2nd EMES International Conference on Social Enterprise

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2nd EMES International Conference on Social
Enterprise Trento, 3 July 2009 Co-operative
stakeholders Who counts in co-operatives, and
how? Dr. Caroline Gijselinckx Cera Centre for
Co-operative Entrepreneurship Higher Institute of
Labour Studies Catholic University of Leuven

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Outline

• Research questions and evidence
• Stakeholder theory
• Whose stakes are taken into account and how, in
  co-operatives ?
• theoretically
• empirical evidence on belgian co-operatives
• Challenges and new avenues for stakeholder
  involvement in cooperatives

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Research questions

• Theory
• Constitution of co-operatives
• - institutionalization of member dialogue and
  participation - natural inclination toward
  stakeholder management, albeit not
• necessarily multi-stakeholder management
• Legal frameworks
• Stimulating multi-stakeholder co-operatives
• Questions
• Empirical evidence who counts in
  co-operatives, and how?
• Stakeholder models among co-operatives?

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Empirical evidence
From Belgium (), gathered through Survey on
co-operatives (2006, N175) In-depth interviews
(2005, N16) Focus groups (2008, N10 and 9
participants respectively) () Co-operatives
in Belgium 40 000 companies with legal form of
co-operative 558 accredited by National Council
of Co-operatives (April, 2008) asked for an
accreditation meeting 5 criteria -
voluntary membership - equal voting rights
for all members or restriction of voting
rights at general assembly - restricted
dividend (max. 6) - patronage dividend for
members pro rata transactions
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Stakeholder theory

• The concept of stakeholder
• Refers to a claimant toward whom an organization
  has fiduciary
• responsibility (Bryson, 2003)
• Those individuals or groups that are influenced
  by or have in influence on the activities of an
  organization (Freeman, 1984)
• Identification and typification of stakeholders
• internal and external stakeholders (Rousseau
  Shperling, 2003)
• stakeholders by design and natural
  stakeholders (Tirole, 2001)
• typology of stakeholders according to attributes
  power, legitimacy,
• urgence (Mitchell, Agle Wood, 1997)
• basic structure of stakeholder model according to
  elements influencing the outcome and components
  of the relationship between an organization and
  its stakeholders (Jonker Foster, 2002)
• Strong and weak versions of stakeholder
  management (Leys, Van Opstal Gijselinckx, 2009)

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Who counts in co-operatives and how?

• THEORETICALLY
• In virtue of specific constitution of a
  co-operative stakeholder dialogue
• is institutionalized in co-operatives
• Co-operatives are member-organizations
• Members involvement and participation in
  governance
• Co-operative members have a double identity user
  and owner
• Members are both dominant and ultimate
  stakeholder (cf. Mitchell,
• Agle Wood, 1997)
• Members are both stakeholder by design and
  natural stakeholder
• (cf. Tirole, 2003)
• Potential for strong version of stakeholder
  management, but not
• necessarily so
• Spectrum of stakeholder involvement in
  co-operatives,
• Inspired by the spectrum of levels of public
  participation (International Association for
  Public Participation)
• information consultation involvement
  collaboration empowerment

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Who counts in co-operatives and how?
Spectrum of stakeholder involvement in
co-operatives
strong
weak
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Who counts in co-operatives and how?

• EMPIRICAL EVIDENCE from Belgium
• Member involvement
• core characteristic of a cooperative
• importance of sufficient, clear and transparant
  information
• development of member advantages
• democratic member participation
• - In general assembly, board of directors, other
  channels of
• participation
• - Tendency the bigger the co-operative, the
  lesser the active
• participation
• - Decentralized member participation in big
  cooperatives
• - Key-members with key position appointed in
  decision making
• founding members
• social organizations

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Who counts in co-operatives and how?

• Employees
• 50 gives them voice in general assembly
• 25 gives them voice in board of directors
• 18 information and consultation of employees
• In social purpose companies workers
  participation is required, but
• experienced to be difficult to organize
• Financiers
• 26 invites them for the general assembly
• 17 invites them for meetings of the board of
  directors
• Other stakeholders mentioned as such
• Other co-operative enterprises (mentioned by 30
  of cooperatives in survey)
• Social organizations (mentioned by 29 of
  co-operatives surveyed)
• Other non-co-operative enterprises (mentioned by
  24 of co-operative surveyed)
• Trade unions (16)
• Governments and local governments (14)

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Who counts in co-operatives and how?

• Corporate social responsibility in co-operatives
• Item list of PASO survey in Flanders used in
  survey on accredited
• cooperatives
• More than 70 of the co-operative employers take
  one or more measures with respect to health and
  safety at work, workers participation and
  work-family life balance
• 47 of co-operatives surveyed takes measures with
  respect to
• transparancy, support of social projects,
  support of cultural projects, respect for local
  community and culture, public health and safety,
  North-South relationships
• 39 of co-operatives surveyed takes measures with
  respect to the
• protection or preservation of the environment
  (most importantly waste
• recycling)
• Tendency the bigger the co-operative, the more
  measures (under
• control for activity sector and
  employer/non-employer status)
• Half of those cooperatives who do not take any of
  these measures are
• small machingering rings

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Who counts in co-operatives and how?

• Socialization of profit
• by 11 of co-operatives in survey (all but 1
  in service sector)
• sponsoring (72)
• donations (44)
• other methods mentioned
• - price reductions for disadvantaged
  people,
• - special awards for employees,
• - patronage dividend for non-member
  customers,
• - making risk social investements with a
  low interest rate

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Who counts in co-operatives and how?

• General pattern
• model 1 seems to be predominant
• some co-operatives seem to be moving towards
  models 2 and 3
• Members as primary stakeholders
• Potential for strong form of multi-stakeholdership
  (multiple types of members)
• Single type member co-operative
• but co-operatives historically and
  pragmatically are single member
• type organizations therefore predominance of
  model 1
• Multiple type member co-operatives
• - employees difficult realization of
  participation in other types of co-
• operatives than worker co-operatives (also
  when obliged in social purpose companies)
• - re-discovery of co-operative model by
  individuals as well as social
• movements and social organizations/movements
• - preliminary attempts to set up
  multi-stakeholder-member co-operatives
• most importantly in social services and
  sustainable energy)

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Who counts in co-operatives and how?

• CHALLENGES
• With respect to controlling stakeholders
  (members)
• For all types of stakeholder models
• Tendency of hampering of member and stakeholder
  management in
• professional boards (consisting of external
  directors)
• - can be solved by requisting that board members
  become members of
• the co-operative and establishing mixed
  boards
• For multiple stakeholder-member model
• Deadlocks in decision making
• Conflicting interests
• In case of one member one vote principle and
  multiple types of
• members tendency of the largest category to
  dominate the organization
• - can be solved by giving certain types of
  members a stronger voice
• With respect to non-controlling stakeholders
  (non-members)
• protection of non-controlling stakeholders/non-mem
  bers
• - through flat claims and exit options
• - through structural linkage with social
  organizations/movements

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• CONTACT
• Dr. Caroline Gijselinckx
• Research Manager Civil Society and Social Economy
  Research Group
• Coordinator Cera Centre for Co-operative
  Entrepreneurship
• HIVA K.U.Leuven
• Parkstraat 47
• 3000 Leuven
• Belgium
• Tel. [phone]
• Fax [phone]
• www.cooperatiefondernemen.be