ERE32E
Co-operative Business
Bridget Carroll
Centre for Co-operative Studies, University College
Cork, Ireland
Session 2: Principles
Distinguishing co-ops
 Conventional companies use the
difference between the cost and
selling price as profit for investors
 Co-ops will either
 Refund some of the difference to
members
 Retain as common property of coop/invest in the co-op
 Invest for other social purposes
Possible problems with conventional
(investor owned) companies
 Short-term
decision-making
 Profit maximising
 Bonuses
 Concentrated
ownership
 Not realising
creative capacity
of workers
 Decisions not in
interests of
consumers/worke
rs/community
 Ownership from a
distance
 Speculation
Co operative Principles
 How might you operate a business
that benefits members not investors?
 How do you put certain values into
practice?
 Guidelines for how co-ops operate
 Principles not legislated for in every
country
Co-op Principles
1.
2.
3.
4.
5.
6.
7.
Voluntary & Open Membership
Democratic Member Control
Member Economic Participation
Autonomy & Independence
Education, Training & Information
Co-operation Among Co-operatives
Concern for Community
Open and voluntary
membership
 Open to
 All who can use the services
 Should be willing to accept
responsibilities of membership
 Regardless of age, gender, politics
 Nominal shareholding required
 May be other requirements – e.g.
must supply (milk), must live in a
certain area
Democratic Member Control
 Co-op democratically controlled –
active participation
 One-member:one vote, regardless of
shareholding*
 Operationalised at AGM primarily
 Other opportunities for member
participation?
 The bigger the co-operative, the
lesser the democracy?
Member Economic Participation
 Capital of co-operative contributed to and
democratically controlled by the members
 Members usually receive limited
compensation
 Distributed according to use
 Issued as bonus shares
 Reinvest (with agreement of members)
Autonomy and Independence
 Autonomous, controlled by members
 Should remain independent of state
supports but depends on market
position
 Not always easy!
Education, Training and
Information
 Education for members
 Training and education for management,
volunteers, staff
 Information to general public,
government, EU etc.
 Visibility of co-ops
 Co-operative marketing – for education?
For differentation? For sales?
 .coop - internet domain name
Co-operation among
co-operatives
 Based on recognition of benefits of
supporting each other
 Work together within movements and
between movements
 Work together locally, regionally,
nationally, internationally
 Trade together
Concern for community
 Sustainable development of local
communities
 Sponsorship
 Ethical policies/investments
 Responsible lending, packaging etc
 Environmental protection
 Job creation initiatives
 www.co-operativebank.coop /
www.vancity.com
Application of co-op principles?
 Open membership - subject to “common
bond” and legislation/regulation
 Democratic member control through Annual
General Meeting (AGM)
 Minimum shareholding, distribution according
to savings
 Each credit union is independent
 Education, training and information?
 Co-operation among co-operatives – through
chapter and league,
 Concern for community – many examples
 E.g. social lending, money advice
Homework!
 This afternoon:
 Read chapters 2 & 3 of The
Competitive Advantages of Cooperatives.