<p>Smallholder commercialization of perishable potato in Ethiopia is constrained by high transaction costs. While cooperatives are promoted to address this, literature often treats participation as binary, overlooking active internal governance engagement. This study addresses the existing gap by analyzing cooperative participation as a two-stage process. Using survey data from 369 households in Western and South Western Shewa Oromia, Ethiopia. The decision to join was modeled using a first-stage Probit model, while governance intensity (annual meeting frequency) was analyzed using a second-stage selection-corrected Poisson regression. Probit results show cooperative entry is driven by being a male household head (marginal effect, ME = + 15.1%, P-value &lt; 0.01), older age (ME = + 1.1%, P-value &lt; 0.01), higher education (ME = + 8.1%, P-value &lt; 0.01), and mobile phone access (ME = + 15.0%, P-value &lt; 0.01). Conversely, larger potato landholdings (ME = − 9.9%, P-value &lt; 0.05) and physical distance (ME = − 18.1%, P-value &lt; 0.01) reduce entry probability. Poisson estimates, corrected for selection bias via the Inverse Mills Ratio (β = − 0.6359, P-value &lt; 0.01), reveal that structural wealth proxies become insignificant inside. Instead, governance intensity is driven by extension contact (Incidence Rate Ratio, IRR = 1.9360, P-value &lt; 0.01) and trust in cooperative negotiating power (IRR = 1.3833, P-value &lt; 0.01). Thus, while structural and spatial barriers govern entry, internal governance is democratic and trust-driven. We recommend establishing decentralized, Kebele-level satellite collection centers to reduce spatial transaction costs, and implementing mobile SMS pricing alert systems to foster transparent, trust-based governance.</p>