At "THE CO-OPERATIVE MERIT" - 2002 State Conference organised by the Co-operative Federation of Queensland, Kerry Adby, Partner, Copernican, highlighted some of the benefits of using a co-operative structure.

She stated that the move to corporate structures and away form the concept of "society" has been the dominant force in the last two decades. This has led to "... a 'Purist' view of the world - that the Corporation is the only efficient, valid and legitimate structural form (and) the 'CANBERRA view' that co-operatives are 'dinosaurs', based on seven premises.

1. Co-operatives are less efficient because they do not seek to maximise "profits".
2. Access to 3rd parties is essential to raise capital.
3. "One vote one Member" spells disaster
   • Is democracy gone mad & has no place in profit maximisation
   • Prevents profit maximisation
   • Is inequitable
   • Leads to bad "governance"
4. Provision of services should not be limited to Members.
5. Members cannot realise the value of their "equity" - wealth is not distributed.
6. Are not open to hostile takeovers - this makes management & boards lazy.
7. Are not "transparent" - e.g. - benefits are provided other than via dividends & increase in share prices.

In concluding her presentation Adby said that co-operatives have benefits when properly managed, that they provide greater control over destinies, by supporting regional communities in ways that a corporate body cannot. Adby's final comment was that a co-operative is only of value if all members are involved and value their membership.

To download a copy of Adby's presentation (powerpoint file - 570 KB), please click here.

Co-operatives play a key role in the lives of many people, worldwide; over 700 million people are members of co-operatives, a sizeable proportion of the world's 6 billion people.

Robert Briscoe and Michael Ward, from the Centre for Co-operative Studies, National University of Ireland, in their publication, The Competitive Advantages of Co-operatives state that "... there are only two types of business, one is capital-controlled and the other is people centred. The people centred business exists to serve the needs of the people who are users of the business, instead of placing emphasis on getting a satisfactory return on invested capital".

There are significant differences between co-ops and conventional firms. Co-ops are open to new members who can use the co-operative's services. An effective co-operative, with active members working together to solve mutual problems, is more likely to design its products and services based on the interests and needs of its members.

For example, an effective dairy co-operative will be concerned with providing services to ensure its members' continuing prosperity as dairy farmers. The conventional firm is less likely to care about the well being of the farmer in a particular geographic region than about securing the most economical supplies from any source. In Ireland alone, the co-operative way of working has given Irish farmers greater control over food processing and the purchase of essential items to carryout their business.

Other examples of where co-ops are winning over conventional businesses include: Farmer co-ops in the United States, that achieved the highest ever market share in 1998, marketing one third of the nation's farm commodities. In Ireland in the same year, the Irish Co-operative organisation registered 43 new rural co-operatives. In Spain, the Mondragon network of worker co-ops reached new heights in 1999 when its workforce peaked at 46,861 and profitability increased by eleven per cent. Throughout Europe, the social economy co-ops are a rapidly growing Third Sector of the economy.

One of the principles of co-operatives is the priority given to the broader needs of the local community. Application of this principle demonstrates the co-operative difference and builds the trust and loyalty of community members. Unlike conventional businesses the success of a co-operative is measured by how well it addresses the needs of its member-stakeholders, not by the return paid to outside investors.

The publication "The Competitive Advantages of Co-operatives" by Robert Briscoe and Michael Ward, is available from the Centre for Co-operative Studies, National University of Ireland, Cork.