Drawing from the property rights theory of the firm, Chaddad and Cook propose a
typology of discrete organizational arrangements (i.e., cooperative models) based upon a broad
definition of ownership rights comprising both residual return and control rights. They argue
that cooperative organizational models may be distinguished by the way ownership rights are
defined and assigned to economic agents tied contractually to the firm (members, patrons, and
investors). According to the proposed typology, the traditional cooperative and the investororiented
firm (IOF) are polar organizational forms (Figure 1). The traditional cooperative
structure is defined as having the following property rights attributes: ownership rights are
restricted to member-patrons; residual return rights are non-transferable, non-appreciable and
redeemable; and benefits are distributed to members in proportion to patronage. As a result of
this “vaguely defined” property rights structure, traditional cooperatives are subject to
investment and governance constraints (Vitaliano, Staatz, Cook).