FACTORS INFLUENCING ORGANIZATIONAL STRUCTURES AND INSTITUTIONAL CHOICE

Within the context of this document, the term organization refers to all forms of co-operation and union based on a central disposition of resources¹. As members of an organization, individuals hand over to it certain decision-making powers. In return, they receive benefits in the form of support or services. Resources received from members are, in turn, used to fulfil the tasks of the organization.

Organizations vary according to the relative influence of a number of factors related to both the objective of the organization and the instruments and strategies chosen to achieve them.

These factors, which determine the structure, aims and activities of the organization, can be grouped into:

1. External factors - those from the enabling environment which are not under the control of the organization but which affect its structure and development. They include:

Economic factors
Socio-economic factors
Political-administrative factors

2. Internal factors - organizational characteristics, including:

Purpose of the organization
Organizational instruments

3. Individual choice factors - members joint or individual decisions regarding expected costs and benefits.

Older studies, especially in the 1970's, focused on the influence of internal factors², while more recent work has emphasised the importance of all three sets of factors.

External factors/enabling environment

Economic factors

These define the economic situation in which production and processing take place. For forest owners these mainly concern the market for wood.

Table 1: Economic factors

Factor	Description / Example
Structure of the wood market / industry	Number, size and distribution of local institutions, enterprises or groupings and their share of production and processing.
Wood use	Uses of harvested timber (firewood, industrial wood, stem wood etc.). A high percentage of firewood use by the forest owner lowers the pressure for marketing and consequently the need for co-operation.
Wood demand	Relationship between wood production and wood use, including import and export of raw timber.
Wood supply	Number and distribution of timber sellers by size.
Forest / land market	Ownership size changes where purchase/sale of forest land is possible.
Role of certification	Wood marketing may be restricted by certification rules. A certificate may be granted only for larger units.
Level of wages	High levels of wages add pressure on forest owners to improve management of the forest either by themselves or through organizations.

Socio-economic factors

These define the socio-economic context in which the organization operates.

Table 2: Socio-economic factors

Factor	Description / Example
Forest ownership structure	The relative proportion and distribution of ownership classes (state, communal, private) affect the potential for co-operation between forest owners.
Size of forest holding	With an increase in size of holding the importance of the forest for the owner also increases. Need for and advantages of co-operative activities are also affected by the size of holding.
Occupation of owner(s)	Whether the forest owner is tied full time to the rural production system, part time or not at all (non-farmer will also affect the need for and activities of the organization (e.g. farmers often get basic training in forestry and are in general familiar with co-operative organizations). The amount of time available for forest management will also vary.
Residency of owner	Residency refers to whether a landowner lives on or near the land or not. Absentee landowners often lack information and contacts about local landowner organizations.
Involvement of groups / organizations in political processes and decision making	Interest representation is one of the basic tasks of many organizations. The involvement in political processes (formal or informal) can increase the attractiveness of belonging to an organization.

Political-administrative factors

This group of factors refers to the political and administrative arrangements, which define the legal boundaries and organizational options

Table 3: Political-administrative factors

Factor	Description / Example
Role and influence of forest authority / forest service	Forest administrations play a crucial role in determining forest owner organization. They can act either as support bodies (provision of subsidies, extension services) or supervisory bodies or both.
Legal framework	Land tenure legislation builds the basis for the organization of landowners. Unclear landowner rights and responsibilities hinder co-operation efforts. The existence of legislation concerning possible organization forms or types either in forest acts or in other general legislation (for example Civil Code) can determine organizational options. The legal framework also determines the two major approaches to the organization of private forest owners: 1. Self organization, where the proprietors have the right to form organizations voluntarily by themselves. The type and activities of any organization will also be their choice though options may be reduced by regulations. 2. External authority organization, where the organizational option(s) and structures are prescribed by the government and membership is obligatory.
Support programs	Governments often implement programmes to encourage formation or improve the functioning of forest owner organizations. The programmes may include financial incentives, either directly (subsidy) or indirectly (tax reduction for organization activities), information and training.

Internal Factors

Internal factors include the purpose of the organization, organizational structures, instruments and bodies

Purpose of the organization

Table 4: Description of internal factors - Purpose of organization

Factor	Description / Example
1 Interest representation	The individual landowners interests are brought together and introduced as a group interest through the political decision making process. Organized interest representation is therefore to be found on the same levels as general political decision making (local, regional, national).
2 Information / Education	This purpose is directed towards the individual members of the organization. Information, which is not available, or is difficult to find, is collected, adapted and distributed by the organization. Training courses and further education events may be directly organized by the co-operative body, or information on what is available distributed.
3. Economics	Group activities to take advantage of economies of scale are a major purpose of forest owner organizations. Economies of scale can be found in input management, supply, production, marketing and cost management.
a. supply	Bulk purchase by an organization on behalf of members can mean lower prices for equipment and materials.
b. production/management	Another economic purpose for organizations is co-operation in wood production and forest management. Joint management activities can be more efficient and simpler for the individual member. With small ownership units, management activities which cross property boundaries are also often necessary. For forest owners not living on the property, joint management with most activities being carried out by others often represents the only management option.
c. marketing	Due to small amount of timber produced per property, joint marketing of wood products is often the only possibility to access larger wood markets. Joint marketing, in general, gives a stronger market position, with consequent higher revenues.
4. Combinations of 1 - 3	Organization purposes may also consist of combinations of interest representation, information tasks or economic objectives. In larger organizations, functions may then be carried out through specialized units.

Organizational structure and instruments

The more appropriate an organizational structure to the local situation and services it wishes to offer, the more efficient and effective it will be.

Table 5: Description of internal factors - Organizational instruments

Factor	Description / Example
1. Constitution a. formal/informal	The constitution of the organization describes the structure of the committees, the roles and the rules governing decision making. These can be informal or formal:
informal organization	Informal organizations tend not to have any formal structure and work through informal agreements between individual partners. Specific duties may be written into contracts or guidelines
formal organization	Resources in a formal organization may be controlled by individuals and/or corporate bodies with recognized rights and duties. Personal partnerships and corporations, associations and limited companies are some examples of such formal organizations.
b. legal form	The legal form of an organization and its rights and obligations depend on the legislative constitution of the individual state. In general though, the two forms of a public body and a private body can be differentiated.
public body	The legal form of a public body is suitable in cases where organizations also have to fulfil specific state tasks, e.g. regulatory functions or administration, distribution and control of subsidies. The organization is often strictly regulated and membership is often compulsory. Public bodies may be formed as: Public corporation, Community forests organization or Chamber (of agriculture or forestry)
private body	The most suitable legal form of organization for private forest owners is usually a private body. The conditions for forming such organizations, their tasks and implications for state supervision are usually simpler than for public bodies, and tend to be voluntary. Private bodies may be formed as Association, Society, Corporation, Co-operative or Community forests.
c. membership type	Membership type refers to the level of free choice by forest owners for membership in an organization. Membership may be voluntary, compulsory (defined as regulated through legislation), conditional (prescribed limits, exclusions or minimum conditions for membership) or unconditional (no limits on who can be a member)
d. member group	The range of potential members gives an indication of the general purpose of the organization. Membership in an organization may be limited to specific member groups, which can be classified into: individual forest owners, private organizations (firms, forest owner organizations), public bodies / authorities (communal forest owners, state forest services)
2. Centralization / Decentralization	The tasks of an organization depend on the organization’s purposes. The level of centralization affects the allocation of tasks and responsibilities of individual positions including the decision making process. A decentralized structure may have sub-units according to functions or geographical area.
3. Structure type	The responsibilities of the organization towards its members as well as the level of member influence indicate the potential effect of the organization on individual forest management decisions. Three levels of member influence may be defined: Corporate Forest / Community forest, where the individual ownership of a specific area is lost and members only own shares. A joint management covers the entire membership area. Production associations, where the individual ownership of an area remains, but forest management is conducted across the borders of individual properties (though larger areas may still be managed individually). Interest associations, where the joint activities are limited to marketing and/or supply purchase and member areas are still managed individually.
4. Technological approach	Services and information offered (newsletters, leaflets, brochures, meetings etc.) will depend on the overall purpose of the organization. Higher levels of services and information may increase the attractiveness of membership. Member capacity building activities like information, training or further education are an important service function of an organization.
5. Participation and delegation	The involvement of members in planning, decision making, implementation of decisions and control of activities is a measure of the level of member influence on the organization performance

Individual choice factors

The following list of criteria makes the assumption that institutional choice is based on a comparison of expected benefits against expected costs of membership.

Table 6: Factors affecting institutional choice by forest owners

Factors

Description / Example

Factors affecting evaluation of expected benefits

The number of members/users, the area covered by the organization, number, size and location of resource units, availability of information, existing and proposed rules of membership, economic pressure

Factors affecting evaluation of expected costs of membership

- issues regarding becoming a member

- issues regarding continuing costs of membership

Number of decision makers, heterogeneity of interests, skills and assets of leaders, current and proposed regulations, options for altering rules.

- size and structure of resources available, technology used, marketing arrangements, current and proposed regulations

- distance to resources, involvement in other co-operative activities, availability of information on opportunities elsewhere