This article provides an analysis of institutional innovation of agricultural cooperatives from the perspectives of a legal order and an economic order. It examines institutional changes and organizational reengineering in two case countries. The study shows how cooperatives have the potential to carry out their own values in a dynamic fashion in the interaction between their legal order represented as cooperative ideological principles and their economic order revealed in the cooperative reality. It proposes that a cooperative balance be struck under the effects of organizational embeddedness and de-embeddedness. This insight may carry implications on an appropriate understanding of the cooperative development in China.