I. Introduction
The cooperative movement had made significant contributions to the different societies worldwide since 18th century. The movement began in England and France and they had succeeded in forming cooperative institutions to meet their common economic, social, and cultural needs. Generally, a cooperative (also known as co-operative , co-op or coop ) is an autonomous association of people united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled business (R.A. 9520). Cooperatives are formed on the principle of democratic and participatory governance by the members who, themselves, use their services.
Cooperatives possess some peculiarities with other types of organizations. Its members live in the principle of cooperativismwhere everyone unites to address issues, face challenges, and attain a common purpose together. They elect functioning officers to oversee the operation of the cooperative. They adopt a “one-man, one-vote” principle that regardless of their contributed share capital, members have equal voting rights. The members are expected to patronize the services of their respective cooperative and help in the furtherance of their common vision. But similar to other forms of organizations, the cooperatives also have a high level of vulnerability regarding operating disruptions due to fund management, weak internal control system, and unstable leadership structure which may result to inconsistent and unclear interpretation and implementation of cooperative policies and procedures. Definitely, internal interventions may be necessary to ensure successful management of cooperatives. Furthermore, because of their great communal role and impact, they need to manifest a strong organizational sense.
Financial management has an important role not only to cooperatives but also to every enterprise, it has a very important role in achieving financial success of a business. Financial Management refers to the efficient and effective allocation of money or funds in such a manner as to accomplish the objectives of the organization. Further, financial management serves as a measurement tool whether an entity had succeeded from meeting its aspirations which includes the values and principles. Financial management success indicates that the entity has fulfilled its mandate and purpose which was formulated by the owners or by those people that were given authority.
Members in a cooperative must have to understand their roles and obligations to their cooperative. Financial information can be used to measure the value system and principles commonly believed by members and the management team. If values and principles are not well defined, the cooperative becomes vulnerable to risk of failure and sooner or later it will eventually die. In a collectivist perspective, if members display individualistic than a collective behavior then it becomes frailty. In this sense, collective behavior must be observed in a social institution and the members must be imbibed with their social role to their cooperative. Collective action must become part of the values and principles of every cooperative.
In a cooperative, the members would elect the board of directors to create an effective decision-making system and leadership for the group. The board of directors only have the power to oversee and implement the shared goals of the cooperative within the financial capacity of the cooperative. Members are the most important part of the team and they have the greater responsibility to the cooperative because they have to provide capital to the cooperative in the form of paid-up shares. Paid-up shares are indications of the members’ commitment to the team and it represents their long-term financial pledge to the cooperative. Payment of paid-up would infuse funds to the cooperative that would be used to provide greater services and maintain volume of member transactions.
This research aims to explore the values and principles of cooperativism in the financial management practices of cooperatives. In general, cooperatives are self-help organizations and success can be realized only if the members themselves are much interested in their own cooperative (Dayanandan, 2013). Thus, when the members understood their role to their cooperative then they would be willing to work collectively as a team in order to realize their overall goal. For instance, a cooperative member must be willing to contribute paid-up capital in order to sustain the cooperatives operation.