In May 1995 the Co-operative Congress took place in Warsaw according the new co-operative law. The new National Co-operative Council was elected in democratic election. Now, the most urgent problem is to strengthen the co-operative position on the market and its successful competition. ---------------------------------------------------------- This document has been made available in electronic format by the International Co-operative Alliance ICA ---------------------------------------------------------- November, 1996 ****************************************************** CO-OPERATIVE INNOVATION AND CHANGE INTERNATIONAL CO-OPERATIVES RESEARCH CONFERENCE 26-29TH SEPTEMBER 1996, TARTU, ESTONIA ABSTRACTS: Part 2 CO-OPERATIVE RESPONSE TO THE AGING SOCIETY: JAPAN'S CASE AUTHOR : Akira Kurimoto, Japan Society for Co-op Studies The formidable speed of aging is one of the most demanding problems facing a lot of countries with longer life expectancy and the increased costs involving social welfare services. There are widening gaps between what the aged people wish and what the society can offer. How to mobilize the financial and human resources to cope with the rapidly aging society is one of the most crucial domestic problems. Where co-ops stand between the State and the Market in the provision of welfare services is a question which needs to be addressed. The welfare state model is becoming to be less attractive because of the high cost/taxation and the inevitable bureaucracy while the market has proven to fail so many times especially to cater to the poorer strata. So, it can be suggested there could be the mutual help solution in addition to the public help and the mere self help. Co-operative solutions to the aging problems should be intensively and extensively studied as an effective supplement or viable alternative. They could be more democratic because of the participation of the people who provide and use the welfare services. They could be less expensive involving the beneficiaries efforts. There exist a number of good examples of co-operative contribution to these problems both in the urban and rural areas, both in the welfare states and the laisser faire society. Herewith the Japanese cases are presented. Medical Co-ops: Self check and rehabilitation The medical co-ops have been serving the health/social care needs of the aged population which constitutes the main corpus of the membership. The preventive medicine has been emphasized to avoid illness and help lead the healthy life. To this end the education and information of members is of crucial importance and the self check activities of blood pressure and urine are carried out in Han meetings with the assistance of the specialists. The rehabilitation is also an important function of medical co-ops, many of which run the day care centers and nursing homes. Consumer Co-ops: Mutual help and supply of goods Consumer co-ops have promoted the members activities based on mutual help; home help groups are formed in 40 co-ops and the luncheon parties/meals on wheel are organized in 30 co-ops. Some of them have organized the home delivery services for the needy people. Out of these activities welfare co-ops/workers collectives have been spun out. JCCU sells the instruments and supplies for the aged through the nationwide catalogues while some co-ops run the specialized stores for such products. Elder Citizens' Co-op: Job creation and motivation to live The latest development is the formation of elder citizens* co-ops under the initiatives of the worker co-op federation. There are 3 co-ops already operating and others being set up. They seek to create job opportunities in such fields as road cleaning, gardening, house repairing, recycling etc. and carry out joint purchases of the necessities. They also promote activities to encourage mutual support through culture, sports, recreation, learning and communication. Conclusion There could be a huge gap to be filled and an enormous potential to be examined by the co-operative actions. To identify good examples and exchange experiences is an important task of the co-operative study. Mr. Akira KURIMOTO Vice-Chairman ICA Committee on Co-operative Research JCCU, 4-2-13 Sendagaya, Shibuya-ku TOKYO tel : +81 3 34 97 91 93 fax : +81 3 34 97 07 22 e-mail :email@example.com Japan LOCAL GOVERNMENT AND DEVELOPMENT THROUGH CO-OPERATIVES AND CO-OPERATIVE-TYPE ENTERPRISES: THE THIRD SECTOR OF THE GREEK ECONOMY AUTHORS: Dionysos MAVROGIANNIS, 16 Neotitos str. NEO IRAKLIO, Athens 14122; fax :00301 2832736; Dimosthenes KASSAVETIS, 50, Skoufa Str., Athens 10672 Recovery of constitutional rights and parliamentary democracy in Greece in 1974, after seven years of military dictatorship (1967-1974), was for several groups of population and local authorities the starting point for creating new forms of social economy. Among various initiatives and attempts in this field, two experiments gained the upper hand and attracted large people's participation : first : the Companies of Shipping owned by users and local organisations, and second the Municipal Co-operatives and Co-operative-type Enterprises. Popular Companies of Shipping (ETAIREIES LAIKIS BASEOS). The rapid growth of the shipping industry after '60ties for the transportation of tourists to the Greek islands of the Aegean and Ionian Seas, had a negative impact on the sea communications with the smaller islands of the area : neglect first of the latter placed out of the so-called "fertile lines" and second, of the agricultural products destinated to the continental urban centres as well as to exportation to West and Central Europe In reaction to that, inhabitants of some prejudicated islands come to the decision to build-up and exploit their own ships by raising private funds and getting organised in Popular Companies of Shipping. The legal form of them is identical to the one provided for the profit societies. But quite different as far as share-holders, capital and distribution of profits are concerned : share-holders are local co-operatives, municipalities concerned, various non-profit associations and physical persons. Share-holding is limited (the ceiling is 10% of the capital). Profits, if any, are distributed in proportion to the share-holding. Such Popular Companies grew-up rapidly during the last 25 years. Some of them are organised even in rural areas and aim to the integrated development of the regions concerned : intensive cultures, processing and packaging of agricultural products. However, some of them have not been able to stand sharp competition coming from the side of profit-oriented shipping business; others failed in terms of an efficient management; and some are facing problems of revolving funds, of the costing adaptation to technology and of an excess of employees. Popular Shipping Companies have broken the powerful monopoly of the capitalist shipping, as well as the isolation of remote islands, by offering to islanders, on a regular basis, social and economic services of an inestimable value. Municipal Co-operatives and Co-operative-type Enterprises Participatory Democracy which substantiates Political one, is foreseen in the Constitution of 1975 (art 5). It comprises among other social and economic institutions, Co-operatives, Trade Unions and Municipal Enterprises. The later, emerging from the first degree local government, belong to the municipalities and aim to provide members of the community with low-cost services and goods. Some of these enterprises are organised in form of co-operative societies, share-holders and users being the citizens of the municipality. Others are co-operative-type enterprises with a mixed membership : physical persons, other co-operatives, social institutions, various associations and occasionally, public bodies. A third form, the most integrated, provides for enterprises, social and cultural activities, organised basically with the financial aid of the State and of the European Union, but owned and run by the inhabitants of the locality according to their needs and capacity to work. These last experiments are the most advanced forms of social economy, creating the foundation of a new participative, collective, humanised and democratic local society. NEW GENERATION CO-OPERATIVES - WHAT, WHY AND HOW ? AUTHOR : Jerker NILSSON, Department of Economics, Swedish University of Agricultural Sciences During the course of the 1990's more than fifty new agricultural co-operatives of a specific organisational setup have been established in Minnesota and the Dakotas. They originate from an economic crisis in some remote and sparsely populated regions. This co-operative model has until now proven itself to be valuable to the extent that the farmers have not been forced to leave the region and the co-operatives show good economic results. Furthermore, the New Generation Co-operative model has during the last few years been propagated to other states of the USA as well as to Canada (Alberta, Saskatchewan and Manitoba). As a NGC is to be established the potential members start by identifying a good market for processed products, such as pasta, alfalfa or bison. The rationale is that selling raw product results in low prices and poor profitability, especially as any local purchasing firm would be in a monopolistic position in these regions if there were purchaser at all. On the basis of market analyses the farmers find out the volumes of processed products that the market can absorb at reasonable prices. The costs for establishing the production and marketing facilities are calculated, i.e., the need for investments are decided. This amount is divided among the farmers in proportion to the quantities of raw product that they are to deliver. Hence, the NGC model has its core elements : * Production of processed products, based on the members' deliveries of raw product. * Investments by the members in proportion to their deliveries. * The shares that the members buy function as delivery rights, i.e., the members are not permitted to deliver neither larger nor smaller volumes. * The membership is closed. Only those who have shares and delivery rights are members. * The shares are traded among the members at market rates, thereby securing that the membership will consist of the most efficient farmers. * If the need for capital increases the members invest more, and if the need for raw product increases new shares are emitted to be purchased by existing members or new ones. * Profits are divided among members as patronage refunds. There is no collective capital. The NGC concept has not yet spread to Europe, though some co-operatives have similar traits,e.g., the starch industry and increasingly so the Dutch dairy industry. It can, however, be expected that this co-operative model will be accepted among some farmers in certain industries (ecological milk, for instance) and some regions. There are some interesting theoretical challenges in the NGC model. It is evident that these co-operatives are effective in solving the transaction cost problems of farmers under certain conditions, but it is not clear how these conditions could be identified in real life. More important is that the NGC concept seems to be promising when it comes to solve the agency problems, which are often claimed to be inherent in co-operative businesses. As the shares are traded within a closed membership, the horizon problem is solved. As the co-operative deal with just one single line of business, the should be not common property problem. My conference paper should, after description of the concept of New Generation Co-operatives, mainly contain a theoretical discussion, including transaction cost theory, but especially agency theoretical problems. ____________________________ Cook, M: Organisational Structure and Globalisation : The Case of User Oriented Firms. Unpublished article manuscript, University of Missouri, Columbia. Egerstrom, L: Make no Small Plans. A Co-operative Revival for Rural America. Lone Oak Press, Rochester MN 1995. Harris, A; Stefanson, B; Fulton, M : New Generation Co-operatives and Co-operative Theory. Centre for the Study of Co-operatives, University of Saskatchewan, 1995. Stefanson, B; Fulton, M; Harris, A : New Generation Co-operatives : Rebuilding Rural Economies. Centre for the Study of Co-operatives, University of Saskatchewan, 1995. Mr. Jerker NILSSON Uppsala Agriculture University PO Box 7013 750 07 UPPSALA tel : +46 18 67 17 68 fax : +46 18 67 35 02 e-mail : firstname.lastname@example.org CO-OPERATIVE VALUES IN PRACTICE : THE CO-OP AS A RESPONSIBLE RETAILER AUTHOR : D.K. SEAMAN, Market Research and Business Information Manager, Co-operative Wholesale Society Introduction This paper will present members of the International Co-operative Research Committee with a case study of the experience of the CWS as a "Responsible Retailer". General Background The increasing importance of ethical and environmental issues to consumers. The example of the Co-op Bank. CWS Members' Survey The CWS carried out a survey of 29,782 members asking about their views and priorities in relation to ethical concerns. This was the UK's largest ever independent survey of this area. The main areas of concern were identified as animal welfare, the environment, packaging and labelling and ease of access. The CWS Response The survey set the agenda by highlighting the main areas of consumer concern where action was needed. Consequently the CWS launched a number of initiatives in relation to information (the consumers' right to know, animal welfare and diet and health). Priorities The ways in which the Responsible Retailer positioning can be developed in the future will be outlined. D.K. SEAMAN Market Research and Business Information Manager Co-operative Wholesale Society New Century House Corporatiuon Street P.O. Box 53 MANCHESTER M60 4ES United Kingdom e-mail : email@example.com ISSUES IN DEMOCRATIC GOVERNANCE AUTHOR : Roger SPEAR, Co-ops Research Unit, Open University, Milton Keynes, UK This paper considers issues of governance in democratic member based organisations, such as co-operatives and mutual societies. It critically assesses the different approaches and the major themes of current debates in corporate governance and examines their relevance to democratic organisations. It examines the processes whereby members interests are mediated and explores some of the issues involved. In particular it considers the difficulties of managing the interests of large numbers of stakeholders, and some of the ways this is undertaken. 1. Democratic membership organizations The paper begins by delineating the type of organisation considered, and the reasons for some of the current concerns. The organizations considered serve a membership and give that membership democratic rights of governance. Examples of the current concerns are most visible in the recent report on Co-op Governance in the UK Co-op Sector, but other concerns are to do with degeneration of co-ops, a tendency to insularity, and the processes or political levers for promoting change in governance. 2. Approaches to Governance This section draws mainly on a critical review of corporate and non-profit governance literature. It draws to a limited extent on the competence based approaches (for effective board activity). The paper then goes onto consider principal/agency theory (eg Jensen and Meckling), its bases for controlling manager agents, and the implications of incorporating democratic rights into such a framework. Principal agency theory has received numerous criticisms for the gap between the theory and reality, but it has been extremely influential, particularly in proposing changes to governance processes. As Kay argues, one either has to change reality to fit the theory or theory to fit reality, he chooses the former in proposing a trustee model of governance (trustees of the firms assets). This approach has the advantage of fitting more closely with most observers views that management is by far the most powerful actor in the governance/management process. This approach is critically examined, particularly in relation to expanding the view of a firms assets to include its core values and democratic rights of members. 3. A Stakeholder Model of Governance This section very briefly develops ideas from section 2 to articulate a stakeholder model of governance. It argues that such an approach is more relevant to social economy organisations (including democratic and non-profit ones). However it also discusses the difficulties of such an approach from a number of perspectives, including considering the potential effects of increased transaction costs (Williamson). It considers two distinctly different ideal typical stakeholder models - primary stakeholder with others as constraints, and stakeholders as defining objective functions (for decision making). The two models would have different applicability within the social economy. 4. This section comments on the UK recent experience of corporate governance in the co-op sector 5. This section briefly considers some of the issues that arise from the analysis, requiring further research or debate. Issues include : The logistics of dispersed member activity (difficulties of collective action - barriers due to geography channels, time and information). Lumpy decisions (the social process of articulating and mobilising disparate members interests) Collectivist orientations (Olson vs Etzioni) - consideration of the extent to which moral behaviour and ethics can play a role within governance theory. Efficiency considerations Forms of degeneration (managerialism vs sectionalism vs the representative model) Openness of membership structures and the problem of sectionalism Power outside governance - eg the power of contracting stakeholders _____________________________________ 1. This text is based on a revisions to a paper presented to Conference on Theoretical Approaches to Democracy in Organisations, Copenhagen, June, 1996. Mr. Roger SPEAR Chairman ICA Committee on Co-operative Research Co-ops Research Unit Open University MK7 6AA Milton Keynes tel : +44 1908 653749 fax : +44 1908 652175 e-mail : R.G.SPEAR@OPEN.AC.UK United Kingdom BETWEEN MEMBERSHIP AND OWNERSHIP: COLLECTIVE FARMS AND OWNERS' CO-OPERATIVES IN CZECH AGRICULTURE AUTHOR : Yohanan STRYJAN, Stockholm School of Business, Stockholm, Sweden The paper discusses the institutional transformation of Czech agriculture, focusing on the transformation of 'collective' farms (JZDs in Czech; here CFs)- the dominant organizational population within primary production under the communist regime, and the rise of new organization types in the process. The initial case material collected 1991-1994, was reviewed and updated 1996. The twin concepts of membership and ownership play a central role in the CFs genesis and evolution. CFs came into being through a centrally steered collectivization and amalgamation process, in which imposed membership in formally cooperative organiza- tions played an important role, and property rights were marginalized, but not abolished. This process is briefly reviewed in the opening section. The transformation process, initiated by the post-communist authorities, was carried through a legislative redistribution of entitlements, and marked by a strong programatic stress on property rights (ownership) and the centrality of family farming. Membership, tenancy- or employment-based entitlements were largely ignored, and worker-ownership actively discouraged. The resulting new organizational population is dominated by "owners' cooperatives" (OC); hybrid forms of formally cooperative character where membership is primarily, or exclusively derived from (historical) ownership (rather than from employment or domicile). The relation between ownership and membership, and the limitations of a concept of cooperative membership that is purely ownership-based, or discussed. It is argued that the OC organization form is inherently defective, and, often, essentially ungovernable. The end-product of the managed transformation of CFs is, thus, a starting point for an ensuing wave of transformation. Though the paper adopts a highly critical view of the successive Czechoslovak and Czech governments' policies, this criticism should definitely not be interpreted as an apology or eulogy for the old system. Indeed, it is argued that this system's way of systematically manipulating and perverting cooperative organizations under its control, prepared the ground for today's policies. _____________________________________ 1. An earlier version of this paper was presented at the ISA World Congress, Bielefeld, 1994. Its updating and rewriting was made possible by ACE/PHARE grant # P95-2743-F. Dr. Yohanan STRYJAN Vice-Chairman ICA Committee on Co-operative Research Stockholm Business School STOCKHOLM e-mail :YS@fek.su.se ITALIAN CO-OPERATIVES BETWEEN MUTUALITY AND SOLIDARITY : A NEW ROLE OF MUTUALISTIC FIRM IN REBUILDING SOCIAL WELFARE AUTHOR : Claudio TRAVAGLINI, Business Administration Department, University of Bologna Social co-operatives probably represent the most important evolution of the Italian co-operative movement during the 80's. Social co-operatives, are a typical example of "co-operative company" and are very interesting for the scholars because of their institutional structure, their approach to mutualism, and the structure of their movement. Coming from associations, voluntary organisations or deriving from privatisation in social services social co-operatives cam help us to reflect on the co-operative movement's changing role in the evolution of both the social context and the welfare system. Social co-operation constitutes a new social welfare towards efficiency concerning both the management of human and financial resources and the participation of social forces, but it represents also a main subject in "social economy". Social co-operatives show a specific institutional structure where workers and consumers are together in the same firm and their opposite interests (the minimum price in services for consumers and the maximum prices and wages for workers) shall be settled in the name of the "general interest of the community to the human promotion and social integration" which is social co-operative's and their members final scope. The social co-operative is an example of "co-operative company" in opposition to the "conflictual company" concept. In the conflictual idea of company economic-managerial needs (efficiency, profitability and competitivity) naturally conflict with ethical-social needs and this conflict can be settled in the form of a "trade-off" where either kind of need is satisfied to the detriment of the other; another solution can be a compromise between the two. In the "co-operative company" concept corporate prosperity and the wellbeing of the workforce are indivisible: the former cannot exist without the latter because a company's capacity to serve the customer, thereby generating good profits, is strictly dependent on its employees shouldering the responsibility for the company's problems. In providing social services a conflictual company meet more difficulties to solve operational problems and to control workers performances and service quality. In co-operative companies all the members cooperate to provide quality in social services because they share the same strategic vision in social co-operation. The social co-operative represents the typical co-operative company and it proposes a kind of co-operatives and co-operators : a) operating to achieve efficiency in providing; b) overcoming particular mutualistic goals of the members' categories to reach common orientation towards "general interest of the community" performed in and by a co-operative enterprise; c) adopting economic activity in social service as a "mission" for social co-operatives to answer to the emerging of social needs, to pursue at the same time the satisfaction of both economic and social needs granting an equal remuneration to the workers and providing service to users; d) qualifying as a social co-operative, they decide to forbid any distribution and any extra-remuneration of any contribution to destine all the surplus to the "general interest" and development of co-operative and movement; e) communicating to the stakeholder the result of the process of production and distribution and explaining in social balance, the way they choose to assign the surplus to the social community. In the social co-operative economic and social responsibility goals are connected and indivisible; their co-existence represents the core of the challenge of an enterprise which tries to perform human promotion through the enterprise itself and thanks neither to its resources nor to its actions. According to this view, the social co-operation movement has developed a specific project both of the co-operative as a "social enterprise" and of the social co-operation movement; a particular interest's choice in this project is represented by the "small dimension". The small dimension or the "strawberry field" co-operation model is the choice to avoid dimensional growth for social co-operatives. In the movement's idea social co-operative is not only an economic enterprise, but must be a strong human experience also. Then a social co-operative can growth to the dimension in which human relations among co-operators are direct and significant. So co-operators can directly control one another, their work and their board and contrast"free riders". Consortiums among social co-operatives in each county and a third level national social co-operation consortium assure advantages scale and scope in finance, marketing, administration advantages. The "nonprofit group" entrepreneurial model is related to the Third Sector development and specification process. Third sector entities have structures their activities in different subjects to guarantee an entrepreneurial approach in managing services and a powerful action in voluntary organisations. Co-operatives are the entrepreneurial dimension of these groups and produce social services in co-operation and/or with the resources provided by the other entities in the non-profit group. Voluntary associations assure fund raising and organize people participation in the activity, through information and support. Foundations preserve estate and maintain strategic mission coherence in nonprofit group's activity. Dr. Claudio TRAVAGLINI Business Administration Department Bologna University Scaravilli Place 40162 BOLOGNA tel : +39 51 25 80 93 fax : +39 51 23 75 68 e-mail : C_Travaglini@ecn01.economia.unibo.it ORGANISATION OF THE SWEDISH CO-OPERATIVE HOUSING INDUSTRY AUTHOR : Lars WESTERLUND, LW-Project, Kyrkogarsgatan 39 A S-753 13 Uppsala, Sweden. New trends and tendencies of the Swedish co-op housing market are front-line news to domestic actors and an international audience. The purpose of the analysis is to describe and explain in an up-to-date review style the historical, economic, legal and social aspects of the co-operative housing organisation and performance, including details concerning dynamic financial prerequisites and regional co-op-share housing demand. The organizational concepts and the co-op-housing market analysis are primary based on new theoretical ideas in micro-economic that focuses on real estate business behaviour and its implications both on market structures and processes, and for public housing policy towards them. This is a broad - in most ways - unexploited applied housing research field within microeconomics and public policy that penetrates market structure, actors behaviour, principles of contacts and risky investments and the effective public policy in each market segment. The analysis will be presented at a level suitable as a source, reference, and teaching supplement for ideas in co-operative housing consumption and co-operative industrial housing organisation and management.