European Journal of Social Sciences Studies
ISSN: 2501-8590
ISSN-L: 2501-8590
Available on-line at: www.oapub.org/soc
doi: 10.5281/zenodo.889986
Volume 2 │ Issue 8 │ 2017
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Joshua Wanjarei
University of Nairobi, Kenya
Abstract:
The interest in this study arose from the great attention currently being given to the role
of co-operative enterprises in achieving the United Nation s goals of reducing poverty,
promoting gender equality, providing health care services and ensuring environmental
sustainability. The study investigated co-operative enterprises strategic planning
intentions and processes and their impact on the ecosystems, societies, and
environments of the future. Although survey questionnaires were the main instrument
for primary data collection, semi-structured follow-up interviews were also conducted
to supplement the method. The study found out that co-operative enterprises integrate
environmental and social policies in their business model thereby representing a
fundamentally distinct type of the modern firm characterized by a governance structure
that in addition to financial performance, accounts for the environmental and social
impact. The study established that co-operative enterprises also seek to promote the
fullest possible participation in the economic and social development of groups of
people who have hitherto encountered economic difficulties within the existing
economic infrastructure that is not able to provide them with opportunities. Seventy
nine percent of the co-operatives enterprises surveyed rated their performance as either
satisfactory.
JEL: E24, J24, O15
Keywords: sustainability, co-operative enterprise, strategic planning
1. Introduction
Sustainability and sustainable development came to prominence in 1987, when the
United Nations World Commission on Environment and Development (WCED),
Copyright © The Author(s). All Rights Reserved.
© 2015 2017 Open Access Publishing Group
20
Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
chaired by Norwegian prime minister Gro Harlem Brundtland published its report Our
Common Future. This report defined sustainability as the development that meets the
needs of the present without compromising the ability of future generations to meet
their needs . In other words, this report stresses on the equity between generations and
equity within generations. In addition, it argues that the goals of economic and social
development must be defined in terms of sustainability in all countries
developed or
developing, market-oriented or centrally planned (WCED, 1987).
This study was in response to the need for further research in areas relating to
the co-operatives sustainability and competitiveness as recommended by a report from
a United Nations Expert Group meeting on the supportive environment for cooperatives which was held in Ulaanbaatar, Mongolia, in May 2002. The report
underscored co-operatives need for research studies into organization management
practices as well as the utilization or deployment of resources in a manner that
promotes sustainability and competitiveness (United Nations, 2002b). The study
focused on the challenges posed to the co-operative enterprises as they respond to their
dynamic environment and leverage their core competencies in order to meet their
members social and economic needs in a sustainable manner. Apart from the
achievement of the economic and social well-being of members, co-operatives
enterprises have also responded effectively to the social challenges of their communities
by trying to solve the problems of unemployment and social exclusion. Some of their
objectives include democratization of the work place; integration of the marginalized
members of the society; fair trade and environment conservation.
The re-emergence of greater interest in co-operatives in the 21st century has seen
various institutions and policy declarations come into being both nationally and
internationally. For example, The Committee for the Promotion and Advancement of
Co-operatives (COPAC) has been created to promote and coordinate sustainability and
sustainable development of the co-operative enterprise through policy dialogues,
technical cooperation and information, and concrete collaborative activities. COP‚C s
membership includes the Food and Agriculture Organization of the United Nations
(FAO), International Co-operative Alliance (ICA), International Federation of
Agricultural Producers (IFAP), International Labour Office (ILO), United Nations (UN),
and World Council of Credit Unions WOCCU . The United Nations sees co-operatives
as an important means of creating employment, overcoming poverty, achieving social
integration and mobilizing resources effectively
‛irchall,
, p.
. In his report to the
Fifty-sixth session of the General Assembly, the United Nations Secretary General
recognized the potential and contribution of co-operatives in the attainment of
economic and social development goals. He recommended that governments should be
urged to create a supportive environment in which co-operatives can participate on an
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
equal footing with other forms of enterprises. He further recommended that cooperatives potential to help members achieve their individual goals and to contribute
to society s broader aspirations should be protected and advanced United Nations,
2001).
Co-operatives spring from the economic and social needs of their members and
their primary purpose is not to obtain a return on capital. They are, by nature, part of a
stakeholder economy, whose enterprises are created by and for those with common
needs, and accountable to those they are meant to serve. They are flexible and
innovative since they are created to meet changing social and economic circumstances.
Co-operatives role in providing men and women with decent work encompassing
conditions of freedom, equity, security and human dignity as recommended by the
International Labour Organization (ILO) has equally been given great attention in the
recent past. Decent work means productive work, with adequate social protection, that
generates adequate income and in which rights are protected. It also means sufficient
work that allows all people full access to income-earning opportunities. The ILO has
placed great emphasis on the employment creation and poverty alleviation activities of
co-operatives and their capacity to provide social protection. In its 90th International
Labour Conference in June 2002, the ILO adopted Recommendation 193, which deals
with the promotion of co-operatives. It recognized the importance of co-operatives in
job creation, resource mobilization, and investment generation (ILO, 2002).
The recommendation also recognized that co-operatives in their various forms
promote the fullest participation in the economic and social development of all people.
The main features of recommendation 193 are: recognition of the importance of cooperatives in economic and social development; reaffirmation of the co-operative
identity; equal treatment for co-operatives definition of the governments role in
creating a supportive policies and legal frameworks; and in facilitating access to
support services and finance (ILO, 2002).
Co-operative enterprises also attracted special attention from the European
Commission which, on 23 February 2004 adopted a Communication on the promotion
of co-operative societies titled: Communication on the promotion of co-operative
societies in Europe [COM(2004)18], which pointed out what Member States and cooperatives themselves can do to exploit the co-operatives business potential. The main
issues of the Communication included promotion of the greater use of co-operatives
across Europe by improving the visibility, characteristics and understanding of the
sector.
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SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
2. Literature Review
Sustainability is defined in terms of a society s use of resources and their impact on the
development. It requires that a society does not over utilize its scare resources, because
the natural resources are depleting at an alarming high rate (WCED, 1987). In future,
the quantity and quality of these resources might decrease, and hence the operational
costs might increase too. Porter and Kramer (2006) assert that sustainability initiatives
create long-term value to the extent that they are integrated with organizational
strategy. The strategic integration of sustainability initiatives embeds sustainability into
organizational decision making, promotes better resource allocation, and forms the
basis for integrating sustainability reporting with traditional financial reporting
(Accounting for Sustainability 2011; Adams et al. 2011).
Sustainability concerns should be reflected in the strategic planning of
enterprises. They should include responsibilities focusing on ethical practices,
employees, environment, and customers. A study by Ameer & Othman (2011) found
out that enterprises that attend to this set of responsibilities under the term superior
sustainable practices have higher financial performance compared to those that do not
engage in such practices.
A co-operative is an autonomous association of persons united voluntarily to
meet their common economic, social, and cultural needs and aspirations through a
jointly-owned and democratically-controlled enterprise (MacPherson, 1996). In many
economies, the co-operative sector is viewed as the third arm in industry alongside
private and state ownership (Cockerton, Gilmour-White, Pearce, & Whyatt, 1980). The
different types of co-operative enterprises that exist in many countries include
consumer co-operatives, producer co-operatives, financial co-operatives (credit unions),
housing co-operatives and worker co-operatives among others. The co-operative model
offers a number of unique attributes that are not seen in other forms of economic
organizations. Shaffer (1999) has argued that co-operatives offer group harmony in
problem solving, democratic participation, social equality, development of leadership,
and solidarity. New Wave co-operatives emphasize the social side of co-operative activities, such as the promotion of healthy living alternatives, environmental
responsibility, and services for social services disadvantaged groups (Lawless and
Reynolds, 2004; Wylie, 2001; Shaffer, 1999).
Co-operativism is seen as a social process through which to over-come social
inequality and to reduce class exploitation. In many cases, co-operatives emerged as a
response to the inequalities brought about by the industrial revolution. Other
marginalized groups have continued to see the co-operative model as a means to
collectively overcome systemic injustices (Lawless and Reynolds, 2004; Wylie, 2001;
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Shaffer, 1999). However, in order to justify their relevance in the competitive global
economy of the 21st century, co-operatives must re-evaluate their reasons for existence
and hence their sustainability and sustainable development. Correct identification of
the needs of their stakeholders and the strategic exploitation of their unique resources
and capabilities to gain the required comparative advantages, are critical to their
sustainability. Spear, Davis, and Wilkins (2000) contend that various research studies
and general statistics indicate that much of the co-operative movement s recent history
has been one of loss of market share and retrenchment even though there have been
signs of sustainability and sustainable development. Spear et al (2000) add that the
international context of transition economies in Eastern Europe, deregulation in much
of the rest of the world and globalization has also increased the competitive pressures
on co-operatives in the UK and many other countries.
Researchers (Fairbairn, 2003; Spear, 2002; Lawless and Reynolds, 2004; Wylie,
2001) argue that co-operatives offer a more feasible model for social service development because they are more responsive to the needs of the community. Most cooperative organizations are formed because of a desire among members of the
community to provide a service they do not have access to. They are a model through
which to identify community needs and provide those services, while at the same time
offering meaningful economic and employment opportunities for members of the
community (Fairbairn, 2003; Spear, 2002; Lawless and Reynolds, 2004; Wylie, 2001).
They also offer economic democracy through the principle of a common sharing of
power. This model allows for equal participation on the decision-making process,
regardless of the economic position of the various members involved. The focus on
developing group solutions to economic problems is an empowering experience for
people facing common problems.
The role of co-operatives in the provision of health and social services has been
recognized by the United Nations which has identified several factors as influencing the
sustainability and competitiveness of the co-operative enterprise (United Nations 1997,
pp. 8 8-90). Since in most European societies, welfare states are under significant
transition due to both downsizing and the lack of responsiveness to the needs of
communities, opportunities for co-operatives to take up the responsibility of social
service provision have increased. Governments are also showing increased interest in
the possibility of co-operatives as more cost-effective health and social care delivery
models (Spear, 2002; Lawless and Reynolds, 2004; Wylie, 2001). Governments have
begun to recognize the importance of community-based services with higher
participation of the citizenry in improving overall health and social well-being (United
Nations, 1997). The general population is similarly showing an increased interest in cooperative enterprises as better able to promote community and individual
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
responsibility in the provision of services. There has, however, been a growth in the
concern on the sustainability and competitiveness of the co-operative enterprise as they
respond to the crisis in welfare state services (United Nations, 1997).
According to the International Co-operative Alliance, co-operatives are based on
the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In
the tradition of their founders, co-operative members believe in the ethical values of
honesty, openness, social responsibility and caring for others (MacPherson, 1996). The
co-operative enterprises are further guided by a set of principles. These principles
define the features unique to co-operatives and the characteristics important to the
success of a co-operative enterprise. MacPherson (1996) lists the principles as including
open and voluntary membership, democratic member control, member economic
participation, concern for community and autonomy and independence, among others.
The General Assembly of the United Nations also passed resolution 56/114 in 2002
recognizing that co-operatives, in their various forms, promote the fullest possible
participation in the economic and social development of all people, including women,
youth, older persons and people with disabilities, and are becoming a major factor of
economic and social development. The resolution therefore encouraged governments to
keep under review, as appropriate, the legal and administrative provisions governing
the activities of co-operatives, with a view to ensuring a supportive environment for
them and to protecting and advancing the potential of co-operatives to help them to
achieve their goals (United Nations, 2002a).
‚ccording to Fairbairn
,
changing times make it critical to find new and
renewed ways of understanding and expressing co-operative approaches to business and society
p. . The dualistic role social and economic of co-operatives makes this task an
onerous one. While their competitors, the conventional corporations, have only one
clear economic objective of profit maximization, co-operatives usually have social and
environmental bottom lines in addition to the financial one (Fairbairn 2003). Return on
capital is not the sole driver but rather the drivers are a matrix of concerns such as
financial sustainability, high quality work places, and support for the future of the
broader community. In fact, co-operative enterprises consider profit maximization as a
means of achieving their common objective of economic and social promotion and not
as the ultimate objective of entrepreneurship (Pflimlin 1996). Davies (1996) argues that
the co-operative social dimension is itself a commercial asset of central importance in the
development of …marketing, human resource, and service / product delivery strategies
. Co-
operatives, therefore, bridge the economic and the social needs of members by
providing employment and income-generating business opportunities.
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Co-operatives fight for social and economic integration and equal opportunities.
They fight against marginalization and social exclusion. The sustainability of cooperatives should therefore be examined within the context of what has become known
as the co-operative advantage which implies that the attainment of social goals provides
an advantage in competitiveness leading to a commercial success that further reinforces
the ability to meet the social goals and hence sustainability. The theory of the cooperative advantage posits that enterprises within a community that enjoys a high
standard of living arising from more employment opportunities and more social
benefits are more likely to be commercially successful. ‚ccording to Levin
the
organization behaviour of producer co-operatives tends to create more jobs per unit of output and
to require less capital for the creation of each job than do the underlying dynamics of capitalist
firms
p.
. He reports that the same level of investment in large industrial worker co-
operatives creates four times as many jobs as in comparable capitalist firms.
The Western Economic Diversification Canada (2005) argues that, apart from the
private sector and government, the social economy enterprises like co-operatives,
foundations, credit unions, non-profit organizations, the voluntary sector and charities
can just be run like businesses for sustainability. They can produce goods and services
for the market economy, but manage their operations and redirect their surpluses in
pursuit of social and environmental goals. Common objectives for social economy
organizations like co-operatives include alleviating poverty, providing affordable
housing,
improving
employment
and
economic
opportunities,
addressing
environmental concerns and providing access to services and programs that can assist
individuals and groups to improve their personal circumstances (Western Economic
Diversification Canada, 2005). The European Commission (2005) is in agreement that
social economy enterprises, including co-operatives, are important sources of
entrepreneurship and jobs in areas where traditional "investor driven" enterprise
structures may not always be viable.
Studies carried out in Spain and in USA confirm that worker co-operatives have
the potential to be more productive than their conventional counterparts. Levin (1984)
reports that there exist both personal and collective incentives in worker co-operatives
that are likely to lead to higher productivity due to reduced worker dissatisfaction and
to increased workplace democracy. The most exciting success story by worker cooperatives comes from Mondragon in Spain. This small town in the Basque region of
northern Spain has become the headquarters of a large worker-ownership movement.
From about 400 employee-members in
, the membership of Mondragon s worker
co-operatives expanded to about 19,000 people in 1981 (Levin, 1984). They produce iron
and steel, machine tools, refrigerators, electronic components and other household
appliances. Overall, as reported by ‛radley and Gelb
European Journal of Social Sciences Studies - Volume 2 │ Issue 8 │ 2017
,
Mondragon has been
26
Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
profitable and appears to have outperformed its capitalist environment by a considerable margin
(p.16). These are workers who operate in the midst of a free enterprise economy and
who enjoy complete ownership and control of their business enterprises. They have
access to all the capital that they need and they enjoy better social and job security than
any democratic state can provide (Campbell, 1983).
Italy also has a history of strong worker co-operatives that are competing very
favourably in manufacturing and construction sectors. Their success has been attributed
to the favourable government policies over the years since even some of the Italian
railways were constructed, owned and managed by co-operatives (Linehan & Tucker,
1983). Greater London Enterprise Board (Undated), points to the fact that many worker
co-operatives in Italy have as many as 200 members and that by 1980 Italy had 3,936
worker co-operatives with 145,197 workers and a sales turnover of ₤ ,
million. In
USA, worker owned enterprises in the form of worker co-operatives have been
predominant mainly in the Pacific Northwest where plywood worker co-operatives
have performed very successfully. In the 1980s, productivity was 30 percent above
industry averages and each worker s income was
percent above those paid by the
conventional firms (Bradley & Gelb, 1983).
In Japan, due to the mega-competitive working environment within the Japanese
capitalist enterprises, Karoshi
death from overwork) became very common. Many
workers began to look for an alternative work environment leading to the formation of
a Mondragon-style Japanese Workers Co-operative Union in 1993. By 1999, the union
had 8,000 members with a turnover of about 15 billion yen (Japanese Workers Cooperative Union, 1999). Professionals including architects, technicians, lawyers and
business analysts forged a network whose objective was to look for new ideas about
work, work-life and community. This resulted from the formation in 1991 of the
Institute of Co-operative Research to promote research into worker co-operative
organizations. The institute is funded by members and it brings together many
professionals including professors, scholars and co-operative members who are
committed to the success of worker co-operatives in Japan. The movement is considered
a great success and has performed very well in the service areas of facility maintenance,
elderly care and distribution of everyday goods. The co-operatives have now begun to
venture into the agriculture and food areas with the view of providing healthy and safe
food products (Japanese Workers Co-operative Union, 1999).
Innovations are critical for co-operatives to differentiate their goods and services
from competitors in ways that create additional or new value for customers (Wright et
al, 1998; Kaplan and Norton, 2004). According to the United Nations (1996), an
important contribution of the co-operative movement continues to be its capacity for
promoting and supporting entrepreneurial development in forms compatible with the
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
principles and objectives of the World Summit for Social Development held at
Copenhagen from 6 to 12 March 1995. Entrepreneurial opportunities represent
conditions in which new products or services can satisfy a need in the market (Hitt et al,
2003). Thomas (1988) contends that one of the reasons for the relative success of worker
co-operatives in wholefoods is that in market terms they have been innovative and have
created a market niche for themselves in which they enjoy a certain degree of customer
loyalty, based on the fit between ideas on healthy and simple eating and the image of an
alternative lifestyle
3. Research Methodology
The research study utilized mainly the quantitative data collection and analysis
methods. However, reasonable use of qualitative techniques was made in data
collection to supplement the quantitative methods. The investigation therefore used
methodological triangulation. In particular, it used the between-methods triangulation
technique in which one method complements and / or supplements the other. Triangulation, in
many cases, produces more valid and reliable results than the use of single methods. Reinharz
99
confirms that triangulation increases the likelihood of obtaining scientific credibility and
research utility
p.
.
The data collection process began by first carrying out informal, open-ended
interviews with officials of co-operative and job ownership organizations that are
involved in promotion work and in research and development projects concerning
worker co-operatives and other job ownership enterprises. The organizations selected
for the informal interviews included the Co-operative-UK, the umbrella body for
worker co-operatives, the Job Ownership Limited, the Industrial Common Ownership
Movement, the Industrial Common Ownership Finance (Cambridge office) and the Cooperative College. The officials interviewed included a chief executive, a national
strategy coordinator, and project managers.
The objective of this phase was to collect relevant background information
regarding the past, present and future opportunities and threats as well as strengths
and weaknesses influencing the performance of worker co-operatives in Britain. Both
personal (face-to-face) and telephone interviewing methods were employed in this
phase. Notes were taken during the interviews and the information gathered formed a
good background material for the construction of survey questionnaires in phase two.
Available literature and case studies on worker co-operatives including the failed cooperative enterprises were also reviewed for relevant material for the survey
questionnaires.
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
According to Co-operatives-UK, it was estimated that there were approximately
390 worker owned and controlled co-operatives in Britain. Mail-survey questionnaires
were therefore sent out to the entire population of worker co-operatives in Britain as
maintained in the directory of their umbrella organization, the Co-operative UK. In
total, the entire 390 worker co-operatives were surveyed on various issues relating to
the research hypothesis. A total of 142 responses were eventually obtained from the 390
worker co-operatives surveyed. Eleven (11) of the responses were not very useful since
the respondents were either dormant, under liquidation or had converted to non-cooperative enterprises. The overall result was therefore a sample of 131 active worker cooperatives out of a population of 379 active worker co-operatives. This is a response rate
of 35%. The responses were from a wide spectrum of worker co-operatives in terms of
the economic and social sectors represented. These sectors included consultancy and
professional services, wholefoods, arts and the media, printing and publishing, care and
support services, crafts and woodwork, leisure, and other retail services.
To test non-response bias, a sample comprising the first forty seven respondents
was compared to the one of 47 respondents who submitted their questionnaires after
the reminder. Chi-square tests χ2) were used for the non-response bias. It is the
contention of many writers (Bryman and Cramer, 2005; Kinnear and Gray, 2004; Field,
2005; Sarantakos, 2003; Berg, 2002) that chi-square tests are the most popular and most
frequently used tests of significance in the social sciences. Normally there are two types
of chi-square tests, being the goodness-of-fit test and the test of independence. Tests of
independence were used in this study for the non-response bias. The results of the tests
are shown in Tables 1
3 below:
Table 1: Chi-square Test for the Type of Business Activity
Table 1 – 1: BusType * Group Crosstabulation
Group
LateRes
EarlyRes
Total
BusType
Consult
Prnting
HlthFood
Arts
HlthLeisr
9
9
18
9
9
18
8
3
11
4
6
10
5
2
7
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
1
4
5
5
2
7
12
18
47
47
CareSppt
MiscRtl
Others
6
Total
94
Table 1 - 2: Chi-Square Tests
Value
df
Asymp. Sig. (2-sided)
9.044(a)
7
.250
Likelihood Ratio
9.384
7
.226
Linear-by-Linear Association
.841
1
.359
Pearson Chi-Square
N of Valid Cases
94
Table 2: Chi-square Test for the Number of Members
Table 2 - 1: NumMbrs * Group Crosstabulation
Group
LateRes
EarlyRes
Total
NumMbrs
0-7
9
5
20
29
49
Over 10
18
13
31
Total
47
47
94
7 -10
14
Table 2 – 2: Chi-Square Tests
Asymp. Sig.
Exact Sig.
Exact Sig.
df
(2-sided)
(2-sided)
(1-sided)
1.203(b)
1
.273
Continuity Correction(a)
.770
1
.380
Likelihood Ratio
1.207
1
.272
.380
.190
Value
Pearson Chi-Square
Fisher's Exact Test
Linear-by-Linear Association
1.190
1
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.275
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Table 3: Chi-square Test for the Level of Performance Satisfaction
Table 3 – 1: Satisfd * Group Crosstabulation
Group
LateRes
EarlyRes
Total
Satisfd
satisfd
Somewhat
8
Not
Total
22
17
39
17
18
35
12
20
47
47
94
Table 3 – 2: Chi-Square Tests
Value
df
Asymp. Sig. (2-sided)
1.470(a)
2
.480
Likelihood Ratio
1.477
2
.478
Linear-by-Linear Association
1.453
1
.228
Pearson Chi-Square
N of Valid Cases
94
All the results in tables 1
3 show that the value of the chi-square is not significant (p >
.05). Therefore, there are no significant differences between the early and the late
responses as regards the five variables listed above. It is therefore reasonable to assert
that the characteristics of those who responded before the reminder and those who
responded after the reminder are not different.
Reliability of the questionnaire was tested using the Cronbach s alpha, which is the
most commonly used measure of questionnaire reliability (Field, 2005; Moser and
Kalton, 1989; Bryman and Cramer, 2005). Only the variables relating to the co-operative
environment and the internal environment were tested for their internal reliability. The
results are shown in table 4 and table 5 below.
Table 4: Reliability Analysis of the Co-operative Environment Variables
Table 4 – 1: Reliability Statistics
Cronbach's Alpha
Cronbach's Alpha Based on Standardized Items
N of Items
.846
7
.846
Table 4 – 2: Inter-Item Correlation Matrix
Princpls
MbCommit
Commnity
FairTrad
Communty
Prncples
FairTrde
Princpls
1.000
.389
.481
.504
.404
.527
.438
MbCommit
.389
1.000
.306
.369
.216
.479
.330
Commnity
.481
.306
1.000
.539
.537
.458
.553
FairTrad
.504
.369
.539
1.000
.694
.491
.467
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Communty
.404
.216
.537
.694
1.000
.390
.358
Prncples
.527
.479
.458
.491
.390
1.000
.314
FairTrde
.438
.330
.553
.467
.358
.314
1.000
The covariance matrix is calculated and used in the analysis.
Table 4 – 3: Item-Total Statistics
Scale Mean
Scale Variance
Corrected
Squared
Cronbach's
if Item
if Item
Item-Total
Multiple
Alpha if Item
Deleted
Deleted
Correlation
Correlation
Deleted
Princpls
10.08
12.062
.629
.412
.820
MbCommit
10.15
12.992
.463
.289
.845
Commnity
9.99
12.069
.665
.487
.815
FairTrad
10.17
11.895
.715
.594
.808
Communty
10.05
12.306
.589
.527
.826
Prncples
9.96
12.299
.607
.429
.824
FairTrde
10.08
12.431
.556
.381
.831
Table 5: Reliability Analysis of the Internal Environment Variables
Table 5 – 1: Reliability Statistics
Cronbach's Alpha
Cronbach's Alpha Based on Standardized Items
N of Items
.822
.823
7
Table 5 – 2: Inter-Item Correlation Matrix
Fnancial
Physcal
Skills
Mgt
Training
DecsnMkg
CoopMgt
Fnancial
1.000
.794
.551
.112
.418
.125
.099
Physcal
.794
1.000
.576
.051
.404
.105
.077
Skills
.551
.576
1.000
.222
.727
.310
.256
Mgt
.112
.051
.222
1.000
.437
.744
.661
Training
.418
.404
.727
.437
1.000
.437
.423
DecsnMkg
.125
.105
.310
.744
.437
1.000
.864
CoopMgt
.099
.077
.256
.661
.423
.864
1.000
The covariance matrix is calculated and used in the analysis.
Table 5 – 3: Item-Total Statistics
Scale Mean if
Scale Variance
Corrected
Squared
Cronbach's
Item
if Item
Item-Total
Multiple
Alpha if Item
Deleted
Deleted
Correlation
Correlation
Deleted
Fnancial
12.18
11.858
.484
.648
.813
Physcal
12.00
12.138
.466
.664
.815
Skills
12.05
11.374
.631
.643
.788
Mgt
11.62
11.653
.517
.591
.807
Training
11.86
11.073
.687
.620
.778
DecsnMkg
11.77
11.378
.616
.807
.790
CoopMgt
11.69
11.724
.563
.753
.799
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SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
The Cronbach s alpha for both the co-operative environment variables and the internal
environment variables is greater than . . Since the values of Cronbach s alpha between
.7 and .8 indicate good reliability ((Field, 2005; Moser and Kalton, 1989; Bryman and
Cramer, 2005), it is reasonable to assert that the questionnaire used in this study is
reliable.
4. Discussion and Conclusions
An important implication of sustainability is the commitment to work, cooperation, and
the willingness to do more for a job that is not just a job. Co-operatives promote
collaboration, especially voluntary collaboration that does not rely on external
incentives to spur. They have norms of behavior which, they enforce and, like families,
they often provide a refuge for friendship, membership, and identity, a place where
members know each other s name and the internal competition that limits cooperation
is less evident (Fukuyama, 1999; Field, 2003; Halpern, 2005). According to Fairbairn
(2003), membership of a co-operative also implies connection and hence, social capital
formation. That is, the trust, understanding, and mutuality that support collaborative
and cohesive action.
The sustainability of a co-operative enterprise lies in its ability to serve members
interests be they economic or social. Although co-operatives, like other enterprises,
require good management, financial probity, well trained and motivated employees,
access to capital, the capacity to innovate and the capacity to respond to change, the
essence of a co-operative enterprise is different. A co-operative is run by members for
the benefit of members. Its main aim is to serve the interest of the members through
their direct participation in both the benefits and the government of the enterprise (The
Co-operative Council, 1994). However, co-operatives must also be entrepreneurial and
innovative in order to achieve sustainability and sustainable development. Co-operative
entrepreneurship therefore involves engaging in an opportunity-seeking behaviour.
That is, identifying opportunities and developing innovation (David, 2005; Hitt et al,
2003).
The essence of co-operative entrepreneurship is to identify and exploit
opportunities. This requires an entrepreneurial mind-set that entails the passionate
pursuit of opportunities (David, 2005; Hitt et al, 2003). After identifying the
opportunities, co-operatives should take action to exploit them and establish
competitiveness. Entrepreneurship and the innovations resulting from it are therefore
critical for co-operatives to increase productivity, promote growth and create jobs
leading to sustainability and sustainable development of the co-operative enterprise.
Co-operative management should try to establish an entrepreneurial culture that
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
inspires members and employees to engage in entrepreneurship. They require not only
the intellectual capital but also an entrepreneurial mind-set and an entrepreneurial
competence which involves effective knowledge of the industry, business and
technology as well as a passion for the business and a risk orientation (David, 2005; Hitt
et al, 2003; Schoemaker & Amit, 1997; Wright et al, 1998).
Since developing innovations and achieving success in the marketplace requires
effective human capital, worker co-operatives must have strong human and intellectual
capital if members and employees are to be innovative. Having the entrepreneurial
capabilities is only part of the challenge. Co-operatives must strategically manage those
capabilities in order to leverage their potential in realizing strategic competitiveness.
They must confront the fact that the future is unknown and must therefore create an
environment that will allow their members and employees to talk openly, learn from
each other, and think creatively (Fairbairn, 2003). This calls for the employment of a
formal research process as a condition for the development of a co-operative s vision,
planning, policies, and decisions (Macmillan & Tampoe, 2000). Research should be
carried out on the co-operative s business, what members require, what the competition
is doing, and what new technology is coming. Without a research-based model,
decisions are either based on the past or on hunches (Allison & Kaye, 1997; Fairbairn,
2003). Many co-operatives may not afford a formal research and development
department. They can, however, share such functions through a network with other cooperatives, with universities, and with other research organizations.
One implication of an information society is that knowledge is the source of
power (Allison & Kaye, 1997). Co-operative education needs to be seen, therefore, as
more than an activity undertaken to satisfy co-operative principles, and also more than
upgrading of employee skills; it needs to be an agency for holding a co-operative and its
members together and on course. Education, communication, research, planning, and
marketing come closer together and overlap in a networked world for sustainability to
be achieved. The most important focus of research and learning activities in worker cooperatives has to be the understanding of the industry or sector in which the cooperative is situated (Fairbairn, 2003). Knowledge of the co-operative model, of the
history of the particular co-operative, of its present-day mission and activities, is
important, too, but not so much as is the knowledge of the business or sectoral environment (David, 2005). The aim of research and learning is to bring these two areas together so as to understand the trends, competition, and opportunities in the industry, and
to understand the co-operative's identity and unique mission within that environment.
Fairbairn (2003) contends also that while the lack of specific co-operative education
among members should cause concern, a lack of understanding of the wider economic
and social environment is more serious. Like the Rochdale Pioneers, co-operative
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
leaders need to have some faith that if members understand what is going on in the
industry, they will understand why they need a co-operative (Fairbairn, 2003).
This study sought to find out the reasons for the marginalization of co-operatives
and whether they can achieve sustained competitiveness and effectively meet their
objectives that include meeting the dual economic and social goals of the enterprise and
its individual members. It has been noted from the literature review that co-operatives
are formed mainly to create and maintain sustainable jobs and to generate wealth in
order to improve the quality of life of their members. They have also been formed to
dignify human work, to allow workers democratic self-management and to promote
community and local development. People have also formed worker co-operatives to
ensure that their work place upholds certain values, such as fair trade or labour
standards.
Asset-based initiatives in the literature review have been successfully employed
by many co-operatives whose main objectives include social care, social integration, fair
trade and concern for the environment. This requires that products and services be
developed and delivered, not as a traditional social program, but as a range of market driven services and products by utilizing the resources that are embedded in the local
communities and their residents. Several co-operatives were examined including the 4
Seasons Worker Co-operative in East Yorkshire; the Castle Project Print Finishers of
Cambridge; Disabled Workers Co-operative in Wales and Carers Direct Worker Cooperative in Devon. The asset-based approach employed by these co-operatives is
capacity-focused and is fundamentally bottom-up, beginning with what is present in
the neighborhood, and inside-out, relying heavily on the efforts of internal agents, such
as members/workers, federations and institutions. It reduces costs, improves product
and service delivery and marketability and strengthens individual and community
commitment since the services and products developed are the result of cooperation
between members and are based on the capacity of each member to add value to the
service or product.
For sustainability to be achieved, co-operatives must first be successful in
identifying their line of business and must strive to serve a viable market. There must
be a clear demand for the goods or services produced and the co-operative must be able
to deliver them at a reasonable cost. The co-operatives, like other organizations, also
require good management, financial probity, well trained and motivated employees,
access to capital and the capacity to innovate (The UK Co-operative Council, 1994).
Eighty five percent of the co-operatives in the study confirmed their success in meeting
the needs of their customers. It was noted that Unicorn Grocery Ltd, a worker cooperative in Manchester, has unparalleled high demand for its products due to its cost
leadership and product differentiation strategies. SUMA wholefoods, in West
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
Yorkshire, a wholesaler and distributor of fair trade, organic and vegetarian foods
products, has also grown consistently for thirty years in a fiercely competitive market
by providing better service to its customers.
Products or services, no matter well they are conceived and developed, will only
be successful if they meet customer needs. Shifts in consumer tastes and preferences
must therefore be constantly monitored by the co-operatives. It is the favourable
demand for whole-food products that has resulted into whole-food worker cooperatives like SUMA wholefoods in West Yorkshire, Unicorn Grocery in Manchester
and Greencity Wholefoods in Glasgow becoming some of the most successful worker
co-operatives in Britain.
Due to the size of most worker co-operatives, competition from non-cooperatives appears to be one of the most commonly perceived threats. About 70% of the
respondents in the study considered competition from non co-operatives to be
unfavourable. To compete successfully in those industries dominated by big business
enterprises, co-operatives must monitor and understand the shifts in the demographic
and social makeup of their target markets in terms of gender, age, income, occupation
and lifestyles. For example the trend towards an aging population in the developed
countries offers co-operatives opportunities in the care and support services. Cooperatives can also exploit new opportunities for creative businesses that offer services
aimed at the needs of working women and single-parent households that have arisen
from the current social trends. For example, one of the recent social changes that have
greatly influenced the food and dining industry is health consciousness. It is pointed
out that whole-food worker co-operatives have successfully exploited this opportunity
to maintain their lead in the fast-growing market segment.
According to the Co-operative-UK, training and education is a key way of
helping worker co-operative members / workers to work more effectively both
internally and with external stakeholders (e.g. customers), as well as providing them
with the technical and specialist skills needed to carry out their jobs. Sustainability
comes from the development of an organization s human capital, and effective
employee training and development can contribute to improved productivity and
profits (Co-operatives-UK, 2004). Co-operative education needs to be seen as more than
an activity undertaken to satisfy co-operative principles, and also more than upgrading
of employee skills. Education on the co-operative model, on the co-operative principles
and practices, on the history of the particular co-operative and on its present-day
mission and activities, is important, but equally important is the knowledge of the
business, industry and the sectoral environment in which a co-operative operates. There
is therefore an urgent need for co-operatives to promote education and training
activities aimed at equipping their members with the much needed skills and
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Joshua Wanjare
SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
knowledge. Also important is the need for training in leadership skills and attitudes,
entrepreneurial and managerial skills, and the general economic and social policy skills.
It is, however, important to realize that new class of managers and the future
managers for the co-operatives can only be developed by educating and training young
people, men and women, in managerial skills. This can be done by setting up training
networks and integrating the experiences of successful co-operative managers.
Educational institutions may consider the inclusion within their curricula the study of
the history, principles and core values of co-operatives. The contribution and potential
contribution of co-operatives to the wellbeing of the society should also be studied. Best
practices on co-operative governance should be identified and promoted among other
co-operatives. There is also need for specialized studies in co-operatives at the tertiary
level of education and for more universities and colleges to offer co-operative studies as
specialized modules in their business studies departments.
Co-operatives must also have sufficient capital to finance their development
costs, start-up costs and growth whatever their social goals. About 74% of the worker
co-operatives surveyed considers inadequate financial resources as a major difficulty. I
was noted that retained profits are considered by 76% of the worker co-operatives as
their main sources of finance. It is noted, however, that even though local revolving
loan funds for co-operatives are now commonplace in many countries, there is still a
need for the formation of co-operative investment banks that can focus mainly on the
financial needs of the co-operative sector. There is also need for innovative co-operative
financing through the utilization of financial instruments like preferred shares and
other non-voting shares with investor members .
This study, which focused on the worker co-operatives in Britain, concludes that
the enterprises suffer from lack of adequate finance, from doing business in unattractive
sectors of the economy and from poor networks and alliances with other co-operatives.
Taxation laws, people s perceptions and the general attitude towards co-operatives
have not been very helpful either. There is therefore need for interventions and policies
that will assure them real equality with other types of organizations and enterprises.
This requires that the special values and principles of worker co-operatives receive full
recognition as being desirable and beneficial to society and that appropriate measures
are taken to ensure that their special qualities and practices are not the cause of
discrimination and disadvantage of any kind.
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SUSTAINABILITY AND THE CO-OPERATIVE ENTERPRISE
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