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.