Abstracts, Part 2

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.

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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA
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                        November, 1996

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               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 :jccu-int@mxb.meshnet.or.jp

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 : jerker.nilsson@ekon.slu.se




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 : abl@msmcws.demon.co.uk




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.