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Journal of Co-operative Organization and Management

journal homepage: www.elsevier.com/locate/jcom

Enhancing board motivation for competitive performance of

Thailands co-operatives
Kriengsak Chareonwongsak a,b,
a
Kellogg College, University of Oxford, UK
b
Institute of Future Studies for Development, Bangkok, Thailand

a r t i c l e i n f o a b s t r a c t

Article history: This study aims to answer the main questions does the motivation of co-operative boards of directors
Received 8 December 2015
affect co-operative performance in Thailand, and to what extent?, and Which factors affect the moti-
Received in revised form 14 June 2016
vation of a co-operatives board of directors?The methods used for the study is the Structural Equation
Accepted 25 January 2017
Modeling (SEM). Data used for the model estimation are collected primarily by questionnaire surveys
from both Board of directors and the managers from the co-operatives in Thailand. Secondary data is
Keywords:
the nancial and non-nancial indicators of the co-operatives, which were collected by Co-operative
Board motivation
Structural equation modeling Auditing Department and Co-operative Promotion Department. The study result suggests that the moti-
Thailand vation of co-operative boards of directors signicantly affects co-operative performance. Factors that
Cooperatives performance are found to affect board member motivation include board authority and function, board composition,
Expectancy theory board meeting quality, board members skill, transparency in the evaluation and compensation setting
process and nancial compensation.
2017 Published by Elsevier Ltd.

1. Introduction motivation is to protect the benets of stakeholders whom the

The main stream of board research focuses on studying the
relationship between board characteristics for instance board size,
board diversity, chairman-CEO duality, and the performance of the
rm. However, research results are inconclusive as the relation-
ship is not clear and the mechanism that explains the relationship
is still in a black box. Therefore, many researchers have been trying
to understand this mechanism and board motivation is one inter-
esting factor that should be studied further (Hambrick, Werder, &
Zajac, 2008; Huse, 2007; Ryan, Lynch, Vansteenkiste, & Deci, 2010).
Even though a lot of studies have been conducted on the topic
of motivation, studies related to board motivation are very few
(Silva, 2005; p.346, 350). Most of the research on this topic does
not study the directors motivation directly. The main stream of
governance literature is dominated by the agency theory which
assumes that directors are motivated to protect principles (own-
ers/shareholders) interest from opportunistic behavior of the
agents (manager).
However, the validity of this assumption is argued by other
theories. For example, the stakeholder theory assumes that board
Corresponding author. Present address: Modern Town Tower 14th Floor, 87/110
Sukhumvit 63, Soi Ekamai 3, Wattana, Bangkok 10110, Thailand.
E-mail address: kriengsak@kriengsak.com
board members represent. The stewardship theory is another the-
ory which assumes that the Board of Directors are motivated by
altruism (Cornforth, 2004). Therefore, many studies focus on study-
ing the theory with which board motivation is consistent with.
Moreover, Hambrick et al. (2008) explained that knowledge on
motivation of executive directors has increased. However, knowl-
edge on motivation of non-executive directors or outside directors
is still not clear (Hambrick & Jackson, 2000).
In the present, good governance practices encourage a com-
pany to have more outside directors compared to inside directors.
The agency theory explains that outside directors are motivated
to protect the shareholders benets rather than their own bene-
ts, because they are independent from a companys management
(Gilson, 1990; Yermack, 2004).
Nevertheless, there is an argument that the non-executive direc-
tor is also an agent for the company owner. Therefore, they will
work for their own benets, similar to the executive directors
(Gomez & Russell, 2005). Another explanation is that outside direc-
tors are motivated by self-interest, such as reputation. They expect
that, for their good work, they will be re-elected as a board mem-
ber or elected as another companies board member. Additionally,
Fehr and Gchter (2000) and Osterloh and Frey (2000) used the eco-
nomic theory of rm to explain that all behaviors of a board member
are motivated by external factors such as nancial compensation.

http://dx.doi.org/10.1016/j.jcom.2017.01.001
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operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
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For a democratic member-based organization such as a co-
operative, it is unlikely to lead to an agency problem because all
members of the Board of Directors are the co-operatives sharehold-
ers and are elected from the co-operative members meeting. The
main motivation of the co-operatives Board of Directors is supposed
to work for member benets because the philosophy of the co-
operative focuses on cooperating and supporting each other (Spear,
2004). Still, there is an objection that motivation in terms of col-
lective action, like working as a member of co-operative Board of
Directors, depends on costs and benets of that work too. Olson
(1965) described that a person will work for the greater good, if
the benets from his/her works are greater than the costs he/she
pays for that work. Therefore, shareholders are motivated to mon-
itor a manager if they believe that the additional personal cost of
monitoring will be lower than the benets which will be received
in return (Matthews, 2007).
From the researchers observation, the most important problem
related to co-operative board of directors is the lack of motivation
among board members, managers, as well as staff, to drive their
co-operatives forward. This is because the co-operative is a col-
lective enterprise and one core principle is one person, one vote,
regardless of the number of shares owned, so that individual has no
motivation to invest in the success of the co-operative (The National
Institute of Open Schooling, 2012, p.99).
Moreover, board members receive very small nancial returns.
Co-operative board compensation ranged from $60$2500/year in
1986 (Zimbelman, 1986) (about $200$9490 in 2014) while total
board compensation levels (in US public companies) regardless of
company size ranged from $134,000$250,000 per year in 2014
(Cook & Co., Inc., 2014). Therefore, their volunteer work is with-
out much motivation and they tend to spend minimal time, skill
and effort in co-operatives compared to the time, skill and effort
invested in work that will generate greater personal income and
benets elsewhere.
However, past studies of the relationship between the motiva-
tion of co-operative Board members and co-operative performance
in Thailand e.g. Rapeepat (1980) and CPD (1985) are qualitative
research. It still does not explain the relationship based on clear
evidence. Hence this article is a test of the relationship between
the co-operatives board motivation and the co-operatives perfor-
mance using Vrooms Expectancy Theory of motivation. This study
would be benecial to both theoretical and policy development to
enhance co-operative board members motivation.
2. Literature review
The co-operatives operate on a self-help philosophy. Most co-
operatives are governed by board members who work voluntarily
and are elected by the members. This philosophy implies that the
membership inuences the management of board members and
the co-operative manager while the board members are motivated
to protect the members benets. However, the results of empiri-
cal studies and experts opinions on the co-operatives performance
have pointed to various governance problems, such as nancial
scandals, the failure of democracy (Lees, 1995), faulty management,
monopoly of power, the restriction of members participation (Lees
& Volkers, 1996), rent seeking behavior, corruption by boards of
directors, lack of transparency in the decision-making process or
weakness of monitoring and control mechanisms, etc. (Corporate
governance and Co-operatives, 2007). These raise doubts about the
quality of co-operative governance.
One question regarding the issue of governance is the duty of
board members in working or not working as representatives of the
members, since co-operative board members are not under internal
Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-
operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
or external pressure as an investor-owned rms board members
are.
Members rarely participate in their board members work, due
to having a lack of involvement in the election of the board
members and a lack of member participation in monitoring and
controlling the board operations (Spear, 2004).
Also, most co-operatives do not have board performance
evaluation mechanisms because their operation is complex and
multi-purpose which leads to conict on how to evaluate board
performance. Consequently, it is difcult for the co-operative Board
of Directors to have important information and to monitor the co-
operatives operations efciently (Enjolras, 2004; Spear, Cornforth,
Chaves, & Schediwy, 2004). Conversely, an investor-owned rm
has the sole purpose of maximizing prot. Moreover, companies
registered in the Stock Exchange have to comply with corporate
governance practices related to board roles and responsibilities
and board evaluation. Accordingly, to evaluate an investor-owned
rms performance is quite simple.
Normally, co-operative board members are not under pressure
from outside because their shares are not traded on the mar-
ket. Thus, there is no external control from the market, and the
rules to protect members rights are weak (Monzon-Campos, Spear,
Thomas, & Zevi 1996). Oppositely, a public company limited is
bound by the rules and regulations of the Stock Exchange which aim
to protect minor shareholders rights which include for example,
the right in nominating and selecting a person to be a board mem-
ber, right in monitoring board operations, right in receiving reports
on board operations and a companys performance, etc. For a com-
pany to have good performance and be attractive to investors, Board
of Directors has to put their effort in monitoring and controlling the
companys management.
Based on the operations and governance problems of co-
operatives and restricted understanding of board behaviors,
particularly with Board conicts between motivations to work on
the basis of voluntary work for the publics interest or for personal
gain, this research studies the Thailand co-operatives board moti-
vation and the factors inuencing it which has never been studied
before as it shows in Table 1.
This research will improve the understanding of the co-
operative board motivations which will help in understanding the
co-operatives board behaviors and may lead to improved gover-
nance quality and co-operatives performance in Thailand.
3. Research framework
Chareonwongsak (2015) developed a new conceptual frame-
work on the co-operative board members motivation and the
co-operatives performance based on Vrooms expectancy theory
(Vroom, 1964) which explained that motivation is a function of
three factors: expectancy, instrumentality and valence.
Expectancy is the perception of how increased effort leads to
better performance. This includes the availability of resources and
occupational support. Instrumentality is the perception of how
much benet will result from performance. This factor depends on
transparency in the evaluation process and how the relationship
between performance and outcomes is understood. Finally, valence
is the degree of value placed on performance outcomes (Serrano,
2015).
Also, board motivation depends upon expectancy, instrumen-
tality and valence. Expectancy is affected by the decision making
process, board authority and function, board composition, board
size, board term, board structure, board meeting, CEO-chairman
duality, board skill and support given to the work of the board.
Instrumentality is affected by transparency in the evaluation pro-
cess, other direct benets and compensation whereas valence is
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Table 1
Summary of knowledge gaps (empirical).

Topic Author Sample Main ndings

Cooperatives
Motivation to be a board member
Board Motivation determinants
Ward and McKillop (2011) 433/volunteers, members & board Altruistic reasons
members/Northern Ireland
Seniority, retirement, low
education

Non-prot organizations
Motivation to be a board member
and engage in board roles
Motivation of good board VS bad
board
Board Motivation determinants
Relationships between
organizational performance and
Board incentives
Widmer (1985), Farris, McKinley, Range from 51 to 291/board Complex and various
Ayres, Peters, and Brady (2009), members/USA, Canada, France motivations
Prouteau and Tabaries (2010), Inglis
and Cleave (2006), Trogdon (2005),
Inglis (1994), Alby (1979)
Gross (1958) 613/board members & Good: civic duty
superintendents/Massachusetts Bad: intent to represent some
group or the desire to gain
political experience
Taylor et al. (1991) 36/trustees/USA No differences
Trogdon (2005), Gross (1958), Alby Range from 51 to 613/board Various factors
(1979) members/USA
Ingham and Thompson (1995), Hallock Range from 64 to 32,146/NGOs/UK, No relationship
(2002), Amess and Drake (2003) USA

Firms
Impact of board ownership on the
rm performance
Impact of board ownership on the
likelihood of critical situations
for rms
Impact of rm performance on
directors compensation
Relationship between
organizational performance and
a board turnover
Relationship between
organizational performance and
number of directorships
McLaughlin (1994), McConnell and Range from 27 to No consensus ndings
Servaes (1990), Payne, Tyge, George, 2266/companies/USA, UK, Nigeria
and Finegold (2009), Leech and Leahy
(1991), Vafeas (2000), Koufopoulos,
Zoumbos, Argyropoulou, and Motwani
(2008), Uadiale (2010)
Shivdasani (1993), Beasley (1996), Range from 52 to 1158/rms Negative relationship
Gerety and Lehn (1997)
Conyon and Leech (1994), Conyon Range from 60 to 1602/directors, No consensus ndings
(1998); Main, Bruce, and Buck (1996), companies/UK, USA, Malaysia,
Buck, Bruce, Main, and Udueni (2003), Thailand
Yermack (2004), Gregg, Machin, and
Szymanski (1993), Cordeiro, Veliyath,
and Eramus (2000), Dogan and Smyth
(2002), Jaikrajang (2005), Grafn,
Wade, Porac, and McNamee (2008)
Warner, Ross, and Karen (1988), Gilson Range from 206 to 734/directors, No consensus ndings
(1989), Blackwell, Brickley, and rms/USA, Fortune 500
Weisbach (1994), Yermack (2004),
Agrawal, Jaffe, and Karpoff (1999), Fich
and Shivdasani (2007)
Yermack (2004), Ferris, Jagannathan, Range from 101 to 3190/directors, Positive relationship
and Pritchard (2003), Kaplan and rms/USA, Fortune 500
Reishus (1990), Helland (2006)

affected by nancial status and nancial burden (Chareonwongsak, Table 2

Hypotheses testing in this study.
2015).
The conceptual framework can be illustrated in Fig. 1. Hypothesis Predicted Sign of
The conceptual framework proposed by Chareonwongsak Coefcient
(2015) is used in this study and the hypotheses that are going to be H1: There is a signicant positive relationship +
tested can be summarized in Table 2. between Co-operative Board Members Work
motivation and the Co-operatives performance
H2: There is a signicant positive relationship +
4. Research methodology between Expectancy and Co-operative Board
Members Work motivation
H3: There is a signicant positive relationship +
4.1. Population and sample size between Instrumentality and Co-operative
Board Members Work motivation
In this study, the primary data was collected using question- H4: There is a signicant positive relationship +
naire surveys from the co-operative board members and managers. between Valence and Co-operative Board
Members Work motivation
For secondary data, the nancial and non-nancial indicators of
the co-operatives, was collected from the Co-operative Auditing
Department and Co-operative Promotion Department, and was
used to build the co-operative performance indicators. equation modeling (SEM). SEM is a large sample statistical tech-
The unit of the sample is the co-operative board of directors in nique that requires a sample size of at least 200 (Iacobucci, 2009).
Thailand and the scope of population is 76,469 members of board of Finally, 330 samples were planned to be collected for this study.
directors from 7165 co-operatives (CPD, 2015). The sample size is To cover all types of co-operatives and to reach out to board
determined based on the data analysis method which is structural members who are truly representative of the population, the best

Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-
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Fig. 1. Analytical framework of the research.

Table 3 managers is detailed and explanation might be necessary which

Planned number of respondents/Number of respondents after preparation process.
could be provided via the phone call. Moreover, this method can
Type (1) (2) (3) (4) (5) reduce cost and time, compared to face to face interviews, to reach
Agricultural Co-operatives 172 130 136 134 1.28 out to co-operatives which have spread throughout Thailand. The
Fisheries Co-operatives 4 20 13 12 0.33 response rate from telephone interview was about 95%, with only
Land Settlement Co-operatives 5 20 24 23 0.22 a few refusing to participate or didnt complete the survey. These
Consumer Co-operatives 9 20 19 18 0.50 samples were excluded from the analysis.
Thrift and Credit Co-operatives 75 75 56 53 1.42
However, because of unforeseen circumstances during the sur-
Service Co-operatives 42 42 39 38 1.11
Credit Union Co-operatives 23 23 43 41 0.56 vey process, the researcher was unable to satisfy the minimum
Total 330 330 330 319 planned number of respondents in some co-operative types. For
(1) Planned number of samples proportionate to population. one complete sample unit, data was needed from co-operative
(2) Adjusted number of respondents. board members and co-operative managers. But in many cases,
(3) Actual collected number of respondents. both co-operative board members and managers from the same
(4) Number of samples after data preparation process. co-operatives were not available. Another reason preventing the
(5) Weight [= (1)/(4)].
researcher to access samples was lack of complete contact infor-
mation of co-operative board members and managers. The actual
number of respondents from each co-operative type is shown in
sampling method for this study was found to be proportional strati-
Table 3.
ed, multistage random sampling. The method involved stratifying
all co-operatives by types, calculating each co-operative type pro-
portionately to a population (based on 330 samples) (Table 3), for
the rst stage, drawing randomly a co-operative in each stratum
4.3. Data analysis method
according to the number calculated and, for the second stage, draw-
ing randomly board members from those sampled co-operatives.
The objective of this study is to quantify the extent of the rela-
However, the stratied quota sampling method was used
tion between the latent variables ((1) expectancy, instrumentality,
because some stratums were too small and would not have been
valence and motivation and (2) motivation and performance). Most
representative of the sample. Therefore, sample size of each stra-
statistical methods cant estimate latent variables. Factor analysis
tum was adjusted (Table 3). Then, co-operatives from each stratum
can estimate latent variables, but it is used to group variables or to
were selected to meet their quota number and board members
test the hypothesis that the items are associated with (Wiratchai,
were drawn randomly as a representative of that co-operative.
2009). For that reason, only structural equation modeling (SEM)
could meet the need of this study because SEM allows a set of
4.2. Data collection process relationships between one or more independent variables, either
continuous or discrete, and one or more dependent variables, either
The data collection could have been done in several ways. continuous or discrete, to be examined. Both independent variables
The researcher used the telephone interview method because the and dependent variables can be either measured variables (directly
data needed from co-operative board members and co-operative observed) or latent variables (Ullman & Bentler, 2004).

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Before the analysis, the collected data had to be examined for
any missing data, outliers, nonlinearity and non-normality of data
rst because SEM is the analysis of correlation among variables.
Having missing data, outliers, nonlinearity and non-normality of
data will affect the variance-covariance among variables and affect
the result of SEM analysis (Sweeney, 2009).
The numbers of samples after data preparation process were
319. After nishing the data preparation process, the researcher
calculated the sampling weights, which were used to adjust the
proportion of sample size from each stratum to be similar to a
population. The calculated sampling weights are shown in Table 3.
As the data is not normal and most of it is categorical or ordi-
nal data, the Weighted Least Squares Means and Variance Adjusted
(WLSMV) method in SEM, which does not assume normally dis-
tributed variables and provides the best option for modeling
categorical or ordinal data, was used as the estimation method
(Brown, 2006).
5. Results and discussion
5.1. Descriptive analysis
It was found that the motivation level of the co-operatives board
members was rather high. The mean average of the answers from
different items ranged from 4.84 to 5.85 (the score range from 1 to
7), and the standard deviation was in the range of 0.91 and 1.44. The
mean average of Expectancy was in the range from 4.05 to 4.48 (the
score range from 1 to 5) with the standard deviation ranging from
0.63 to 0.97. The mean average of Instrumentality was in the range
from 4.86 to 5.85 (the score range from 1 to 7) and the standard
deviation was in the range from 0.96 to 1.40.
The mean average of Valence was in the range from 4.07 to 5.74
(the score range from 1 to 7) and the standard deviation was in the
range of 1.071.47. This variable had more dispersion of scores than
the other variables. It appears that co-operative board members do
not value nancial benets, or being honored for being a commit-
tee member as a major incentive. These two items had the lowest
means. The compensation they value the most is feeling of having
done good and gaining satisfaction from having utilized their full
potential (Table 4).
5.2. Conrmatory factor analysis
In the measurement model, there are four latent variables
to be measured: the motivation of co-operative board members
(MOTIVE), expectancy (EXPECT), instrumentality x valence (IV),
and the co-operatives performance (PERFORM).
The multiplicative form between instrumentality and valence is
chosen because in this study, the questions used to measure Instru-
mentality and the questions used to measure Valence correspond
with each other item by item. This multiplicative form is more con-
sistent with the theory. This model specication is consistent with
the study of Campbell and Pritchard (1976).
Finally, it was found that MOTIV3, MOTIV4 and MOTIV5
are appropriate indicators for measuring motivation (MOTIVE),
EXPECT1 and EXPECT2 for measuring EXPECT, IV2, IV7, and IV8 for
measuring Instrumentality and Valence (IV), and ROE52, COOPLEVE
and NOLOSS for measuring co-operative performance (PERFORM).
The nal adjusted model had Goodness-of-t indices that all
passed the criteria (see Table 5). The models degree of freedom
was 38. 2/degree of freedom (df) ratio was equal to 1.43. Root-
mean-square error of approximation (RMSEA) was 0.036. CFI was
equal to 0.986 and TuckerLewis index (TLI) was equal to 0.980.
For the test of convergent validity, standardized factor loadings,
composite reliabilities (CR), and average variance Extracted (AVE)
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5
were considered. The CR had to exceed the level of 0.6, while the
AVE had to exceed the level of 0.5 (Table 6). From Table 7, it was
found that all standardized factor loadings exceed the threshold
value of 0.4; all CRs exceeded the threshold value of 0.6, and all AVEs
exceeded the threshold value of 0.5, except the AVE of PERFORM
which was equal to 0.489, a little lower than the threshold level.
In an interesting, rst-time study, Ping (2009) argued that
AVE slightly below 0.50 might be acceptable and it is considered
acceptable if it does not produce discriminant validity problems.
According to Ping (2009), AVE of 0.489 for PERFORM can be
considered acceptable and can be summarized as all latent vari-
ables passing the test of convergent validity because this study is
one of the rst studies to be conducted on board motivation and
performance of Thailands co-operatives and discriminant validity
was not seen to be a problem (as can be seen in Table 7).
For the test of discriminant validity, the AVE values of any two
constructs have to be greater than its squared correlation. It can be
seen from Table 7 that no matter which pairs of constructs are con-
sidered, both AVE values are greater than its squared correlation.
In conclusion, all the latent variables pass the discriminant validity
test. In conclusion, the measurement of all the latent variables is
valid and reliable.
5.3. Structural model
After the appropriate measurement model of latent variables
was obtained from conducting CFA, a structural model which
presents the causal relationships among those latent variables, sup-
plemented with other observed variables, was then constructed
using the SEM. Hypothesized causal relationships between latent
variables and other observed variables were included. All causal
relationships needed to be statistically signicant and the sign of
their coefcients had to be consistent with the theory or hypothesis.
A number of variables that were expected to determine each ele-
ment of motivation (i.e. Expectancy, Instrumentality, and Valence)
were tried in the model according to the predetermined hypothe-
ses. Furthermore, control variables were also included to reduce the
estimation bias that would emerge from the omission of variables.
Control variables of the board motivation that were tested
are sex, age and education level of co-operative board members,
homogeneity/heterogeneity of goods and services offered (types
of co-operatives is used as a proxy), geographic dispersion (loca-
tion: inside or outside municipality is used as a proxy) and size of
co-operative (number of members is used as a proxy). The control
variables of the co-operative performance which were tested are
government support, co-operative league support, technology use,
market condition, co-operative member characteristics, operating
problems, business plan, law and regulation, member participation,
level of communication in co-operative and co-operative type.
The nal structural model that satised all the criteria of model
estimation is illustrated by Fig. 2.
There are ve explanatory variables of Expectancy, which are
BFUNC6 (a decision maker for strategy, policy, goals), BCOMPO4
(co-operative board members understand the context of the co-
operative because they are also members of the co-operative),
BAUTHO1 (co-operative board rarely participates in co-operative
activities), BMEET2 (meeting agenda is only concerned with small
issues and is just for informational purposes), LNSEMINAR (aver-
age number of seminars on co-operative development attended
in a year in terms of log transformations), and two explanatory
variables of instrumentality and valence are included, which are
LNMEETAL1Y (meeting allowance in a year in terms of log trans-
formations), and COMRULE4 (the compensation-setting process
is fair and reliable). Three control variables (other explanatory
variables besides motivation) of co-operative performance are
included which are DUALITY (How does your co-operative appoint
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Table 4
Descriptive Statistics of the motivation variable and its components.

Measurement items Question N Mean S.D.

Motivation (15 scale) Your current work as a Co-operative Board member

MOTIV1 1) You wish to sacrice more time and ability in working for the 320 5.76 0.98
co-operative
MOTIV2 2) You wish to develop yourself to increase your quality of work for 320 5.85 0.91
the co-operative
MOTIV4 3) You wish to take more responsibility in the co-operatives work 319 5.75 1.02
MOTIV4 4) You feel that other Board members respect and value having you 317 5.56 0.93
work as a Board member
MOTIV5 5) You feel that being a member of the Co-operative Board is 316 5.71 0.94
important to you
MOTIV6 6) You feel that your decision-making has a signicant impact on 317 5.30 1.34
improving the standard of living for co-operative members
MOTIV7 7) You feel that you have sacriced more effort than other Board 316 4.84 1.44
members

Expectancy (17 scale)

EXPECT1 1) In your current context, how possible is it for your co-operative to 317 4.05 0.97
improve or to reach its goal due to your hard work?
EXPECT2 2) It is a general rule that If one makes an effort, one will meet with 316 4.48 0.63
success. In your experience how applicable is this general principle in
working in your co-operative?

Instrumentality (17 scale) Do you agree that if you work hard for the co-operative, you will have
a chance to get these incentives?
INSTRU1 1) Having increased nancial benet (Meeting Allowance, Bonus, 322 4.86 1.40
Welfare)
INSTRU2 2) Being honored and awarded by the co-operative or the Public Sector 322 5.13 1.34
INSTRU3 3) Having more work personally assigned 320 5.42 1.17
INSTRU4 4) Taking on more challenging work tasks 316 5.45 1.04
INSTRU5 5) Gaining admiration and respect and being loved by colleagues and 321 5.52 1.06
people in the community
INSTRU6 6) Feeling good and satised through doing good for society and 321 5.85 0.96
utilizing all ones potential
INSTRU7 7) Feelings of accomplishment 320 5.61 0.97
INSTRU8 8) Being well known in the community and society 322 5.62 0.97
INSTRU9 9) Being healthy 319 5.24 1.17

Valence (17 scale) How important are these rewards to you?

VALENCE1 1) Having increased nancial benet (Meeting Allowance, Bonus, 317 4.07 1.38
Welfare)
VALENCE2 2) Being honored and awarded by the co-operative or the public sector 317 4.52 1.47
VALENCE3 3) Having more work assigned to you 319 5.25 1.30
VALENCE4 4) Taking on more challenging work tasks 316 5.34 1.13
VALENCE5 5) Gaining admiration and respect and being loved by colleagues and 318 5.22 1.23
people in the community
VALENCE6 6) Feeling good and satised by doing good for society and utilizing all 319 5.74 1.07
ones potentiaL
VALENCE7 7) Feelings of accomplishment 317 5.42 1.20
VALENCE8 8) Being well-known in the community and society 317 5.46 1.17
VALENCE9 9) Being healthy 315 5.40 1.24

Table 5
Goodness-of-t indices of the adjusted measurement model.

Index Acceptable Threshold Levels Adjusted model Result

1. 2/df ratio 2 or 3 1.43 Passed

(Schreiber, Stage, King, Nora, &
Barlow, 2006)
2. Comparative t index (CFI) 0.90 0.986 Passed
(Hu & Bentler, 1999)
3. TuckerLewis index (TLI) or 0.90 0.980 Passed
Non-normed t index (NNFI) (Hu & Bentler, 1999)
4. Root-mean-square error of 0.06 0.036 Passed
approximation (RMSEA) (Hu & Bentler, 1999)

managers?), FINTYPE (nancial-type co-operative), and GOVSUP3
(price intervention from the government).
For control variables of board motivation, no variable were
included in the model because some cause model mist (sex, age,
homogeneity/heterogeneity of goods and services offered and geo-
graphic dispersion) whereas some might t the model but they
are not statistically signicant (education of co-operative board
members and size of co-operative).
All the t indices indicate the model ts satisfactorily and the
data is presented in Table 8.
Table 9 presents the estimated standardized factor loadings of
all causal relationships in the nal model. All factor loadings are
statistically signicant at a condence level of more than 95%.
For the hypotheses testing, all 4 hypotheses are accepted (see
Table 9).

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operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
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Table 6
Results from CFA of the adjusted measurement model.

K. Chareonwongsak / Journal of Co-operative Organization and Management xxx (2017) xxxxxx

Model construct Measurement Description Standardized Standard error Critical Ratio Squared multiple Composite Average variance
item factor loadings (t-statistic) correlations Reliabilities* (CR) Extracted* (AVE)
(r-square)

MOTIVE Motivation 0.820 0.604

MOTIV3 You wish to take more 0.850 0.023 37.587 0.723

ARTICLE IN PRESS
responsibility in the co-operatives
work
MOTIV4 You feel that other Board members 0.698 0.034 20.732 0.488
respect and value having you work
as a Board member
MOTIV5 You feel that being a member of 0.777 0.029 27.025 0.604
the co-operative Board is
important to you

EXPECT Expectancy 0.678 0.518

EXPECT1 How possible is it for your coop to 0.810 0.142 5.717 0.661
improve or to reach its goal due to
your hard work?
EXPECT2 If one makes an effort, one will 0.616 0.109 5.660 0.381
meet with success. In your
experience how applicable is this
general principle in working in
your coop?

IV Instrumentality x Valence 0.802 0.590

IV2 Being honored and awarded by the 0.478 0.052 9.193 0.228
co-operative or the Public Sector
IV7 Feelings of accomplishment 0.866 0.031 28.177 0.750
IV8 Being well known in the 0.890 0.030 30.084 0.791
community & society

PERFORM Performance 0.734 0.489

ROE52 Return on Equity 0.609 0.055 11.022 0.371
NOLOSS No loss 0.879 0.077 11.405 0.773
COOPLEVE CPDs Ranking of co-operatives 0.570 0.073 7.825 0.325

7
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6. Discussion Table 7
AVE compared to squared correlation between the constructs.

From the results, there are two points that should be discussed. EXPECT IV MOTIVE PERFORM

EXPECT 0.518
IV 0.069 0.590
6.1. Relationship between boards work motivation and the
MOTIVE 0.180 0.536 0.604
co-operatives performance PERFORM 0.000 0.003 0.026 0.489

Note: Values along the diagonal indicate AVE.

The study result supports hypothesis No. 1 (H1), i.e. the work
motivation (MOTIVE) of the co-operative boards has a signicant
positive relationship with the performance of the co-operative they
serve, which is measured by return on equity (ROE52), having no
loss in the last 2 accounting periods (NOLOSS) and CPDs clas-
sication of co-operatives level of internal management quality
(COOPLEVE). Expectancy (EXPECT) and instrumentality multiplied
by valence (IV) of co-operative boards was found to have a positive
relationship with their work motivation, which is consistent with
hypotheses No. 2, 3 and 4 (H2, H3 and H4).
The importance of the above result is that it provides knowledge
about the direct relationship between the boards work motivation
and the co-operatives performance, which has never been found in
past related research. Some research work in the past addressed the
motivation to become a board member or to work as a volunteer in a
non-prot organization, but the studies did not investigate the rela-
tionship between such motivation and organizational performance.
Although there were some studies emphasizing the relationship
between extrinsic motivations, for example, nancial compensa-
tion, positions, etc. and the performance of the rm, they neglected
the difference between the motivation of board members and the
process of motivations of the board members.
Even though there was some research in the past that studied
the relationship between board motivation and board effective-

Fig. 2. The nal structural model.

Table 8
Goodness-of-t indices of the structural model.

Index Acceptable Threshold Adjusted model Result

Levels

1. 2/df ratio 2 or 3 1.69 Passed

(Schreiber et al., 2006)
2. Comparative t index (CFI) 0.90 0.914 Passed
(Hu & Bentler, 1999)
3. TuckerLewis index (TLI) or Non-normed t index (NNFI) 0.90 0.900 Passed
(Hu & Bentler, 1999)
4. Root-mean-square error of approximation (RMSEA) 0.06 0.046 Passed
(Hu & Bentler, 1999)

Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-
operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
 JCOM-56; No. of Pages 13
G Model
operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-

Table 9
Results of the structural model of co-operatives board motivation.

Variables Standardized Standard error Critical Ratio P value Hypothesis

factor loadings (t-statistic) Supported

PERFORM (Performance) MOTIVE (Motivation) 0.144 0.064 2.246 0.025 H1 is accepted

MOTIVE (Motivation) EXPECT (Expectancy) 0.394 0.090 4.373 0.000 H2 is accepted
MOTIVE (Motivation) IV (Instrumentality x Valence) 0.748 0.111 6.751 0.000 H3 is acceptedH4 is accepted
MOTIV3 (You wish to take more MOTIVE (Motivation) 0.854
responsibility in the co-operatives
work)
MOTIV4 (You feel that other Board MOTIVE (Motivation) 0.669 0.046 14.554 0.000

K. Chareonwongsak / Journal of Co-operative Organization and Management xxx (2017) xxxxxx

members respect and value having
you work as a Board member)
MOTIV5 (You feel that being a member MOTIVE (Motivation) 0.752 0.041 18.458 0.000
of the Co-operative Board is
important to you)

ARTICLE IN PRESS
EXPECT1 (How possible is it for your EXPECT (Expectancy) 0.802
co-operative to improve or to reach
its goal due to your hard work?)
EXPECT2 (If one makes an effort, one EXPECT (Expectancy) 0.616 0.118 5.217 0.000
will meet with success. In your
experience how applicable is this
general principle in working in your
co-operative?)
IV2 (Being honored and awarded by IV (Instrumentality x Valence) 0.434
the co-operative or the public sector)
IV7 (Feelings of accomplishment) IV (Instrumentality x Valence) 0.774 0.128 6.051 0.000
IV8 (Being well known in the IV (Instrumentality x Valence) 0.841 0.134 6.280 0.000
community and society)
EXPECT (Expectancy) BFUNC6 (A decision maker for strategy, 0.231 0.081 2.836 0.005 H6 is accepted
policy, goals)
EXPECT (Expectancy) BCOMPO4 (Co-operative Board 0.214 0.092 2.335 0.020 H7 is accepted
members understand the context of
the co-operative)
EXPECT (Expectancy) BAUTHO1 (Co-operative Board rarely 0.258 0.085 3.038 0.002 H6 is accepted
participates in co-operative activities)
EXPECT (Expectancy) BMEET2 (Agenda concerns small issues 0.228 0.084 2.725 0.006 H11 is accepted
and is just to inform)
EXPECT (Expectancy) LNSEMINAR (average number of 0.260 0.103 2.530 0.011 H13 is accepted
seminars on co-operative development
attended in a year in term of
log-transformations)
IV (Instrumentality x Valence) COMRULE4 (The compensation-setting 0.276 0.082 3.367 0.001 H15 is accepted
process is fair and reliable)
IV (Instrumentality x Valence) LNMEETAL1Y (Meeting allowance in a 0.183 0.073 2.505 0.012 H16 is accepted
year in form of log-transformation)
ROE52 (Return on equity) PERFORM (Performance) 0.629
NOLOSS (No loss) PERFORM (Performance) 0.862 0.135 6.373 0.000
COOPLEVE (CPDs Ranking of PERFORM (Performance) 0.552 0.102 5.413 0.000
co-operatives)
PERFORM (Performance) DUALITY (How does your co-operative 0.447 0.063 7.078 0.000
appoint managers?)
PERFORM (Performance) FINTYPE (Financial-type co-operative) 0.347 0.114 3.047 0.002
PERFORM (Performance) GOVSUP3 (Price intervention) 0.447 0.063 7.078 0.000

9
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ness (for example, Gross (1958), Alby (1979) and Taylor, Richard,
and Thomas (1991), etc.), research in this area still had some
problems. The results of this research lack reliability because the
research method had several weaknesses, for example, the num-
ber of respondents was relatively small or there was a reliability
problem with the data, etc. Another problem is the lack of criteria
for dening and measuring board effectiveness (Herman, Renz, &
Heimovics, 1997, p.374) due to the lack of a clear understanding
about the mechanism that connects board effectiveness and rm
performance (Herman & Renz, 2000).
This research is an effort to study another dimension of the
relationship between board motivation and the performance of
organizations by using Vrooms expectancy theory, which is a the-
ory that has been recognized and widely used in research related to
the study of motivation. This research has attempted to cover the
weaknesses of past research on the motivations of board members
in nonprot organizations by using quantitative research methods
and utilizing a relatively large sample size and data from several
sources.
6.2. Types of motivation that inuence the co-operatives
performance
The descriptive statistics of variables which are a manifestation
of instrumentality and valence (see Table 5) reect the fact that the
people who took over the positions as board members had diverse
motivations. By observing the variables which have the highest
average scores, i.e. INSTRU6 and VALENCE6 (Feeling good and sat-
ised by doing good for society and utilizing all of ones potential),
it is shown that the co-operative board members gave the most
importance to doing activities for the benet of others. This is con-
sistent with research in the past, which stated that altruism was an
important motivation for people to work as a member of the co-
operative and other non-prot organizations (Ward & McKillop,
2011; Guerrero & Seguin, 2008; Widmer, 1985), while nancial
incentives (INSTRU1 and VALENCE1), having increased nancial
benet (Meeting Allowance, Bonus, Welfare) had the lowest aver-
age.
However, the instrumentality and valence (IV) variables that
are signicantly correlated with effective motivations, which have
an inuence on the co-operatives performance, are not those of
altruism. These effective motivations are not those of nancial
motivation, but they are instead of receiving honors and awards
from the co-operative or government agencies (IV2), feelings of
accomplishment (IV7) and being well-known in the community
and society (IV8).
The importance of this result is that it challenges beliefs about
the good motivation of the co-operatives board members. Research
in the past (e.g. Gross, 1958) has indicated that good motivations
are those associated with altruism and one who wishes to vol-
unteer which will make non-prot organizations or co-operatives
successful and developed, while bad motivations are associated
with seeking ones own interest. However, this study found that the
motivation of doing well for the benet of society and that nan-
cial motivation do not have a signicant relationship with effective
work motivation of the co-operative board members.
Why the motivation to do activities for the benet of society
does not have a signicant relationship with effective work moti-
vation (which means it is not related with the performance) is
probably connected with the lack of clarity of the indicators that
reect the interests of society. A co-operative is an organization
that has the important principle to act for the benet of members
and society, causing the operation of a co-operative to be complex
and have a variety of purposes, with no conclusion of how to cor-
rectly measure its performance (Enjolras, 2004; Spear et al., 2004).
Co-operative board members with incentives consistent with the
Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-
operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
principles of the co-operative could have a different understanding
regarding indicators about the performance of the co-operative.
Furthermore, the indicators used for the analysis in this model
are the nancial ratios of the co-operatives, which might not be
appropriate indicators to measure the social benets.
The reason why nancial incentives do not have a relationship
with the co-operative boards effective work motivation may be
explained by the opinion of experts, who argued that the nancial
compensation that co-operatives provide to their board members
is not much and people who become board members are aware of
this issue already. In addition, it is possible that the respondents to
the questionnaire survey did not truly answer this issue in order to
maintain their own image.
The reason why the three IV variables above have a positive rela-
tionship with effective work motivation of board members (which
means that they affect the performance of co-operatives indirectly)
can be explained as follows. These motivations themselves require
an obvious output and outcome resulting from the board per-
formance because they are directly connected to the output and
outcome of the co-operatives performance that can be measured.
For example, a director with the motivation of Being honored and
awarded by the co-operative or the public sector (IV2) will try to
push the performance of the co-operative to meet the criteria to
be awarded. This is consistent with the criteria of the government
agencies, which often use the nancial ratios to rank co-operatives.
Another example is that if the directors have motivation to be well-
known in the community and society (IV8), they will try to push
their performance to the point that their co-operative will have no
loss (NOLOSS) or to be classied as having good quality of internal
management (COOPLEVE), so that the Co-operative will gain a good
reputation.
However, characteristics of the three kinds of motivation (three
components of IV) can be interpreted in two ways. The rst is that
these motivations come from the basic need of human nature to be
respected and to feel proud. The second is that these motivations
are the desire to grow in their careers. If the second interpretation
is chosen, this will conform to past literature, which indicated that
board members of the rms seek reputational benet or oppor-
tunities in order to become a director in other organizations. In
the case of co-operatives, board members must be elected from co-
operative members, so there is less opportunity for a board member
to be a board member in other co-operatives. However, according
to the opinions of some experts, co-operative board members may
have the motivation to build their reputation in order to be elected
as board members of co-operatives at higher levels, such as the
co-operative federation, co-operative league, etc. In other words,
being a board member in a co-operative is used as a ladder to step
up to a higher political level.
Furthermore, the analysis result also shows that instrumentality
multiplied by valence has more inuence on work motivation than
expectancy (more value of standardized loading). This result can
be explained as follows. Each co-operative board member may per-
ceive that their effort does not have much effect on the performance
of a co-operative, as a co-operative is an organization with multi-
ple objectives, both business and social objectives. Moreover, there
are many factors that affect the performance of a co-operative.
This includes member participation, policies and promotions from
the government, quality of the management team and employees,
and the competitive environment of the market. Many factors are
beyond the control of the board. However, what board members
expect from working as a board member is closely related to the
co-operatives performance that can be measured. For example, if
the co-operative is protable and can pay a lot of dividends to mem-
bers, it will allow board members to be honored by the members
and feel successful.
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7. Conclusions
In this study, it was found that the work motivation of the co-
operative boards has a signicant positive relationship with the
performance of the co-operatives they serve. Expectancy, instru-
mentality and valence of co-operative boards have a positive
relationship with their work motivation. The importance of these
results is that it provides knowledge about the direct relationship
between the boards work motivation and co-operatives perfor-
mance, which has never been found in past related research.
The instrumentality and valence variables that are signicantly
correlated with effective motivations, which have inuence on the
co-operative performance, are not those of altruism. Nor are these
effective motivations those of nancial motivation, but are instead
associated with being well-known in the community and society,
receiving honors and awards from the co-operative or government
agencies, and feelings of accomplishment.
The variable which has a signicant positive relationship with
expectancy are board authority and function measured by a deci-
sion maker for strategy, policy, goals and co-operative board which
rarely participates in co-operative activities; board composition
measured by the degree to which co-operative board members
understand the context of the co-operative because they are also
members of the co-operative; board meeting quality measured by
the degree to which meeting agenda concerns small issues and is
just to inform; and knowledge of directors measured by average
number of seminars on co-operative development attended in a
year in term of log-transformations.
The variables which have a positive relationship with the instru-
mentality and valence of the co-operative board includes the
opinion of the board members on the fairness and reliability of
the compensation-setting process (for meeting allowances, other
allowances, bonuses) and meeting allowances that board members
receive in 1 year in terms of log transformation.
Results from the model show that other factors which have a
signicant relationship with the co-operative performance are the
way the co-operative appoints their managers, nancial-type co-
operative, and government price intervention.
8. Implications for practice
The above ndings lead to practical proposals to enhance moti-
vation for co-operative board members and to develop co-operative
performance as follows.
8.1. Developing co-operative board evaluation and reward
systems
From this study, co-operative board members who have moti-
vation that positively affects co-operatives performance are those
who value the feelings of accomplishment, the reputation and
recognition. Therefore, to create appropriate motivation of the
co-operative board members is to provide proper incentives or
rewards for the co-operative board members.
The co-operative movement should set up honor certicates or
rewards to give to co-operative board members in a hierarchical
manner from the co-operative level to the national level. There
should be a design of indicators and mechanisms to evaluate the
performance of co-operative board members which are clear, trans-
parent and credible, in order to be used as information in providing
awards or honoring certicates to co-operative board members and
boards of co-operatives at all levels across the country.
Please cite this article in press as: Chareonwongsak, K. Enhancing board motivation for competitive performance of Thailands co-
operatives. Journal of Co-operative Organization and Management (2017), http://dx.doi.org/10.1016/j.jcom.2017.01.001
11
8.2. Board succession planning
Knowledge and skills cause a higher expectancy of co-operative
board members, so one way to help improve the performance of
co-operatives is obtaining co-operative board members who have
knowledge and ability.
A succession plan, to prepare the co-operative members to have
knowledge about the co-operative system, understand the role of
members and board members and be knowledgeable about the
business and management system, will make the co-operative have
a pool of quality members who will be elected to serve as co-
operative board members in the future.
8.3. New board member orientation
Seminar attendance is positively correlated with expectancy.
This implies that co-operative board members should develop their
specic knowledge and the skills which are necessary for working
as co-operative board members.
Co-operatives should provide suggestions for the election of
new co-operative board members in advance of the time, so that
the new board members will have an opportunity to obtain a set of
orientations which will equip them to have sufcient knowledge
and skills necessary to serve the co-operative.
8.4. Promoting good co-operative governance
Board authority and functions have a relationship with board
member expectancy. Therefore, the co-operatives should focus on
the development of good governance in co-operative organizations,
also called good co-operative governance, especially the develop-
ment of the co-operative board members to have better knowledge
and understanding about the principles and guidelines of good
co-operative governance, and the roles and responsibilities of the
co-operative board members.
9. Limitation and future research
Due to the scope and resource constraints of this study, this
study has some limitations that deserve to be claried.
1) This study cannot analyze the effect of factors that have or have
not been applicable to co-operatives over the past due to some
conditions. Analyzing the effect of these factors is worth pur-
suing because it could lead to solutions for a transformation in
co-operatives, for example, changes in coop principles may lead
to the emergence of a new-generation of co-operatives.
2) To solve the problem of bias that may occur in the data about
board motivation which was collected using the self-assessment
method in this study, this data should be collected from different
methods for e.g. collected from other sources such as from co-
operative members.
3) Samples used in this research might not be the best repre-
sentative of a population due to limited data on nancial and
non-nancial data of the co-operative as well as contacts of all
co-operative board members.
4) The measurement of co-operative performance is still a chal-
lenge, particularly the measurement of performance in social or
community terms. Development of co-operative performance
measurements will lead to a more accurate performance assess-
ment, and the analysis of such data may lead to different
conclusions from this study.
5) In this study, the latent variable PERFORM, which is measured
by three manifest variables ROE52, NOLOSS and COOPLEVE,
has an AVE value of 0.489, which is slightly less than the thresh-
old value of 0.5. This might have occurred because of a few
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variables, probably ROE52 which is a nancial indicator being
used to measure co-operative performance, and which has a
high measurement error variance. The latent variable PER-
FORM could have a higher reliability and validity, if other
alternative indicators measuring co-operative performance are
included in the model in future research.
6) The data about nancial and non-nancial indicators used in this
research to measure co-operatives performance is from only
one years observation. Using time series data might provide
different results.
7) Different types of co-operative may have different behaviors
in detail. As this study analyzes co-operatives behaviors as a
whole, it might have lost some details of behaviors of each type
of co-operative. In the future, further study on each type of co-
operative is needed.
Conict of interest
It is to specically state that no competing interests are at stake
and there is no conict of interest with other people or organiza-
tions that could inappropriately inuence or bias the content of the
paper.
Acknowledgement
The author of this paper has no a nancial or personal relation-
ship with other people or organizations that could inappropriately
inuence or bias the content of the paper.
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Kriengsak Chareonwongsak is a well-known academic who has been appointed to
a wide variety of advisory and chair positions in leading public and private organi-
zations worldwide. For example, he has been involved at Oxford University, UK, as
a Visiting Fellow at the Oxford Internet Institute and a Fellow of the Skoll Centre for
Social Entrepreneurship at Oxford Universitys Said Business School. His writings
center on economic, business management, strategy, human resource, and national
development.