A farmers’ specialized cooperative in Yichang City, Hubei Province Photo: IC PHOTO

Economic sociology generally holds that the development of farmers’ specialized cooperatives in China is embedded within the social structures and relational networks of rural communities. Influenced by local traditions and social culture, these cooperatives do not strictly adhere to the logic of free-market competition. Rather, they are deeply intertwined with the hierarchical class dynamics of rural society, fragmented clan factions, personalized administrative practices, and the characteristics of rural labor markets. 

However, the stable social relations and interpersonal mechanisms relied upon by traditional society are undergoing significant transformations due to the short-term nature and speculative risks of relationships prompted by rapid social mobility. This shift weakens traditional interpersonal bonds and may even foster harmful behaviors. In a transitional society, how do traditional interpersonal mechanisms and social relationships, along with modern institutional structures and authoritative norms, function and interact to address opportunistic self-interest within cooperative operations? 

Avoiding opportunistic self-interest 

The core issue in the cooperative phenomenon is identifying intrinsic mechanisms to counter opportunistic self-interest. However, the greatest challenge facing modern society is the alienation and fragmentation of social relationships resulting from social mobility. Although personal relationships may not immediately dissolve, the cultural norms and concepts such as “face” (“mianzi”) that sustain their operation may lose effectiveness or transform into the objective fairness mechanisms described by Chinese scholar Huang Guangguo, which are characteristic of modern society. 

This does not imply that urbanization and mobility in contemporary Chinese society have completely eliminated traditional interpersonal relationships and interaction patterns. Traditional culture, embedded in individual habits, continues to influence behavior. Even in a dynamic and fluid society, people often rely on past patterns, using gift exchanges to construct and maintain personal relationships. 

To address the issues of short-term behavior and opportunism in an open, mobile society, it is essential to revisit the concept of new institutionalism proposed in organizational and political sociology. 

Whether an institution can serve as a source of abstract trust generally depends on its ability to provide normative guidelines and cognitive frameworks—that is, whether it can offer scripts for action or frameworks for understanding. Therefore, striking a balance between personal relationships and interests, ideals and rationality, particularism and institutional norms to achieve what is considered both “reasonable and justifiable,” has become a critical challenge for farmers’ specialized cooperatives in overcoming the trust dilemma. 

Case study 

The case selected for this study is located in G City, in the northeastern part of the Chengdu Plain. In 2017, a local large-scale grain farmer, Mr. Yang, collaborated with 392 local farmers to establish the M Land Shareholding Cooperative. By 2020, the cooperative’s service area had expanded to 50,000 mu (approximately 8,200 acres), encompassing the full-cycle cultivation of rice and wheat and covering multiple locations, including Chengdu, Deyang, and Mianyang. The cooperative’s income from socialized services exceeded one million yuan. 

During its development, the cooperative faced trust crises and a wave of member withdrawals. In its early stages, the cooperative relied on two key factors to establish basic trust networks: the involvement of influential individuals and critical groups. Initial trust relationships were built primarily on small-scale, informal, and multi-layered connections. However, as the cooperative expanded its business and membership, the social distance among members grew, and trust relationships gradually shifted toward more rational, cooperation-based dynamics. 

As a result, opportunistic risks within cooperative relationships began to emerge and escalate, and members’ attitudes toward interpersonal relationships became increasingly strategic and instrumental. Trust in informal social relationships declined, as did members’ willingness to take responsibility. 

To address the decline in the effectiveness of informal social relationships caused by the expansion of cooperative membership, the cooperative’s management team sought assistance from formal institutional mechanisms. While rational, written systems require execution through layers of institutional agents—introducing factors such as agents’ roles, personal character, and relationships—these agents operate within formal structural positions and adhere to role-specific norms. Moreover, they are shaped and constrained by the institutional culture of their respective organizations and departments. Consequently, these formal systems proved effective in curbing opportunistic individual behavior and limiting the instrumentalization of interpersonal relationships. 

Rural elites 

In cooperative studies, individuals who hold significant positions in rural areas due to their economic capital and traditional authority have long been a focal point of research. This form of elite authority differs from the absolute authority typical of traditional collectivism, manifesting instead in a more rationalized, reputation-based manner. The founder, Yang, leveraged his expertise in planting techniques and agricultural machinery to promote comprehensive agricultural services. He facilitated the collective purchase and supply of production materials for farmers, ensuring lower-than-market prices and guaranteed quality, which significantly reduced production costs for cooperative members. Yang also skillfully utilized external resources to guide cooperative activities. 

For rural elites, elite status signifies social standing and serves as a key resource for influencing others’ attitudes and behaviors. However, the role of capable individuals in the development of modern organizations remains a subject of academic debate. 

On one hand, some scholars view elite management of cooperatives with caution, arguing that while rural elites may enhance governance efficiency, issues like “oligarchization” and “elite capture” could lead to undue benefits for elites and foster undesirable practices, such as “village official” vote-buying or the influence of illicit financial powers. On the other hand, elites embedded in rural relational networks can provide the initial social capital necessary for cooperative development. However, as cooperatives expand and engage in public affairs, these elites may encounter “interpersonal dilemmas” rooted in traditional social relations, ultimately challenging the sustainability of long-term cooperation. 

Social relationships are also a crucial form of social capital in building trust. The key group primarily consists of individuals born in the 1970s, the same generation as Yang. Early participants in the cooperative were mainly personal acquaintances of Yang. Over time, through extensive training and participation in public welfare activities, these relationships developed a sense of “revolutionary camaraderie.” 

In the initial stages of collective cooperative actions, the costs typically outweigh the benefits. However, within the framework of identity-based trust, the key group is willing to bear certain initial costs. Once the cooperative reaches a certain scale and begins generating returns, it naturally attracts more participants. 

Although members may choose to withdraw from the cooperative or engage in opportunistic behavior when faced with operational difficulties or unmet promises, particularistic interpersonal mechanisms have helped retain core members and weather crises. However, when confronted with the allure of other economic organizations or market opportunities offering significantly higher benefits, the cooperative’s cohesion—relying solely on local social networks—faces immense challenges from opportunistic behavior driven by profit incentives. 

The behavior patterns of local farmers align more with situational appropriateness. They no longer strictly adhere to the ethical norms of traditional rural society, nor do they make choices solely based on comparative economic advantages. Instead, they tend to consider their roles and the situational norms within the local social context to make decisions deemed appropriate for the situation. 

Role of formal institutional norms 

How do formal institutional norms from distant social relationships effectively enter and function within primary-level rural societies? Do they conflict with the logic of situational appropriateness in behavioral judgment? These are two unresolved questions within the frameworks of cultural institutionalism and social network theory. 

The implementation of formal institutional norms relies not only on ritualized and symbolic strategies of promotion but also, more importantly, on a layered and intertwined system of dual-role relationships. These relationships connect upper-level institutional agents with grassroots rural agents. Through this chain of personalized, role-based dual relationships, formal institutional norms are conveyed and implemented at the grassroots level of rural society. 

Previous studies have often regarded village cadres as key links between culture and structure, serving as important intermediaries between formal authority and informal local culture and social networks. The M Cooperative exemplifies how, through the multilayered interpersonal relationships of institutional agents, a coordination mechanism is established between formal institutional norms and personalized interpersonal mechanisms. This allowed the cooperative to align with the village party secretary and leverage the pressure of formal institutions to ensure smooth operations. 

Formal institutional norms are implemented through a chain of dual-role relationships among institutional agents at various levels, and under normal circumstances, they function effectively. However, this effectiveness is grounded in the logic of situationally appropriate behavior. While this logic applies to most villagers, it does not entirely eliminate the possibility of opportunistic behavior or misconduct when individuals face significant financial temptations. In such cases, formal institutions activate their built-in penalty mechanisms to serve as “a final ultimatum,” curbing inappropriate behavior and maintaining order. 

The development of the M Cooperative and its approach to addressing opportunistic behavior among members raises an important issue: the complex relationship between personal ties and rational systems of authority and institutional frameworks. First, how does the group pressure mechanism function in a semi-acquaintance society? To resolve trust and responsibility issues in economic activities, it is necessary to transcend interpersonal relationship networks and cultural norms, avoiding both excessive socialization (over-reliance on cultural norms) and under-socialization (over-reliance on rational calculation). The key is to combine trust based on interpersonal relationships with trust rooted in authority and institutional frameworks. 

Second, in the absence of bilateral collateral credit contracts, how can credible commitments be increased? In typical cooperative relationships, classical contracts are generally used to establish cooperation. However, such contracts, based on comparative benefits, are prone to opportunistic risks of breach by either party. One solution in this case is mutual collateral forming a relational contract for joint governance. Alternatively, low-cost third-party involvement may be necessary for third-party governance 

Lastly, beyond classical and relational contracts, what other methods can be used to increase trust outside of formal agreements? A unique challenge faced by farmers’ cooperatives is renewing contracts. The “land seizure” problem during contract renewal requires the involvement of broader local authorities to ensure the sustainable operation of the cooperative. By implementing a chain of dual-role relationships between institutional agents at various levels, formal institutional norms are effectively integrated into the cooperative’s operations at the grassroots level, facilitating coordination between formal institutional norms and informal interpersonal mechanisms. 

Guo Weihe is a professor from the School of Ethnology and Sociology at Minzu University of China; Zhang Xinxin is from the Law School at Southwest Petroleum University. 

Edited by WANG YOURAN