Strategy+Business writes:

The membership-based governance structure of a cooperative is the feature that distinguishes it from an ordinary corporation and the feature that lies at the core of its success. The organization is run by its members: one person, one vote. Members elect representatives, who are directly accountable to the members. Depending on the internal structure and operations of a particular cooperative, members may also participate actively in making decisions and setting policy. Some cooperatives admit individuals, typically either employees or customers, as members. Other cooperatives are composed of smaller businesses and organizations. Rabobank and COOP are examples of both; they are consortia of local cooperatives that in turn have individual members.

Although the companies that make up a co-op may see profits, in most countries, the co-ops charter requires that profits be put toward the co-ops promotion or invested in its growth and functioning, not taken as dividends. In general, co-ops are more financially successful than observers may realize, but their real value comes from their ability to keep alive the social contract of communities. They are set up to ensure the continued viability of jobs, promote entrepreneurship, and improve quality of life without sacrificing competitiveness. Co-ops could be an even more powerful economic force for communities and for economic regions during the coming years.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.