Theoretical Framework
Cooperatives have non-commercial character (Ramanauskas, et al., 2017) in which they are organized in order to attain the member’s collective aspirations. While they operate business, they are guided by cooperative principles that were drawn from the historical roots of the cooperative movement. Such principles were provided by International Cooperative Alliance (ICA) (1995) to serve as guidelines in order for cooperatives to practice cooperative values such as self-help, self-responsibility, democracy, equality, equity and solidarity. These cooperative principles are: (1) voluntary and open membership; (2) democratic control; (3) member economic participation; (4) autonomy and independence; (5) education, training and information; (6) cooperation among cooperatives; and (7) concern for community. These principles will guide the members of cooperatives on their operation, governance and behavior. These principles are powerful that allowed the members to work collectively to achieve their goals which could not be attained when they are alone (Simkhada, 2017). Although cooperatives do commercial activities, they are geared towards attaining collective goals. In general they operate businesses that are in-line with the needs of the members who are mostly belonging to vulnerable groups or societies. Cooperatives would offer goods and services that are often affordable for the members and in case there is a surplus (i.e. profit in business perspective), this will be given back to society and as patronage refunds or dividends for the members. Additionally, cooperatives has the capacity to enhance their weak members (Lecoutere, 2017); promote better economic decision-making (Nippierd, 2002); and create equitable growth in wealth through the patronage and cooperation of the members (Altman, 2015). Through this, the members can improve themselves economically and further pursue their social and political aspirations.
Cooperatives have been instrumental in transforming several economies and societies because of their governance structure that embraces the social and political aspects. Because of this, most countries provide taxation privileges for cooperatives since they complement the countries or states in terms of promoting human development in various aspects. In terms of social aspect, the members of cooperatives can express their feelings of ownership in an organization that cares for them which could eventually encourage them to be involved in the cooperatives’ activities Borgström (2013). The cooperative movement represents the individuals’ aspirations to become part of a collective action and to be secured and better off than being alone. The members organized themselves and follow democratic governance in order to pursue their individual and collective interests. They operate on the basis of trust (Jensen-Auvermann, et al., 2018; Mazzarol, et al., 2013) and members’ involvement becomes an important norm (Nogueira, et al., 2018). Literatures provided that in terms of social goals, cooperatives provide opportunities for interactions among the members and their officers in order to effectively maintain their autonomy and independence (Sumelius, et al., 2015; Borda-Rodriguez & Vicari, 2014). They have also improved the social benefits of their members by providing education and trainings (Oczkowski, et al., 2013) and the opportunity to participate in meetings and to become officers (Majurin, 2012).
Cooperatives have been considered effective avenues for members to express their aspirations for better governance in the pursuit of a better political state. They are self-governing institutions that are not allowed to be influenced by external forces, nor are interfering with state affairs. The practice of governance is held internally, where members can express their desires for self-government. The governance of cooperatives follows the concept of Triandis (2001) on horizontal and vertical collectivism. Unlike other business forms whose affairs are managed by professional managers, cooperatives highly depend on collective action wherein the members are equally contribute resources and efforts to pursue their goals. Horizontal collectivism in cooperative context specifies that the members would have to work and collectively contribute monetary interest in order for them to procure resources that they will manage and patronize. On the other hand, vertical collectivism is the process wherein the members would have to elect functioning officers (e.g. BODs and management) to oversee the business operation and enable them to reach their goals and aspirations. The elected officers and managers are given authorities and accountabilities wherein individuals in the cooperative have to submit and monitor as well. Hence, cooperatives in all aspects are highly dependent on collective action (Morris, et al., 1993) and their success can only be realized if the members themselves are much interested in their own cooperative (Dayanandan, 2013). In practice, the members would have to patronize their products and services, and elect functioning officers (Harris, et al., 1996) who emanated among them, and guarantee their participation by paying the subscribed shares (Mikami, 2015). In some instances, the members are not only member owners who invest monetary interest but they can also become employees, suppliers, and/or customers in order to support their cooperative (Ramanauskas, et al., 2017).
The survival of the cooperative movement could be attributed to the cooperative principles and collectivist culture that were passed on by the early founders and members of cooperatives. They have shown that through cooperation and promotion of their welfare, they can provide their needs and attain better living standards. Yet, there are organizations that were formed adopting the principles of cooperation, they eventually failed. The failures of these cooperative actions could have been due to lack of commitments of the cooperative actors (members and officers) to collectivist culture. Hence, it is worthwhile to revisit the theoretical and historical foundations of cooperatives that emerged from collective actions.