Garry Cronan, Cooperative Strategist, Policy Specialist, Cooperative Business Researcher
Cooperatives define themselves through a set of agreed values and principles. One of the key roles of the International Cooperative Alliance (ICA) is to act as the global steward of these principles.
The ICA last revised its international principles in 1995, at its Centennial Congress in Manchester, United Kingdom. The resulting Statement on the Cooperative Identity, including a newly spelt out definition, values and updated and new principles were, like the previous two revisions of the original ‘Rochdale’ principles in 1937 and 1966, the result of extensive consultations over several preceding years. In each case, these revisions have reflected both the changing external environment in which cooperatives were operating and the internal tensions and adaptions occurring within these organisations.
The resulting 1995 principles have been included in a number of international instruments, recommendations, and guidelines, as well as being included and referenced in a wide range of individual countries’ legislation and policy settings. In this sense, the principles have acted as a guiding and unifying light for movements and governments throughout the world. Greater harmonisation of laws and policies, between and within countries, is possible because of the wide acceptance of these international principles. However, sometimes the devil is in the detail.
While cooperative representatives can agree on a set of informing principles and definitions, how these are put into practice can vary widely throughout the world. Several different cooperative traditions of thought and practice along with different institutional and historical experiences have shaped national movements and how cooperatives, particularly large cooperative businesses, have operationalised the ICA principles.
Large cooperative businesses have witnessed, in the period leading up to and following the adoption of the 1995 ICA principles, very significant global change. Not least the ascendency of neoliberalism and increased and more competitive globalisation of the markets in which they have traditionally operated. These trends have represented, for some, an almost existential threat to their very nature and way of doing business. In several countries, there have been major commercial failures of long-established cooperatives. Additionally, there have been, particularly in Anglo-Saxon countries, waves of demutualisation of large and very significant national and international cooperative businesses. This has been particularly the case, in my home country, Australia.
It is worth noting that most demutualisation if they are contested by the membership, are fought locally. An opportunity exists for the international cooperative movement to show solidarity and defend the cooperative identity - as well as defining and promoting it - by helping to resist the loss of many of these large, viable and important cooperatives. Early actions such as a coordinated international/ national campaign of support against local conversions may well prove decisive in addressing what are often self-serving arguments against the cooperative business model.
Nevertheless, these, often high-profile business failures or demutualisation, should not obscure the overwhelming sustainability of large cooperative businesses throughout this period. The cooperative business model has proven remarkably resilient and adaptable. Understanding how to meld cooperative principles and values into sustainable business models appropriate for national and industry settings and institutional histories is the key to survival. Knowing, how and why these large businesses survive during this period is therefore not only of real and urgent interest to the large cooperatives themselves, and their members, but is a key strategic issue for the wider international cooperative movement. Large cooperative businesses are almost always long-lived organisations. Many can trace their formation back, often to over 100 years. They are the survivors of several waves of major economic, social, and political changes over this period. In one sense, they are the living history of the cooperative movement. The result of both organic business growth and mergers between similar cooperative businesses. They contain the ‘DNA’ of countless cooperative members, practitioners and traditions built up over many years.
There is much that can be learnt from how these large, complex cooperative businesses have adapted to these changing and challenging circumstances. The ICA itself has been aware of this and has in some of its research and publications including its Guidance Notes to the Cooperative Principles focused on the particular challenges of applying the principles in large complex cooperatives facing very competitive market situations. Increasing size or scale has often been pointed to in research as holding the prospect of weakening cooperative identity. Levels of trust can decline the further the members are from the management and governance of these complex businesses, which often include hybrid structures, non-cooperative (for-profit) subsidiaries, and external equity. Increasing heterogeneity among differing membership bases within the large cooperatives has again been examined as a possible problem for the retention, and advancement of cooperative identity.
How large cooperative businesses embrace their principles, structure themselves, and behave towards their members and in the marketplace, is therefore of strategic importance. A significant part of the global cooperative asset and revenue base is concentrated into these large businesses. Resources which are available to help promote and support their national and international cooperative movements. They are also the conduit through which large numbers of the public, by way of their membership, see cooperative principles in action, or not. And finally, it is these businesses which are most visible to government and help shape their opinion and the resulting policy and legislation governing not only the large cooperative businesses but the wider cooperative movement including its new and innovative applications to changing societal needs.
Therefore, cooperative identity needs to work and be relevant, in larger and older as well as in smaller, younger cooperatives. Indeed, it could be argued that it is even more important for cooperative identity and values to be at the centre of successful scaled-up business models if cooperatives, are to be able to offer, as seems a real possibility now in a post-global financial crisis, post-COVID world a genuine alternative to the investor-owned, profit-driven models dominant during neoliberalism. In this sense, it is also important to acknowledge that the ability of cooperatives to scale-up and be competitive globally with large investor-owned firms is somewhat limited. Only, certain industry sectors seem to have been able, through a combination of market conditions, institutional history, and business models to scale and be sustainable over time, while retaining a cooperative structure and character.
Understanding the patterns as to why some large cooperatives succeed, and in what circumstance, while others fail is, therefore, critically important. More research is required to better understand this and the key relationship between cooperative size and identity.
