ' behavior induced? Authority. The authorized action participants can take independendy. 15. What kind o f action members can take without approval o f the cooperative? 16. In case o f independent actions generate problems, is there any conflict-solving mechanism? 17. H o w is considered the highest authority wi th in the cooperative? Information. The information that participant may reveal to others. 18. H o w are the agreements informed wi th in the cooperative? 19. What kind o f information members must share wit i i in the cooperative? RELATIONSHIP WITH T H E COMMUNITY 20. What are the existing local property-rights arrangements on fishing resources between the cooperative and the no-member fishers? 21. In which community's special occasions does die cooperative actively participate? 22. What are the linkages between cooperative's managerial staff and local authorities? 23. A r e there conflicts i n the fishing activity and use o f other marine resources between the cooperative and no-member fishers? 24. I f yes, what is the nature o f the conflicts? 25. H o w those conflicts are resolved? Ecological attitudes 26. H o w do members o f your cooperative perceive the future o f the fishery resources? 27. What are the corresponding attitudes to these perceptions? 28. H o w is the ecological knowledge passed through generations? 29. What are the different activities that this cooperative carries out and /o r participate? 30. What are the relevant factors you consider have driven your cooperative to its current level o f organization and production? Please rank arid check them as positive (+) or negative (-), being . 1 the most important. 31. W h y do you consider those factors as being important? Please explain. 133 32. Have all members o f the cooperative discussed these factors to understand its current level o f organization and production? Please explain. 33. What other factors do y o u think should be considered to improve the level o f organization and product ion o f your cooperative? R E L A T I O N S H I P W I T H T H E I N T E R M E D I A R I E S 34. What are the arrangements for supplying marine species to the intermediaries? 35. H o w are the different species priced? 36. H o w is the price agreement formalized? 37. H o w is the price agreement enforced? 38. W i t h how many intermediaries this cooperative trades? 39. I f more than one, Why? Please explain 40. Where are the intermediaries from? 41. Is there a credit-marketing relationship between cooperative/fishers and intermedairies? 42. I f yes, please explain. 43. What is the role o f the cooperative when the credit relationship is established direcdy wi th its members? 134 APPENDIX B Questionnaire for measuring satisfaction among members First section: cooperative attributes. In the following questions, circle the number that best expresses your views about each attribute. Management style. Question 1: How satisfied are you about the general way your cooperative has been managed in the last 6 years? 1. Completely satisfied 2. Mosdy satisfied 3. Mixed -equally satisfied and dissatisfied 4. Mosdy dissatisfied 5. Completely dissatisfied Question 2: In a few words, could you explain why are you (dis)satisfied? Question 3: Flow do you evaluate the performance of your cooperative in the following situations? Situations a) Dealing with fish buyers b) Dealing with local authorities c) Dealing with federal authorities d) Asking for technical assistance e) Dealing with finance sources f) Members carrying management g) Managing savings plan h) Applying internal rules i) Solving internal conflicts Very Don't Excellen good Goo know Poo Ver y Terribl poo e 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 6 6 6 6 6^  6 6 6 6 7 7 7 7 7 7 7 7 7 Solidarity among members. Question 4: How satisfied are you about the solidarity that is perceived in your cooperative? 1. Completely satisfied 135 2. Most ly satisfied 3. M i x e d —equally satisfied and dissatisfied 4. Most iy dissatisfied 5. Completely dissatisfied Question 5: In a few words, could you explain why are you (dis)satisfied? Question 6: H o w do you evaluate the performance o f the members o f your cooperative i n the fol lowing situations? Situations a) Compliance with regulations b) Selling catches only to the coop c) Participation i n meetings d) G o o d personal relations e) Fo l l owing internal rules f) Sharing information on fishing V e r y D o n ' V e r Excel len G o o t P o o y Ter r ib l good d kno r poo e 2 2 2 2 2 2 4 4 4 4 4 4 5 5 5 5 5 5 6 6 6 6 6 6 7 7 7 7. 7 •7 Equipment and facilities. Question 7: In general, how satisfied are you wi th your cooperative's equipment and facilities? 1. Completely satisfied 2. Most ly satisfied 3. M i x e d -equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 8: In a few words, could you explain why are you (dis)satisfied? Question 9: H o w do you evaluate the way your cooperative acquire and maintain equipment and facilities? Equipment and facilities Very D o n ' t Very Exce l len good G o o d k n o w P o o r poor Terrible t a) F ish ing equipment b) Vehicles 2 2 3 3 4 4 5 5 6 6 7 7 136 c) Office furniture 1 2 3 4 5 6 7 d) Buildings 1 2 3 4 5 6 7 e) F i s h storage faculties 1 2 3 4 5 6 7 f) Ice making facilities 1 2 3 4 5 6 7 g) F i sh processing facilities 1 2 3 4 5 6 7 Question 10: H o w satisfied are you wi th the access you have to the equipment and facilities provided by your cooperative? 0. D o not apply 1. Completely satisfied 2. Mosdy satisfied 3. M i x e d —equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 11: In a few words, could you explain why are you (dis)satisfied? Question 12: H o w satisfied are you wi th the access you have to the technical assistance requested by your cooperative? 0. D o not apply 1. Completely satisfied 2. Most ly satisfied 3. M i x e d —equally satisfied and dissatisfied 4. M o s d y dissatisfied. 5. Completely dissatisfied Question 13: H o w satisfied are you wi th the access you have to the financial resources requested by your cooperative? 0. D o not apply 1. Completely satisfied 2. M o s d y satisfied 3. M i x e d —equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Second section: social and fishing services. 137 In the following questions, circle the number that best expresses your.views about each attribute. Social services. Question 14: In general, how satisfied are you wi th the social services (medical services, water supply) provided by your community? 1. Completely satisfied 2. M o s d y satisfied 3. M i x e d —equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 15: In a few words, could you explain why are you (dis)satisfied? Question 16: H o w do y o u evaluate the provision o f the fol lowing services by your community? Social services Very D o n ' t Very Excellent good G o o d apply P o o r poor Terrible a) Access roads 1 2 3 4 5 6 7 b) Postal service 1 2 3 4 5 6* 7 c) Telephone service 1 2 3 4 5 6 7 d) T V , radio, newspapers 1 2 3 4 5 6 7 e) Electricity supply 1 2 3 4 5 6 7 f) Water supply 1 2 3 4 5 ' 6 7 g) Medica l services 1 2 3 4 5 6 7 h) F o o d markets 1 2 3 4 5 6 7 i) Schools 1 2 3 4 5 6 7 Fishing services. Question 17: In general, how satisfied are you wi th the fishing services (dry dock, lighthouse) provided by your community? 1. Completely satisfied 2. M o s d y satisfied 3. M i x e d -equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 18: In a few words, could you explain why are you (dis)satisfied? 138 Question 19: H o w do you evaluate the provis ion o f the fol lowing services by your community? Fishing services V e r y D o n ' V e r y Excel len good G o o t Poo r poor Ter r ib l t d a p p i y e a) D r y docks 1 2 3 4 5 6 7 b) Lighthouse 1 2 3 4 5 6 7 c) Ice making facilities 1 2 3 4 5 6 7 d) Gasoline and o i l supply 1 2 . 3 4 5 6 7 e) Gear and equipment supply 1 2 3 4 5 6 7 f) Equipment maintenance 1 2 3 4 5 6 7 g) F i sh storage facilities 1 2 3 4 . 5 6 7 h) F i sh processing facilities 1 2 3 4 5 6 7 Third section: relationship cooperative-community. In the following questions, circle the number that best expresses your views about each attribute. Question 20: In general, how satisfied are you wi th the relationship that your cooperative has established wi th your community? 0. D o not apply 1. Completely satisfied 2. Mos t ly satisfied 3. M i x e d -equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 21: In a few words, cou ld you explain why are you (dis)satisfied? Question 22: H o w do you evaluate the way your cooperative support or sponsor the fol lowing events i n your community? 139 Events Very Excellent good G o o d D o n ' t apply P o o r V e r y poor Terrible a) Social 1 2 3 4 5 6 7 . b) Cultural 1 2 3 4 5 6 7 c) Religious 1 2 3 4 5 6 7 d) Sport 1 2 3 4 5 6 7 e) Social projects 1 2 3 4 5 6 7 Question 23: H o w do you evaluate, in turn, events promoted by your cooperadve? the su pport your community provides to Events Very Excellent good G o o d D o n ' t apply P o o r V e r y poor Terrible a) Social 1 2 3 4 5 6 .7 b) Cultural 1 2 3 4 5 6 7 c) Religious 1 2 3 4 5 6 7 d) Sport 1 2 3 4 5 6 7 e) F ishing projects 1 2 3 4 5 6 7 Fourth section: relationship cooperative-fish buyers. In.the following questions, circle the number that best expresses your views about each attribute. Question 24: H o w satisfied do you feel about the relationship your cooperative has established wi th the main fish buyer(s) that operate i n your community? 0. D o not apply 1. Completely satisfied 2. M o s d y satisfied 3. M i x e d -equally satisfied and dissatisfied 4. M o s d y dissatisfied 5. Completely dissatisfied Question 25: In a few words, could you explain why are you (dis)satisfied? 140 Question 26: Is the fish buyer(s) behavior fair and consistent regarding the fol lowing activities wi th your cooperative? Activities Strongl y agree Moderatel y • agree M i l d l y agree D o n ' t know M i l d l y disagre e Moderatel y disagree Strongl y disagre e a) F i x i n g prices 1 2 3 4 5 6 7 b) P rov id ing loans 1 2 3 4 5 6 7 c) Enforc ing contract 1 2 3 4 5 6 7 d) Determining demand 1 2 3 4 5 6 7 e) Sharing market information 1 2 3 4 5 6 7 f) Buy ing legal catches 1 2 3 •4 . 5 6 7 • Question 27: H o w do you evaluate, i n turn, your coo activities wi th the fish buyer(s)? lerative's performance regarding the fol lowing Activities Strongl y agree Moderatel y agree M i l d l y agree D o n ' t kno ? w M i l d l y disagre e Moderatel y disagree Strongl y disagre e a) F i x i n g prices 1 2 3 4 5 6 7 b) A s k i n g for loans 1 2 3 4 5 6 7 c) E n f o r c i n g contract 1 2 3 4 5 6 7 d) Deterrnining supply 1 2 3 4 5 6 7 e) A s k i n g for market information 1 .2 3 4 5 6 7 f) Sell ing legal catches 1 2 3 4 5 6 7 141 a +-» CO C C i<3 CO t-l CU co •a CU - M CO >> co C u X! § S 3 PH 2 O c o ••s x cu 3 CO CU cs o CU . ft O .s o a c O c o T3 C o o o C L co c o o CO .S .S .S .S 'S 'S 'S '3 CL. 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Sf * c U • cj u u , G O • •M • i-H CX I o cj cj •*-» cs U Of w OM o o u CP o CU -w C N C N JO O h-1 u o o O I C N I C N ov § C N C N ON C N OO C N oo co 3 C N VO 0. -1 00 oo oo C N CO C N « APPENDIX E Typical decision situations at different levels of organizational structure of cooperatives Strategic individual decision-making There are some differences i n the decision-making process described i n Chapter III, section III.6.4 when considering authoritative cooperatives. A s the leaders make the strategic decisions most o f the time, these persons do not need to call for a meeting. Then , when facing a situation decision, they skip the information stage because they control all o f it. They may discuss the problem wi th the general administrator i n supervisory cooperatives, or they can decide by themselves i n the case o f autocratic cooperatives. Once the leader makes the decision, he can delegate the responsibility o f implementing a specific action depending on the importance o f the problem. The difference between supervisory and autocratic leaders is that the former undertakes a learning process to gain knowledge from the problem solved, and to take preventive actions for avoiding the same or similar problems i n the future, whereas the autocratic leader does not embrace this learning process. The examination o f some personal characteristics o f supervisory leaders helps the analysis o f strategic decision-making i n these types o f cooperatives. The first characteristic is that these leaders understand when problems are complex and that the solutions may affect the whole organization. They evaluate solutions i n how they solve the problem (intended results) and how they affect the whole organization (unintended results). Supervisory leaders are aware that problems and solutions change over time, and that solutions may create new situations that w i l l need a different solution i n turn. Th is characteristic is k n o w n as systematic way o f thinking (Montana and Charnov, 1993). Ano the r characteristic is that supervisory leaders sometimes plan i n advance wi th the help o f the general administrator, innovative alternatives to achieve strategic objectives. They attempt to deal wi th problems before they emerge as major difficulties because, as mentioned earlier, it is easier and more efficient to deal wi th small problems before they grow. I f there is need for a change, they try to change i n the right direction to survive to the rapidly modifying environment, accepting the associated risk and uncertainty. Supervisory leaders make decisions i n two basic ways. The first way is descriptive or look ing at historical analogies to find how other cooperatives have solved either similar or o^ssimilar problems i n the past. The second way is prospective or trying to imagine a future scenario to solve the problem and then acting as needed to enable the desired scenario. They can use either way or a combinat ion o f both. Then , they gather information to construct a conceptual model to represent the problem i n a manageable way. Next , they try different decision rules to select the best alternative. The best approach they have devised is using informal decision rules. That is, they base their decision on experience and c o m m o n sense. Administrative group decision-making G r o u p decision-making i n non-directive and consultative cooperatives is more concerned wi th administrative decisions. This is because the boards o f directors o f those cooperatives transfer the strategic decision-making to the intermediary, operating as a technical department o f a larger fishing firm. Administrat ive decisions are more suitable to committees or staff members, and are more concrete and action oriented. A n important characteristic o f aclrninistrative decisions is that they are made wi th regards to routine problems that lead to systematic procedures that affect specific areas o f the cooperative. Because o f this, directors making administrative decisions exhibit a more 147 simplistic way o f trunking. Usually, directors assume that each problem has a single solution and that it w i l l affect only the problem area, not the rest o f the cooperative. O n c e the solution is implemented, it remains val id and should only be evaluated on how wel l it solves the problem. The disadvantage with this way o f thinking is that ignoring the interrelationships among organizational levels may lead to a simplistic solution that does not solve the larger problem. Directors o f consultative cooperatives do not hesitate i n making changes when there is an indication that such changes are necessary. However , there is no prior commitment to change. A l t h o u g h they recognize the need to change i n an uncertain environment, they do not create alternatives i n advance. Non-direct ive and consultative directors use more intuitive and traditional methods for decision-making. These methods are highly idiosyncratic, leading. the problem solving i n these cooperatives to be more personalized than institutionalized and based on stipulated rules. Some idiosyncratic methods include the 'security method' or choosing the least risky opt ion, the 'delay method' or choosing to postpone the decision as much as possible, and the 'repetition method' or choosing the same alternative as i n a previous decision situation. Figure E . l shows the catch price setting, one o f the most frequent decision situations that the board o f directors o f non-directive and consultative cooperatives, and members at the administrative level i n supervisory and participatory cooperatives, has to carry out. Decisions made by administrative staff during price setting are rather simple, since the decision rule is either the members have a debt wi th the cooperative. A t the beginning, depending on the level o f the bargaining power o f the cooperative, this and the fish buyer fix the catch's price. Before paying, the buyer discounts any debt that the cooperative has wi th h im. I f there is no debt, the original price is maintained. Nex t , the cooperative fixes the price that is going to be paid to the member. T h e first step i n price setting from the cooperative to the member is making three types o f discounts based on percentages from the members' catch. O n e discount is a contribution to the cooperatives' administrative costs, the second one contributes to the federation administrative costs, and the third one is directed to the savings fund each member has wi th in the cooperative. Th is is a payoff rule establishing that all members are granted wi th such savings depending on their individual catches along the fishing season. These savings are paid to the fisher at the end o f the year. In the second step, from the remaining amount o f money after the three discounts, the aclministrative staff has to check i f the member has a debt wi th the cooperative. I f there is a debt, another percentage is discounted and the price is reduced again. In the case where there is no debt, the final price is paid to the fisher. Prices wi th and without discount' contribute to the annual member's incomes. Operational individual decision-making The members o f laissez-aller and autocratic cooperatives mosdy make operational decisions because they are only concerned wi th the course o f the daily operations oriented to reach product ion objective. It was mentioned that these cooperatives have no structural units. A s adrninistration is not needed, the usual situations that members more frequendy confront are routine and repetitive because they include fishing activities that have been performed for many years. F o r these members, most problems affect only their daily operations, but not the whole organization's structure. Thus, solutions are specific to isolated problems that affect them direcdy. Once the solution is implemented, they believe there is no impact o n other members or organizational elements, and that the problem w i l l be valid for a l ong period. Members i n these cooperatives are fundamentally problem avoiders, that is, they try to refrain from making changes. Depend ing o n their personal goals, some o f them may resist changing even when 148 Catch trading Price setting Price to cooperative Cooperative set the price w w A n n u a l fisherman incomes Price with discount Yes N o Price to fisherman Cooperative adrriinistrative costs Federation administrative costs + Fisherman savings Figure E . l . A schematic catch price setting at administrative level changes are obviously i n their best interest. In this condit ion, members keep their organizations, which depend highly on their technical operations, o n a calm and even course. Th is is the most effective decision-making style i n an environment i n wh ich the intermediary buffers the effect o f external changes hence there is litde need for adaptation. Decisions are made trusting more o n intuition, wh ich is helpful because members obtain good approximations to the opt imal decision made wi th formal methods. The drawback o f heuristics as decision-making method is that it may lead to biases and discrepancies f rom reality (Pious, 1993). \ Figure E .2 depicts the three most c o m m o n decision situations that every member o f all cooperatives has to deal wi th every day at the operational level. There are at least three decisions that a fisherman has to make everyday, and they are influenced by a number o f variables that he has to consider before making the decision. The first decision, 'Fishing today?' considers weather conditions, social and cultural events, fisheries management constraints, and market variations. Socio-cultural events are related to specific traditional rules to each fishing community, whereas fisheries management regulations have to be complied wi th according to government regulations. I f these variables are unfavorable, it is more likely that the fisherman wi l l not catch the target species that particular day and decide to carry out alternative activities. Otherwise, he w i l l prepare his equipment and boat to travel to the fishing ground he knows is more productive. The second decision, 'Keep fishing i n the same area?,' depends o n weather conditions and the abundance o f the target species. The fisherman has to decide at this point i f there is a need to search for another fishing ground or i f it is more convenient to return to the community. Searching for new fishing grounds may be based on information rules, i f these allow members to share information o n the location o f productive fishing spots. O n c e the member is back, and the catch is 149 weighed and frozen, he receives a ticket that has to be cashed wi th the administrative staff. T h e same variables considered at the beginning are weighed for the third decision, 'Fishing tomorrow?'; i f the answer is yes, the member has to buy the gasoline to be ready the fol lowing morning. T h e alternative activities may comprise fixing the equipment, washing the nets, visit ing relatives in other communities, attending social or religious events, and the like. W , S, M g , Figure E.2. Schematic decision situations at the operational level 150 

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