Co-operative Enterprise Research Program

Contacts: 
tim.mazzarol@uwa.edu.au
elena.limnios@uwa.edu.au

  

Co-operative Enterprise in a Global Context

 
At the global level co-operative enterprises rank amongst the largest business organisations. The 300 largest co-operatives have a combined annual turnover of US$ 963 billion and are to be found in such industries as banking and finance, agriculture, and retailing and wholesaling. They are also to be found in all parts of the world, with the Top-10 largest co-operatives coming from Japan, Korea, France, Germany, Spain, Switzerland, the United Kingdom and the United States. These businesses included:
 
  1. Zen-Noh, Japan
  2. Zenkyoren, Japan
  3. Credit Agricole Group, France
  4. Nationwide Mutual Insurance, USA
  5. National Agricultural Co-operative Federation, South Korea
  6. Groupma, France
  7. Migros, Switzerland
  8. The Co-operative Group, UK
  9. Edeka Zentrale AG, Germany
  10. Mondragon Corporation, Spain
Globally co-operative enterprise is represented by the International Co-operative Alliance (ICA), which is the peak body of the world co-operative movement founded in 1895. In 2012 the ICA has over 250 member organisations in over 100 countries that employ around 100 million people and represent the interests of some 1 billion people.
 

What is a Co-operative Enterprise?

 
According to the ICA: 
 
A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
 
Co-operatives come in a wide range of different types and with a variety of different business structures, however, what they have in common is that they are established for the benefits of their members who are also usually the owners of the business. This makes them different to conventional investor owned firms (IOF) that exist for the benefits of their investors who may not be trading with the enterprise and who only view it as of important for its return on the capital invested.
 
Although a co-operative is a social enterprise, it is a business that has been established to generate economic as well as social benefits. As a result the co-operative enterprise must not be confused with the non-profit or charitable business sector. Co-operatives exist for the economic benefit of their members, not the economic benefit of others who might be in need of assistance. They are about economic self-development not welfare.
 
Co-operatives are also characterised by not being associated with government or religious organisations. They are independent of these and membership to a co-op is not determined by a person's race, religion, gender or political affiliation. This has been an important aspect of co-operative enterprises throughout their long history.
 

Co-operative Principles

 
Co-operatives are one of the oldest and most enduring forms of social enterprise. For example, the Shore Porters Society of Aberdeen, Scotland, was founded in 1498, while the Fenwick Weaver's Society, also from Scotland, was established in 1761. In France there were co-operatives formed among cheese makers as early as 1750, and the co-operative bakery Caisse de Pain was founded in Alsace at Guebwiller in 1828.
 
However, the modern co-operative enterprise tends to draw its foundations from the formation in 1844 of the Rochedale Society of Equitable Pioneers. This co-operative was established to enhance the economic status of its members and was founded on a set of principles (the Rochedale Principles) that continue to be the guiding values of the international co-operative movement. 
 
These principles have been amended only twice since 1844, once in 1937 and again in 1966. Today the modern ICA has seven guiding principles of co-operation:
 
  1. Voluntary and open membership
  2. Democratic member control
  3. Member economic participation
  4. Autonomy and independence
  5. Education, training and information
  6. Co-operation among co-operatives
  7. Concern for community

 

UN International Year of  Co-operatives 2012

 
2012 is the United Nations International Year of Co-operatives. The purpose of the UN IYC is to raise international awareness of the importance of the co-operative enterprise sector and the valuable role it plays in alleviating poverty, generating employment and enhancing social integration.
 
The year will showcase the strengths of the co-operative business model as an alternative means of doing business and furthering socio-economic development. 
 
The UN IYC goals are threefold: i) increase public awareness of co-operatives and their contribution to social and economic goals; ii) promote the formation and growth of co-operatives; and iii) encourage governments around the world to establish legislative and regulatory environments that enhance the formation, growth and sustainability of the co-operative enterprise.
 
Further information on the UN IYC can be found at the ICA website. This includes a range of case studies and information on co-operative enterprises via the website Stories.coop where a wide range of interesting cases can be found about different co-operatives from around the world.
 

Co-operative Enterprise in Australia

 
Within Australia the Top 100 Co-operative enterprises control a combined turnover of around $15 billion and provide employment and economic benefits to many thousands of people across both regional and rural Australia. In WA there are around 70 Co-operatives working across a wide range of industries including fishing, farming, retailing and services sectors. Australia's top 10 largest co-operative and mutual enterprises in 2011 were:
 
  1. Co-operative Bulk Handling Ltd (WA)
  2. Murray Goulburn Co-operative Co Ltd (Vic)
  3. HBF (WA)
  4. Capricorn Society Ltd (WA)
  5. RAC WA (WA)
  6. Australian Unity (Vic)
  7. Dairy Farmers Milk Co-operative (NSW)
  8. National Roads and Motorists Association (NSW)
  9. RACV (Vic)
  10. Norco Co-operative (NSW)

 

Sustainable Co-operative Enterprise Research Study

 
Despite their significance there is relatively little research available on drivers of the Co-operative business model and what makes it both unique and competitive. This study addresses these issues and assists Co-operatives WA to prepare for the introduction of new State legislation and provide research of benefit to Co-operatives at the national level. Funded under an Australian Research Council (ARC) Linkage Grant between the University of Western Australia (UWA), Co-operatives WA, Co-operative Bulk Handling and the Capricorn Society, the project will address five interrelated research questions:
 
  1. What causes a co-operative to abandon its principles, values and business mode and transform into an investor-owned enterprise?
    1. With specific attention given to the roles played by:
      1. Co-operative Boards
      2. Members of the Co-operative
      3. The structure, activity and capitalisation of the Co-operative
  1. How does a Co-operative measure and communicate the true value of membership?
    1. With specific focus on:
      1. What is the Co-operative’s role in capturing value in an integrated or vertical value chain?
      2. What is the most appropriate means of communicating value to these stakeholders?
      3. What are the causes of free-riding by members and non-members and
      4. How can value recognition and reporting be used to minimise free-riding?
  1. Are there best practice examples of Co-operative Boards that provide lessons for future business models?
    1. With specific attention to:
      1. The constitution and composition of Co-operative Boards including their constitution and articles of association;
      2. The design and characteristics of supply chain relationships within the Co-operative, and
      3. The development of trust within the Co-operative between members and between the Co-operative and its members.
  1. How does a Co-operative successfully participate in financial markets without compromising its principles, values and business model?
    1. With specific attention to:
      1. What characteristics of the Co-operative business model constrain access to external funding, particularly access to risk capital?
      2. How can Co-operative Capital Units (CCU) find and retain favour in capital markets?
      3. What are the taxation implications for issuers and investors in relation to CCUs?
      4. How will CCU be dealt with under the Australian Accounting Standards?
  1. What are the alternatives to the "one-member-one-vote" principle normally associated with Co-operatives and how do these alternatives strengthen or weaken a Co-operative's ability to operate in a sustainable and competitive way over time? 
    1. With specific attention to whether this:
      1. Risks control vesting with minor or less active members;
      2. Results in undesired takeovers;
      3. Makes it difficult to raise capital from members;
      4. Leads to decisions that are not in the interests of the transacting shareholders;
      5. Significantly disadvantages those that are the major users of the co-operative; and
      6. Stifles change.
 

Global Research Network

 
A feature of this co-operative studies research program is the formation of an international network of around 40 researchers who are collaborating on the development of a book to be titled "Sustainable Co-operative Enterprise: Case Studies of Organisational Resilience in the Co-operative Business Model". This book is to be published by Edward Elgar Publishing circa 2013. 
 
Further details of this project and the case studies that are being developed for the book can be found here: Sustainable Co-operative Enterprise book project. 
 

Co-operatives Conference 8-9 November 2012

 
As part of the UN IYC we are collaborating with Co-ops WA to hold the first co-operative studies research exchange in Perth on 8-9 November 2012. Further details of this can be found here: UN IYC Co-ops Conference Perth.
 

Publications

A range of publications have been produced from this research study and are listed below from most recent to earliest:
 
paper presented at the New Zealand Association for the Study of Cooperatives and Mutuals (NZASCM) Annual Conference, 21-23 June, Wellington, New Zealand.
 
Elena Mamouni Limnios, John Watson, Tim Mazzarol and Geoff Soutar (2012)
paper presented at the New Zealand Association for the Study of Cooperatives and Mutuals (NZASCM) Annual Conference, 21-23 June, Wellington, New Zealand.
 
Tim Mazzarol, Elena Mamouni Limnios and Sophie Reboud (2012)
paper presented at the 57th Annual ICSB World Conference, 10-13 June, Wellington, New Zealand.
 
Elena Mamouni Limnios, John Watson and Tim Mazzarol (2012)
CEMI Industry Research Report.
 
Elena Mamouni Limnios, John Watson, Tim Mazzarol and Geoffrey N. Soutar (2012)
CEMI Discussion Paper 1201, Centre for Entrepreneurial Management and Innovation, ISSN: 1448-2541.
 
Tim Mazzarol, Richard Simmons and Elena Mamouni Limnios (2011)
CEMI Discussion Paper 1102, Centre for Entrepreneurial Management and Innovation, ISSN: 1448-2541.
 
Tim Mazzarol, Elena Mamouni Limnios and Sophie Reboud (2011)
Paper presented at "Future of Work and Organisations", 25th Annual ANZAM Conference, 7-9 December, Wellington New Zealand.
 
Tim Mazzarol (2009)
Industry Research Report for Co-operatives WA.
 
Research Team: 
Tim Mazzarol
Elena Mamouni Limnios
John Watson
Geoff Soutar
Joanne Sneddon
Kadambot Siddique

Copyright © 2012 Centre for Entrepreneurial Management and Innovation, Publishers of CEMI. All Rights Reserved.