Editorial (1997)

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This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
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April, 1997
(Source: ICA Review, Vol.90 No.1, 1997, pp.3-7)

Editorial
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The papers in this special issue were selected from our last ICA
Research Committee Conference, a delightful and very fruitful visit 
to Tartu in Estonia. The conference was on "Innovation and Change", 
but one thing clearly had not changed and that was co-operative hospitality,
together with the ability of co-operators to enjoy themselves! I would
particularly like to thank Lea Sudakova and her team in Estonia (Walter
Krinal and Henn Elmet) as well as Yohanan Stryjan, Stockholm School of
Business, Koopi, Stockholm, and Alina Pawlowska of ICA secretariat for
their administrative support. 
    
Last year we had a special research conference issue of the Review of
International Co-operation, as part of our aim to to increase the visibility of
our research findings. This year again with the support of Mary Treacy,
Communications Director of the ICA, we are doing a special issue to
disseminate findings from some of the best papers at our Estonian Research
Conference. Since there were over 30 papers, this has not been easy, and I
have had to leave out a number of good ones, because our space is limited.
The selection is based on an attempt to get a reasonable spread of papers
across the globe, across sectors and across issues.  I have also tried to pick
papers which have a bearing on a wider range of  sectors and countries than
the specific ones immediately addressed, i.e. they address important and
general issues. Thus the ten papers chosen reflect range and variety and
hopefully, relevance to current issues.  

Since the papers were selected partly to show the varied research being
undertaken, I have attempted to put them together in some order, but of
course there are numerous other ways they could have been grouped.  The
first three are concerned with the ways co-operatives can influence the
development of new and existing markets  -  since it is clear that markets are
very different (for example compare the market for consumer goods with
that of corporate finance).   The next four explore innovation and change in
different co-operative sectors. These are followed by accounts of the
adaptations that co-ops are making in the new market economies being
developed in Eastern Europe - though clearly there are deregulation and
privatisation. Last but certainly not least is a paper on social reporting in the
insurance sector - hopefully the first of many in the area of social audits.

We chose "Innovation and Change" as the theme of the Estonian conference
because, although co-ops have a great tradition of innovating, this strength
can also be a weakness if it becomes an excuse for inward and backward
looking. So we wanted to bring out some interesting current examples of
innovation and change which indicate positive lessons for co-ops, as well as
for researchers. And we wanted to examine economic as well as social
innovations.

One of the most important  business attributes is to be able to move quickly
into new markets, but to do this and innovate socially requires something
extra. The first paper by Santuari and Borzaga is based on the impressive
experience of the Italian social co-operatives. There are now well over
2,000 such co-ops and their social and economic performance is so
impressive, they have like a beacon for many Europeans looking for
alternatives to a privatised welfare system.  The paper argues that
participation in these new welfare markets has led to the evolution of co
operative and associative forms of organisation. And one of the interesting
features of this is the greater prominence given to other stakeholders (most
co-ops tend to be run in the interests of one stakeholder eg consumers or
workers or producers). This leads them to use the term multi-stakeholder
co-operative, and examine their performance, and how they compare to non
profit-making organisations. There are important implications here not just
for co-operatives, but also for those concerned with restructuring the
welfare state. 
 
In a similar vein, the paper by Kurimoto documents the major achievements
of the Japanese co-operative system, particularly in relation to problems
associated with an ageing population. The co-ops reviewed include medical
co-ops, consumer co-ops in the welfare sector, and elder citizen co-ops for
job creation and support. This highly developed experience indicates that it
is not just manufacturing management and business organisation that might
serve as interesting models for the rest of the world!

With regard to these experiences in the welfare sector, it is encouraging to
see a new ICA health co-op federation recently established and Italian social
co-ops continuing to develop their federative structures.

The third paper is concerned with rather a different kind of welfare - that
which comes from the production of Champagne!  Unless you are rather
rich and a confirmed enthusiast for the delicious stuff, you might feel this
link is rather tenuous.  In some respects you would be right, but the
contribution Draperi makes in his paper is of value particularly to new
markets. He develops a sharp analysis of how co-ops make a market work
for its members - often small and medium-sized operators. He examines the
technical, economic and social functions that co-ops play in the Champagne
system, and argues that they play a key role in defining common rules and
regulations amongst the economic players, thereby helping to manage the
uncertainties and failures associated with markets. This co-op system of self
regulated market offers an interesting alternative to the dynamic but often
unstable deregulated markets and the bureaucratic state regulated markets. 
 
The next four papers represent interesting features of innovation and growth
in quite different sectors. The first by Jerker Nilsson on New Generation
Farmer Co-ops, examines the "co-op fever" in the mid-west USA (Dakota
and Minnesota).  Numbering more than 50 recently formed co-ops, formed
in the last five years, they have helped revitalise prospects for their member
farmers.  The driving force seems to be the search for value-added
products, often in niche markets - these range from organic products, new
meats (ostrich, bison, venison) and their processing, to pasta, soy
processing  and aquaculture. After describing the experience, Nilsson goes
on to examine the particular form that these co-ops take, and their economic
rationale, arguing that from a theoretical perspective (economic) they are
very effective.  
  
The next paper by Ferguson, McKillop and O'Rourke on the Northern
Ireland Credit Union Industry is interesting for a number of reasons.
Firstly, in many ways credit unions can be regarded as a worldwide co-op
success story, and there are clearly lessons here for others. And secondly,
the analysis is based on their very interesting typology of credit union
industry development, as "nascent", "transitional" and "mature" - this
represents a pattern of change where different issues are associated with
each stage. The challenge of growth and development consistent with co
operative values is a common theme not just in the credit union field but in
other sectors too; and the developmental typology would certainly bear
wider application.

The paper by Bidet is concerned with French co-operatives of artisan or
craftsmen/women. Although small, it has been a fairly dynamic sector with
building being replaced by services (eg. taxi co-ops) as the more important
area.  Factors limiting their development in the past have included a lack of
good financial infrastructure, and corporatist barriers (trade unions, linked
to wholesalers). The decline of trade union power means that these co
operatives offer a new form of collective action, but this may be offset by
considerable increases in value of member shareholdings. On the other hand
innovations in terms of vertical integration to improve quality, and
particularly for joint purchasing, seem to offer opportunities for growth.
This suggests some parallels with the rather different world of "new
generation co-ops" in the USA. Watson reminds us that although the
relationship between co-ops and trade unions has at times been ambiguous,
there are also many examples of solidarity and effective collaboration. In the
UK trade unions have often carried out a major entrepreneurial role in
helping to form democratic employee owned businesses and form co-ops
from failing businesses. A stunningly successful example is the last coal
mine in Wales being 100% employee owned, with the jobs saved from a
projected pit closure. 
 
The next couple of papers chart the experiences of co-operatives in Estonia
and Poland in the difficult recent years when state privatisation and free
market reforms have presented co-ops with major challenges. The paper by
Leetsar and Kerner is on Estonia, and they emphasise the positive
contribution that co-ops can make in the crisis ridden transition period;
while that of Chyra-Rolicz is on Poland, and documents the difficult
challenges co-ops have faced during the first half of the nineties. In some
respects these experiences seem like those in western Europe "writ large",
since co-ops in the west have often struggled to adapt to market
deregulation, privatisation (including their own), and the forces of global
competition; indeed it may be instructive to make such comparisons.
However, the other factors involved and the degree of transformation
required make these experiences extraordinary - but they remain very
interesting accounts of co-operative survival and change.  
 
The final paper by Blomqvist is based on his study of social reporting in the
co-operative and mutual insurance sector.  After reviewing practice, and
drawing on co-op principles and values, he discusses ways of improving
both the reporting and actions that arise from such reports. Now that co-op
values and principles have been argued over for several years and revised,
social reporting (and audit) provides  one of the most effective ways of
ensuring they continue to play a vital role in the co-operative enterprise.
Let's hope we see some more studies of this type to develop the theory and
practice of social audit.

While the Estonian Conference was our major event, the other main
activities of the Research Committee last year were at the ICA European
Meeting in Budapest in October, where we made a lively contribution
through two events: a European Conference on Labour Markets,
Unemployment and Co-operatives, which we co-organised with CIES
(Isabel Vidal) of Barcelona University; and a small Workshop on Social
Audit. The former brought together researchers from east and west Europe
with the help of European Commission PHARE money, and produced
some very good papers, stimulating discussion, and some plans to take
work forward in this important area. I'd like to thank Isabel Vidal for all her
hard work in making that meeting a success. The latter workshop on social
audit was part of the Research Committee's strategy to stimulate and nurture
research around themes that are important for co-operators. Social audit is at
an early stage of development and researchers can play an important role in
clarifying issues and developing approaches.  The meeting has already led
to some ideas for joint projects, and at least one funding application. No
doubt future research conferences will see the results of further work.

Since taking over the Chair of the Research Committee, I have been able to
draw on the hard work and support of the other committee members:
Yohanan Stryjan of Stockholm Business School, Lou Hammond-Ketilson
of Saskatchewan Co-operative Centre, and Akira Kurimoto, Japan Society
of Co-op Studies - I'd like to thank them for their support in past activities,
and for their help in future plans to strengthen our global organisation and
activities.  

We welcome all new participants, and hope that we can continue to maintain
high quality research activities which make a contribution to the
development of the co-op movement globally. 

Finally, as all papers were shortened by their authors, I would like to thank
them for their research and for writing both papers! I would also like to
thank Mary Treacy, ICA Communications Director, and Laura Wilcox for
editing the papers and putting this Special Issue together.

Roger Spear
Chair,  Research Committee