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Co-operatives during crisis and the post-crisis period
G Model
JCOM-16; No. of Pages 3 Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
Contents lists available at ScienceDirect
Journal of Co-operative Organization and Management journal homepage: www.elsevier.com/locate/jcom
Co-operatives during crisis and the post-crisis period 2013 ICA Global Research Conference, 12–15 June 2013, Nicosia, Cyprus
People young and old have recently gathered in parks and open spaces all over the world to protest the behaviour of corporations — behaviour that has been characterized as reckless and driven by greed. Citizens are fed up with the lack of transparency and fairness in decision making, as well as the outcomes of decisions that have resulted in huge wealth and income disparities.1 The Occupy Wall Street Movement has since given way to other protest movements. The Bank Transfer Movement, triggered by events specific to legislation affecting bank customers in the United States, was consumer activism at its strongest. Between 29 September, the day that the Bank of America announced its (now defunct) monthly fee for debit card transactions, and 5 November — Bank Transfer Day — credit unions received $4.5 billion in funds and 650,000 new customers, equal to a 50 percent increase in new accounts. The Credit Union National Association claimed that on 5 November 2011 alone, approximately 40,000 people joined credit unions, with credit unions realizing $80 million in new account funds (www.cuna.org/public/press/press-release/issues/). The Occupy Wall Street Movement has caused young people in particular to challenge what many in the recent past would have praised as efficient and effective business behaviour. In fact, not just our youth but many ordinary people are questioning their previous faith in the market, and for good reason. And finally, those in positions of authority and influence are beginning to see that traditional assumptions regarding the effectiveness of the market must be re-examined. When former Federal Reserve Chairman Alan Greenspan went before Congress in October 2008, he told American lawmakers that the economic meltdown had revealed a ‘‘flaw in the model’’ that he had not expected — that banks operating in self-interest would not self-regulate to protect their shareholders and institutions.2 The massive public bail-out of private, investor-owned banks in 2008–2009 has underlined — and revealed to many for the first time — the virtues of a customer-owned co-operative banking system that is more risk averse and less driven by the need to make profits for investors and bonuses for managers. In the year following the economic crisis of 2008, credit unions, building societies, and co-operative banks all over the world reported that
1 Senator Bernie Sanders, ‘‘Wall Street Protests,’’ Huffington Post, 10 July 2011, http://www.huffingtonpost.com/rep-bernie-sanders/wall-street-protests_b_ 1000642.html. 2 Daniel McCabe, ‘‘Economics Shrugged,’’ University Affairs, 9 March 2009, http:// www.universityaffairs.ca/economics-shrugged.aspx.
they were still financially sound. They had experienced improvements in almost every facet of their business, including an increase in assets and deposits, an increased volume of lending, a better rate of interest, and greater stability (measured by capital adequacy ratios and loan default rates). Further, membership increased as former bank customers switched to them because they were highly trusted.3 The point is important because the co-operative banking sector is extraordinarily large; the World Council of Credit Unions has 56,000 credit unions in membership, with 200 million individual members in 101 countries.4 The International Raiffeisen Union estimates that 900,000 co-operatives with around 500 million members in more than 100 countries are working according to the co-operative banking principles worked out in Germany by Friedrich Raiffeisen. In Europe alone, there are 4200 local cooperative banks, around 60,000 branches, and a market share of 20 percent. These banks serve 45 million members and 159 million customers.5 Some of the largest banks in the world are cooperatives; 50 percent of Dutch citizens are members of Rabobank, for example, which is the largest agricultural bank in the world and is rated the world’s eighth safest bank.6 As we moved into 2012, the International Year of Co-operatives, the majority of co-operative banks and credit unions were still in an unusually strong position around the world. They reported that they had not been damaged as much by the banking crisis and were growing strongly as customers switched their business away from the discredited investor-owned banks to what they saw as a more risk-averse and trustworthy sector. As noted by the Co-operative Bank Panel addressing the United Nations General Assembly in New York during the official launch
3 Johnston Birchall and Lou Hammond Ketilson, Resilience of the Co-operative Business Model in Times of Crisis (Geneva: International Labour Organization, 2009), 41 pp. 4 See http://www.woccu.org. 5 Bouke de Vries, ‘‘European Co-operative Banks in Financial and Economic Turmoil,’’ paper presented to the UN Expert Group Meeting, ‘‘Cooperatives in a World in Crisis,’’ 28–30 April 2009, New York. 6 ‘‘World’s 50 Safest Banks 2012,’’ Global Finance magazine, http://www.gfmag. com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html. It is also the only privately owned bank in the world with the highest possible credit ratings from Standard & Poor’s and Moody’s Investor Service. Overseas Cooperative Development Council, Cooperatives: Pathways to Economic, Democratic, and Social Development in the Global Economy (Washington, DC: Overseas Cooperative Development Council, 2007), p. 6.
http://dx.doi.org/10.1016/j.jcom.2014.04.002 2213-297X/
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002
G Model
JCOM-16; No. of Pages 3 2
L.H. Ketilson / Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
of the International Year of Co-operatives,7 co-operatives as institutions are generally an underestimated and overlooked opportunity. In particular, ordinary citizens see banks as responsible for many of the world’s economic difficulties, whereas they trust co-operative banks and credit unions. Successive North American studies have demonstrated that cooperatives have a higher survival rate than traditional businesses.8 And with these characteristics, co-operatives are capable of addressing tremendous need in remote and underserved communities.9 The co-operative movement today extends ownership and control to the people who are involved in it as members; it is a movement with a long history and a demonstrated capacity to meet all kinds of needs. Registered, formally organized cooperatives were first established in Europe during the nineteenth century by people concerned about protecting their interests and improving their economic and social well-being. Based on the fundamental principles of one member, one vote, the practice of rewarding people in proportion to their participation, and the use of education as a means of empowering people, the multifaceted ‘‘organized’’ movement had spread throughout most of the European continent by the beginning of the twentieth century. In the wake of European colonization and migrations, co-operative organizations were established in most of the rest of the world as well. Today, the co-operatives affiliated with the International Co-operative Alliance are involved in hundreds of different kinds of businesses, with more than 800 million members in over one hundred countries. In the past year, however, this position of co-operative advantage is being seriously challenged, and in parts of the Eurozone, co-operative banks have come under tremendous pressure. By happy coincidence or perhaps clear vision, the theme of the 2013 ICA Global Research Conference held in Nicosia, Cyprus, 12–15 June, ‘‘Cooperatives During Crisis and the Post-Crisis Period,’’ addressed many of the important issues faced by cooperatives in economies under stress due to the financial crisis.
co-operative movement and lessons learned from its responses to crises throughout its history. It was suggested that if we are to provide evidence against erroneous interpretation of co-operative behaviour, we must develop measurement approaches that go beyond traditional economic evaluations. We need to be able to measure and report on these behaviours in a way consistent with what co-operatives are trying to achieve in keeping with the cooperative values and principles, underscoring the importance of balanced measures of performance that inform co-operative governance and management critical to longevity. For in addition to measures of business growth and stability, we must gauge the outcome of the relationship between the social and economic objectives of the co-operative. To fully demonstrate the impact of co-operatives and their ability to create resilient communities, therefore, researchers must look beyond ‘‘traditional’’ measures of performance. It is critical to understand what co-operatives do that is different from a typical privately owned or investor-owned business, and why the metrics used to measure co-operative performance and impact must be different and matched to their unique behaviours. 1.2. Co-operatives and economy Co-operatives were described as a democratic mechanism for wealth creation. Members of co-operatives put equity into the enterprise, and a successful co-operative enterprise gives a return on that investment. Sometimes the return takes the form of annual dividends or patronage refunds; sometimes the return is in the form of job security and living wages and benefits, or reduced costs of products and services. Individual co-operatives decide democratically how much of the surplus should be allocated to members and how much should be unallocated or retained in the business. Because of the democratic nature of co-operatives, distribution occurs in an equitable fashion, which places the wealth generated from the business into the hands of the owner-members, and sometimes other stakeholders.
1. Themes addressed by conference presentations 1.3. Co-operative development and social entrepreneurship Following on formal greetings and warm welcomes to conference participants at the historic Famagusta Gates, the opening keynote provided an overview of the lessons learned from the Cyprus economic crisis. With this history and context providing a starting point, participants chose from among nine different themes in five concurrent sessions over the course of two days. A sample of the themes and issues addressed are provided below. 1.1. Co-operative history and values It has been said that to know the future, we must come to know our past. Presenters examined the evolution of the international 7 United Nations Launch of 2012 International Year of Co-operatives, 31 October 2011, New York. See http://www.canada2012.coop/en/about_IYC_2012/UnitedNations-IYC-launch. 8 Richard Stringham and Celia Lee found that the three-year survival rate for coops incorporated in Alberta between 2005 and 2008 was 81.5 percent, compared to 48 percent for conventional businesses. Co-op Survival Rates in Alberta (Port Alberni, BC: BC-Alberta Social Economy Research Alliance, and Alberta Community and Cooperative Association, 2011), pp. 10–12. This publication references earlier, fiveyear survival studies in Que´bec and British Columbia that showed similar, if less spectacular, results – 64 percent (in Que´bec) and 65.8 percent (in British Columbia) for co-operatives, compared to a survival rate of 35 percent and 39 percent, respectively, among conventional businesses. 9 Lou Hammond Ketilson and Kimberly Brown, Financing Aboriginal Enterprise Development: The Potential of Using Co-operative Models (Saskatoon: Centre for the Study of Co-operatives, University of Saskatchewan, 2009).
Co-operatives, it was argued, are driven by the needs of their membership. Their leadership stresses the importance of meeting member needs and of responding to local pressures. They are inclusive organizations and are respectful of the rights of individuals and the values of communities. Thus, when managed properly, they can become strong manifestations of community needs and community pride. They can be the kinds of responsive, entrepreneurial institutions many people say they want and demonstrably need. A fuller understanding of ‘‘co-operative entrepreneurship’’ is required to avoid confusion with the more individualistic motivations of the social entrepreneur. The ultimate goal is to develop a typology to inform government policy, and to prevent narrow perceptions of co-operatives, i.e. only for the poor and marginalized, from restricting the growth and use of the cooperative model. 1.4. Co-operatives and food security Food security is a critical issue in many countries today given the challenges caused by climate change and associated environmental degradation. Researchers have focused their attention on agricultural co-operatives examining how strategic orientation leads to increased sustainability; the growth of new forms of cooperatives to address needs in challenging areas; as well as how to support co-operative development that addresses needs in long established economies.
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002
G Model
JCOM-16; No. of Pages 3 L.H. Ketilson / Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
1.5. Co-operative marketing and management Co-operatives are based on democratic principles of one person, one vote, the accountability of elected leaders, and the need for members to be informed about their co-operatives. If managed effectively, co-operatives deepen relationships with members over time by encouraging them systematically to expand their investments in equity and by involving them in a range of activities in the co-operative. Their collaborative models of decision-making result in the creation of shared value and greater commitment to the organization and the well being of the membership overall. 1.6. Co-operative banking Not surprisingly, many presentations focused on co-operative banking. It was argued that the governance structure of cooperatives, where local credit unions and co-operative banks scrutinize the decisions of the central institutions, causes decision makers to be more aware of the fact that the loan they offer to their members is another member’s money. The direct link between savings and loans, which may not be as apparent in some banks, acts as a moral constraint. Additionally, at the local level, cooperative banks and credit unions are not reliant upon the capital markets for funding, but are funded through member deposits. They are strong in retail banking, which is characterized by stable returns and comparatively good access to savings and deposits. Since they are not able to go to the markets to obtain easy money from investors, they tend to retain their profits and take fewer risks. Despite these tendencies, co-operative banks are facing serious challenges in many countries. 2. Conference reflections The 2013 ICA Global Research Conference was a successful combination of intellectual challenge, stimulating debate, historical and cultural inspiration, and culinary delights. If there were any criticism of the event it would be to offer fewer concurrent sessions to enable participants to benefit from more of the presentations, and to demand submission of completed papers prior to the conference to assist the organizers in disseminating the knowledge generated more efficiently.
3
We must raise the question, however, as to whether or not the correct themes have been covered or if are there are gaps considering the needs of the co-operative movement today? The ability of co-operatives to survive economic crisis has been well demonstrated in many studies examining the outcomes of the economic crisis. We are in need of research that provides more indepth conceptualization of definitions of, and the source of, the resilience, along with strategic approaches to achieving this dynamic outcome. The important role of law was emphasized, along with the avoidance of further ‘‘companizing’’ of cooperatives. What can research tell us about how to do this? What can be determined about the role of gender and diversity in developing strong co-operatives and improving management? How do we ensure the establishment of governance structures that facilitate the homogeneity of interest which has emerged as central to the ability of co-ops to react with speed and innovation to the challenges imposed by the economic crisis? And finally, new forms of collaboration warrant additional examination particularly in light of accelerated movement towards mergers among co-operatives previously constrained by jurisdictional boundaries, now removed. Research must identify where co-operative forms overlap with other forms such as regional clusters, networks, consortia, mutual societies and social enterprises, and provide recommendations as to when it makes sense to adopt or adapt new forms. ‘‘Cooperatives During Crisis and the Post-Crisis Period’’ occurred at an important juncture in the history of the Cypriot Co-operative Movement, which is currently undergoing a restructuring process. Ironically, the movement had just celebrated its one hundredth anniversary during the Cyprus presidency of the European Union in the autumn of 2012. I join the conference organizers in their belief that the problems of the Cyprus economy will be overcome and the co-operative movement will again play a central role in supporting the local society as it has done during the long years of its existence. outgoing Chair Lou Hammond Ketilson ICA Committee on Co-operative Research Received 3 April 2014
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002
JCOM-16; No. of Pages 3 Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
Contents lists available at ScienceDirect
Journal of Co-operative Organization and Management journal homepage: www.elsevier.com/locate/jcom
Co-operatives during crisis and the post-crisis period 2013 ICA Global Research Conference, 12–15 June 2013, Nicosia, Cyprus
People young and old have recently gathered in parks and open spaces all over the world to protest the behaviour of corporations — behaviour that has been characterized as reckless and driven by greed. Citizens are fed up with the lack of transparency and fairness in decision making, as well as the outcomes of decisions that have resulted in huge wealth and income disparities.1 The Occupy Wall Street Movement has since given way to other protest movements. The Bank Transfer Movement, triggered by events specific to legislation affecting bank customers in the United States, was consumer activism at its strongest. Between 29 September, the day that the Bank of America announced its (now defunct) monthly fee for debit card transactions, and 5 November — Bank Transfer Day — credit unions received $4.5 billion in funds and 650,000 new customers, equal to a 50 percent increase in new accounts. The Credit Union National Association claimed that on 5 November 2011 alone, approximately 40,000 people joined credit unions, with credit unions realizing $80 million in new account funds (www.cuna.org/public/press/press-release/issues/). The Occupy Wall Street Movement has caused young people in particular to challenge what many in the recent past would have praised as efficient and effective business behaviour. In fact, not just our youth but many ordinary people are questioning their previous faith in the market, and for good reason. And finally, those in positions of authority and influence are beginning to see that traditional assumptions regarding the effectiveness of the market must be re-examined. When former Federal Reserve Chairman Alan Greenspan went before Congress in October 2008, he told American lawmakers that the economic meltdown had revealed a ‘‘flaw in the model’’ that he had not expected — that banks operating in self-interest would not self-regulate to protect their shareholders and institutions.2 The massive public bail-out of private, investor-owned banks in 2008–2009 has underlined — and revealed to many for the first time — the virtues of a customer-owned co-operative banking system that is more risk averse and less driven by the need to make profits for investors and bonuses for managers. In the year following the economic crisis of 2008, credit unions, building societies, and co-operative banks all over the world reported that
1 Senator Bernie Sanders, ‘‘Wall Street Protests,’’ Huffington Post, 10 July 2011, http://www.huffingtonpost.com/rep-bernie-sanders/wall-street-protests_b_ 1000642.html. 2 Daniel McCabe, ‘‘Economics Shrugged,’’ University Affairs, 9 March 2009, http:// www.universityaffairs.ca/economics-shrugged.aspx.
they were still financially sound. They had experienced improvements in almost every facet of their business, including an increase in assets and deposits, an increased volume of lending, a better rate of interest, and greater stability (measured by capital adequacy ratios and loan default rates). Further, membership increased as former bank customers switched to them because they were highly trusted.3 The point is important because the co-operative banking sector is extraordinarily large; the World Council of Credit Unions has 56,000 credit unions in membership, with 200 million individual members in 101 countries.4 The International Raiffeisen Union estimates that 900,000 co-operatives with around 500 million members in more than 100 countries are working according to the co-operative banking principles worked out in Germany by Friedrich Raiffeisen. In Europe alone, there are 4200 local cooperative banks, around 60,000 branches, and a market share of 20 percent. These banks serve 45 million members and 159 million customers.5 Some of the largest banks in the world are cooperatives; 50 percent of Dutch citizens are members of Rabobank, for example, which is the largest agricultural bank in the world and is rated the world’s eighth safest bank.6 As we moved into 2012, the International Year of Co-operatives, the majority of co-operative banks and credit unions were still in an unusually strong position around the world. They reported that they had not been damaged as much by the banking crisis and were growing strongly as customers switched their business away from the discredited investor-owned banks to what they saw as a more risk-averse and trustworthy sector. As noted by the Co-operative Bank Panel addressing the United Nations General Assembly in New York during the official launch
3 Johnston Birchall and Lou Hammond Ketilson, Resilience of the Co-operative Business Model in Times of Crisis (Geneva: International Labour Organization, 2009), 41 pp. 4 See http://www.woccu.org. 5 Bouke de Vries, ‘‘European Co-operative Banks in Financial and Economic Turmoil,’’ paper presented to the UN Expert Group Meeting, ‘‘Cooperatives in a World in Crisis,’’ 28–30 April 2009, New York. 6 ‘‘World’s 50 Safest Banks 2012,’’ Global Finance magazine, http://www.gfmag. com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html. It is also the only privately owned bank in the world with the highest possible credit ratings from Standard & Poor’s and Moody’s Investor Service. Overseas Cooperative Development Council, Cooperatives: Pathways to Economic, Democratic, and Social Development in the Global Economy (Washington, DC: Overseas Cooperative Development Council, 2007), p. 6.
http://dx.doi.org/10.1016/j.jcom.2014.04.002 2213-297X/
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002
G Model
JCOM-16; No. of Pages 3 2
L.H. Ketilson / Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
of the International Year of Co-operatives,7 co-operatives as institutions are generally an underestimated and overlooked opportunity. In particular, ordinary citizens see banks as responsible for many of the world’s economic difficulties, whereas they trust co-operative banks and credit unions. Successive North American studies have demonstrated that cooperatives have a higher survival rate than traditional businesses.8 And with these characteristics, co-operatives are capable of addressing tremendous need in remote and underserved communities.9 The co-operative movement today extends ownership and control to the people who are involved in it as members; it is a movement with a long history and a demonstrated capacity to meet all kinds of needs. Registered, formally organized cooperatives were first established in Europe during the nineteenth century by people concerned about protecting their interests and improving their economic and social well-being. Based on the fundamental principles of one member, one vote, the practice of rewarding people in proportion to their participation, and the use of education as a means of empowering people, the multifaceted ‘‘organized’’ movement had spread throughout most of the European continent by the beginning of the twentieth century. In the wake of European colonization and migrations, co-operative organizations were established in most of the rest of the world as well. Today, the co-operatives affiliated with the International Co-operative Alliance are involved in hundreds of different kinds of businesses, with more than 800 million members in over one hundred countries. In the past year, however, this position of co-operative advantage is being seriously challenged, and in parts of the Eurozone, co-operative banks have come under tremendous pressure. By happy coincidence or perhaps clear vision, the theme of the 2013 ICA Global Research Conference held in Nicosia, Cyprus, 12–15 June, ‘‘Cooperatives During Crisis and the Post-Crisis Period,’’ addressed many of the important issues faced by cooperatives in economies under stress due to the financial crisis.
co-operative movement and lessons learned from its responses to crises throughout its history. It was suggested that if we are to provide evidence against erroneous interpretation of co-operative behaviour, we must develop measurement approaches that go beyond traditional economic evaluations. We need to be able to measure and report on these behaviours in a way consistent with what co-operatives are trying to achieve in keeping with the cooperative values and principles, underscoring the importance of balanced measures of performance that inform co-operative governance and management critical to longevity. For in addition to measures of business growth and stability, we must gauge the outcome of the relationship between the social and economic objectives of the co-operative. To fully demonstrate the impact of co-operatives and their ability to create resilient communities, therefore, researchers must look beyond ‘‘traditional’’ measures of performance. It is critical to understand what co-operatives do that is different from a typical privately owned or investor-owned business, and why the metrics used to measure co-operative performance and impact must be different and matched to their unique behaviours. 1.2. Co-operatives and economy Co-operatives were described as a democratic mechanism for wealth creation. Members of co-operatives put equity into the enterprise, and a successful co-operative enterprise gives a return on that investment. Sometimes the return takes the form of annual dividends or patronage refunds; sometimes the return is in the form of job security and living wages and benefits, or reduced costs of products and services. Individual co-operatives decide democratically how much of the surplus should be allocated to members and how much should be unallocated or retained in the business. Because of the democratic nature of co-operatives, distribution occurs in an equitable fashion, which places the wealth generated from the business into the hands of the owner-members, and sometimes other stakeholders.
1. Themes addressed by conference presentations 1.3. Co-operative development and social entrepreneurship Following on formal greetings and warm welcomes to conference participants at the historic Famagusta Gates, the opening keynote provided an overview of the lessons learned from the Cyprus economic crisis. With this history and context providing a starting point, participants chose from among nine different themes in five concurrent sessions over the course of two days. A sample of the themes and issues addressed are provided below. 1.1. Co-operative history and values It has been said that to know the future, we must come to know our past. Presenters examined the evolution of the international 7 United Nations Launch of 2012 International Year of Co-operatives, 31 October 2011, New York. See http://www.canada2012.coop/en/about_IYC_2012/UnitedNations-IYC-launch. 8 Richard Stringham and Celia Lee found that the three-year survival rate for coops incorporated in Alberta between 2005 and 2008 was 81.5 percent, compared to 48 percent for conventional businesses. Co-op Survival Rates in Alberta (Port Alberni, BC: BC-Alberta Social Economy Research Alliance, and Alberta Community and Cooperative Association, 2011), pp. 10–12. This publication references earlier, fiveyear survival studies in Que´bec and British Columbia that showed similar, if less spectacular, results – 64 percent (in Que´bec) and 65.8 percent (in British Columbia) for co-operatives, compared to a survival rate of 35 percent and 39 percent, respectively, among conventional businesses. 9 Lou Hammond Ketilson and Kimberly Brown, Financing Aboriginal Enterprise Development: The Potential of Using Co-operative Models (Saskatoon: Centre for the Study of Co-operatives, University of Saskatchewan, 2009).
Co-operatives, it was argued, are driven by the needs of their membership. Their leadership stresses the importance of meeting member needs and of responding to local pressures. They are inclusive organizations and are respectful of the rights of individuals and the values of communities. Thus, when managed properly, they can become strong manifestations of community needs and community pride. They can be the kinds of responsive, entrepreneurial institutions many people say they want and demonstrably need. A fuller understanding of ‘‘co-operative entrepreneurship’’ is required to avoid confusion with the more individualistic motivations of the social entrepreneur. The ultimate goal is to develop a typology to inform government policy, and to prevent narrow perceptions of co-operatives, i.e. only for the poor and marginalized, from restricting the growth and use of the cooperative model. 1.4. Co-operatives and food security Food security is a critical issue in many countries today given the challenges caused by climate change and associated environmental degradation. Researchers have focused their attention on agricultural co-operatives examining how strategic orientation leads to increased sustainability; the growth of new forms of cooperatives to address needs in challenging areas; as well as how to support co-operative development that addresses needs in long established economies.
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002
G Model
JCOM-16; No. of Pages 3 L.H. Ketilson / Journal of Co-operative Organization and Management xxx (2014) xxx–xxx
1.5. Co-operative marketing and management Co-operatives are based on democratic principles of one person, one vote, the accountability of elected leaders, and the need for members to be informed about their co-operatives. If managed effectively, co-operatives deepen relationships with members over time by encouraging them systematically to expand their investments in equity and by involving them in a range of activities in the co-operative. Their collaborative models of decision-making result in the creation of shared value and greater commitment to the organization and the well being of the membership overall. 1.6. Co-operative banking Not surprisingly, many presentations focused on co-operative banking. It was argued that the governance structure of cooperatives, where local credit unions and co-operative banks scrutinize the decisions of the central institutions, causes decision makers to be more aware of the fact that the loan they offer to their members is another member’s money. The direct link between savings and loans, which may not be as apparent in some banks, acts as a moral constraint. Additionally, at the local level, cooperative banks and credit unions are not reliant upon the capital markets for funding, but are funded through member deposits. They are strong in retail banking, which is characterized by stable returns and comparatively good access to savings and deposits. Since they are not able to go to the markets to obtain easy money from investors, they tend to retain their profits and take fewer risks. Despite these tendencies, co-operative banks are facing serious challenges in many countries. 2. Conference reflections The 2013 ICA Global Research Conference was a successful combination of intellectual challenge, stimulating debate, historical and cultural inspiration, and culinary delights. If there were any criticism of the event it would be to offer fewer concurrent sessions to enable participants to benefit from more of the presentations, and to demand submission of completed papers prior to the conference to assist the organizers in disseminating the knowledge generated more efficiently.
3
We must raise the question, however, as to whether or not the correct themes have been covered or if are there are gaps considering the needs of the co-operative movement today? The ability of co-operatives to survive economic crisis has been well demonstrated in many studies examining the outcomes of the economic crisis. We are in need of research that provides more indepth conceptualization of definitions of, and the source of, the resilience, along with strategic approaches to achieving this dynamic outcome. The important role of law was emphasized, along with the avoidance of further ‘‘companizing’’ of cooperatives. What can research tell us about how to do this? What can be determined about the role of gender and diversity in developing strong co-operatives and improving management? How do we ensure the establishment of governance structures that facilitate the homogeneity of interest which has emerged as central to the ability of co-ops to react with speed and innovation to the challenges imposed by the economic crisis? And finally, new forms of collaboration warrant additional examination particularly in light of accelerated movement towards mergers among co-operatives previously constrained by jurisdictional boundaries, now removed. Research must identify where co-operative forms overlap with other forms such as regional clusters, networks, consortia, mutual societies and social enterprises, and provide recommendations as to when it makes sense to adopt or adapt new forms. ‘‘Cooperatives During Crisis and the Post-Crisis Period’’ occurred at an important juncture in the history of the Cypriot Co-operative Movement, which is currently undergoing a restructuring process. Ironically, the movement had just celebrated its one hundredth anniversary during the Cyprus presidency of the European Union in the autumn of 2012. I join the conference organizers in their belief that the problems of the Cyprus economy will be overcome and the co-operative movement will again play a central role in supporting the local society as it has done during the long years of its existence. outgoing Chair Lou Hammond Ketilson ICA Committee on Co-operative Research Received 3 April 2014
Please cite this article in press as: Co-operatives during crisis and the post-crisis period. Journal of Co-operative Organization and Management (2014), http://dx.doi.org/10.1016/j.jcom.2014.04.002