This paper constructs a new conceptual framework around the impacts of member heterogeneity on cooperative union (federated cooperative) performance considering both a union’s capital factor structure and its service link operations structure, and that governance control rights serve as an integrated, additive influence. The framework is tested empirically with a large sample of cooperative union data from government sources and detailed case study interviews. We find that the influence of factor heterogeneity is resilient and positive when accounting for service link heterogeneity; however, excluding service link heterogeneity biases upwards expected union performance, particularly in less developed, poor regions in China. We also find democratic control rights is a key mechanism through which the heterogeneity of members affects the performance of the union. Our findings suggest that more detailed data in annual cooperative reporting will better identify the linkages and associations of union performance. In so doing, the results can better inform cooperative development priorities and governance processes to support sustainable development.