The Meaning and manifestation of the dual nature in co-operatives

  • Anu Puusa University of Eastern Finland
  • Sonja Novkovic Saint Mary's University. Halifax NS Canada
Keywords: Co-operative, dual nature, business role, member community role, patronage, ownership, complexity

Abstract

Based on their history and the ideology that motivated the creation of co-operatives in the 19th century (ICA 1995), co-operatives have unique characteristics which separate them from other business forms. Co-operatives are known to be complex organizations with a variety of goals, some of which may be in conflict with one another (Draheim 1952; Skurnik 2002; Mooney & Gray 2002; Puusa et al. 2013).

Typically, the “cooperative difference” is captured in their dual nature, which creates the basis for the unique co-operative identity. A co-operative is a business enterprise and a social group of members and as such has both a business and member community roles. This specific character, duality has been identified and conceptualized in co-operative literature in the 1950’s (Draheim 1952). However, a comprehensive and well-established theoretical framework on the subject is still missing.

In this paper we argue that co-operative duality is a multifaceted concept, which requires more in-depth examination. Although a basic division into business and member community roles is identified in prior research, the in-depth content and meaning of the roles, and in particular their manifestation in practice, are still largely unclear and little researched topic area.

In this paper we provide a more nuanced interpretation of dual features of co-operative enterprises, encompassed in the dichotomy between: patronage and ownership (Nilsson 2001; Mazzarol et al. 2011); social and financial aims (Novkovic 2012); collective and individualistic interests (Puusa 2013); collective and private ownership (Crowell & Novkovic 2019); and their diverse purpose. The paper contributes to a deeper understanding of co-operative complexity, and their strategic advantage.

Author Biography

Sonja Novkovic, Saint Mary's University. Halifax NS Canada

Sonja Novkovic PhD
Economics Department
902.420.5607
Academic Director,
International Centre for Cooperative Management
Saint Mary's University. Halifax NS Canada
http://managementstudies.coop
Chair, ICA CCR
http://ccr.ica.coop

References

Crowell, E. and S. Novkovic 2019. ESOPs or Co-ops? Depends on the Long-Term Goal. 50by50-Democracy collaborative, US
https://www.fiftybyfifty.org/2019/12/erbin-crowell-and-sonja-novkovic-esops-or-co-ops-depends-on-the-long-term-goal/

Draheim, G. (1952). Die Genossenschaft als Unternehmungstyp (2nd edition 1955). Goettingen: Vandenhoeck, and Ruprech.

International Co-operative Alliance (1995). The Statement on the Co-operative Identity available at https://www.ica.coop/en/cooperatives/cooperative-identity

Mazzarol, T., Limnios, E. & S. Reboud (2011). Co-Operative Enterprise: A Unique Business Model? Paper presented at Future of Work and Organisations, 25th Annual ANZAM Conference, Wellington, New Zealand, December 7-9.

Mooney, P. & Gray T. (2002). Co-operative Conversion and Restructuring in Theory and Practice. Research Report 185. United States Department of Agriculture. Rural Business Co-operative.

Nilsson, J. (2001). Organisational principles for co-operative firms. Scandinavian Journal of Management, 17 (3), 329-356.

Novkovic, S. (2012). The balancing act: Reconciling the economic and social goals of co-operatives. The Amazing Power of Cooperatives, 289-299.

Puusa, A., Mönkkönen, K. & Varis, A. (2013). Mission lost? Dilemmatic dual nature of co-operatives, Journal of Co-operative Organization and Management, 1, 6–14.

Skurnik, S. (2002). The role of cooperative entrepreneurship and firms in organizing economic activities – Past, present and future. Finnish Journal of Business Economics, 1, 103–124.
Published
2022-08-10
Section
6.7 Hybrid cooperatives - Business and Member communities