MEMBERSHIP DESERTION AS AN ADJUSTMENT PROCESS ON HONDURAN AGRARIAN-REFORM ENTERPRISES

In the Honduran debate, pervasive membership desertion from agrarian reform enterprises is frequently cited by reform critics as empirical evidence of inefficiency and decline within the reform program enterprises. This desertion is generally blamed on various collective action problems of cooperative organization, such as organizational infighting, labour shirking, and corruption. We use a retrospectively constructed panel data set on membership flows from 70 Honduran agrarian reform enterprises to examine the efficiency and equity implications of the membership desertion process. We set forth two basic arguments about the membership desertion process. First, we attempt to dispel the notion that membership desertion is, in and of itself, a useful indicator of agrarian reform enterprise efficiency. We argue instead that : reform enterprises begin organisational life oversubscribed in terms of the balance between productive resources available to the group members and their off-enterprise opportunities; and in the heavily constrained economic environment of the Honduran reform enterprise membership or labour is the most fluid and therefore adjustable resource for the enterprises to overcome oversubscription. For the second argument, we draw from one of the central tenets of the literature on labour-managed enterprises, the dividend maximization hypothesis, to show why the mature enterprise can be expected to move, over time, to a level of resources per member above that corresponding to the average member's off-enterprise opportunity cost. Finally, we evaluate the equity outcomes across different enterprises and between the reform and the nonreform sectors. -from Authors