This publication is based on a study carried out between February 1997 and August 2000 by researchers from Nicaragua, Israel and the Netherlands. It identifies the pros and cons of the participation of rural households in production cooperatives in Nicaragua and their motives for affiliation with various other types of rural organisations, such as secondary service cooperatives, farmers’ associations, traders’ networks, rural finance institutions, NGOs and development projects. It presents an innovative approach which makes use of the concept of social capital.