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Abstract
Providing a performance measure of any firm is a crucial issue, not only for the stakeholders of the firm, but also
for policy makers, labor unions, and economists. The relevant performance measures should consider the objectives of the
firm’s owners. The ownership structure of cooperatives is different from that of investors owned firms, which in principle
implies the need of different tools to measure their performance. Typically, however, the performance of cooperatives and
investor owned firm is mostly compared using the same approach. In this study, we use Data Envelopment Analysis (DEA)
to compare the performance of dairy cooperatives and investor owned firms in major European dairy producing countries
using a traditional approach, which views both types of firms as cost minimizers, and an alternative approach, which
considers the objectives of the cooperatives. In the alternatives approach, two hyperbolic models were evaluated, one of
them consider the firms to expand both output production and use of material to address the objective of the owners of the
cooperatives. The performance of the cooperatives changes across the two approaches form being out performed by IOFs
using the traditional approach to outperforming IOFs when using an approach that is in line with the objective of the
cooperative.