February 19, 2008
The Cheesemaker Study
Posted by Gordon Smith

A few years ago, while I was still at the University of Wisconsin, I started investigating the business of cheesemaking. Wisconsin has long been the leading producer of cheese in the United States, but as California has increased production, Wisconsin cheesemakers have turned increasingly to the production of specialty cheeses. I noticed that some of these specialty cheesemakers were organized as corporations or limited liability companies, while others were organized as cooperatives.

At roughly the same time that I was looking into cheesemaking, I had a couple of students who were interested in the law governing cooperatives. I did a bit of reading and started asking around in the local legal community. We never discuss cooperatives in Business Organizations, and very few legal scholars write about cooperatives (Henry Hansmann being the notable exception). I became fascinated by this lost corner of our law, which obviously still has some traction in the U.S.

So last year I recruited Brayden King and Marc Schneiberg, two organizational sociologists, as co-authors. We applied for and received a grant from the University of Wisconsin Center for Cooperatives. And I took the occasion of the Wisconsin Contracts Conference to visit some cheesemakers in southwest Wisconsin. This is my first time using interviews as a research methodology, and it's a lot more fun than sitting in my office hatching theories of fiduciary duty. Not that there's anything wrong with that.

The only problem is the weather. A storm on Sunday -- rain followed by snow -- left the roads icy, and most of these cheesemakers reside in very small towns ... or in no town at all. They are accessible only by country roads, which are beautiful in the summer, but treacherous this week. Yesterday, I ended up in a snowbank on an unmarked curve. Fortunately, a cheesemaker named Ole (I am not making this up) had a truck and a chain and was able to pull me out.

My discussions with the cheesemakers are fascinating. I am constantly reminded of Stewart Macaulay's famous study of non-contractual relations because the smaller cheesemakers simply can't be bothered with formal contracts. If they come crosswise with a farmer who supplies them with milk or a distributor who sells their cheese, they just stop dealing with them. Simple.

UPDATE: If you want to get a feel for some disturbing local culture, this is one of the towns I visited yesterday.

Business Organizations, Cheese, Law & Economics, Law & Entrepreneurship, Law & Society | Bookmark

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"Ronald Coase studied automobile manufacturers (among other things), Bob Ellickson studied ranchers ( ..." [more] (Tracked on February 19, 2008 @ 9:27)
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