Abstracts: Workshop on Structure and Growth (1997)

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 Abstracts : Workshop on Structures and Growth


                    October 1997

Source : Abstracts presented to the ICA Committee on Research Annual 
Conference The Co-op Advantage in Civil Economy, Bertinoro, Italy, 
October 1997

AGROINDUSTRIAL CO-OPERATIVE : AN ESSAY ON GROWTH AND
CAPITAL STRUCTURE.

Prof. Sigismundo Bialoskorski Neto,  São Paulo State University, Dept of 
Economics, Researcher, PENSA Agribusiness Program ; Prof. Pedro 
Valentim Marques, São Paulo State University, Dpt of Agricultural 
Economics, Brazil

This paper discusses the nature of co-operative enterprise, accordingly
with contractual relationships and the New Institutional Economics, 
particularly the Transactions Costs Economics  point of view.
The objective of this study is to analyze the co-operative
growth and its adaptation capacity and the firm's survival conditions.

The aim was to verify that co-operative enterprise, because the 
opportunity costs of ownership capital, and the costs of financial 
governance structure, shows viability when it is a small enterprise,
and the necessary growth process increases the cost of
transactions, and the "agency", when compared with other enterprise forms 
organizations. Two graphics analysis show that when assets specificity grows, 
 the transaction costs rise too, and because relations of productions factors, 
capital and labor, in the co-operative enterprise these firms have a tendency
 to have more transaction costs of capital them other organizations, and 
one debt structure more expansive.

These situation happens because the doctrinal structure of the co-operative
enterprises, where there are a problem of capitalization process, slow and 
expensive process of decision, and presence of small proportion of  
professionals at the board. 

Also it is possible to indicate a necessary change in the co-operative capital structure,
throughout the opening  the capital, in order to the enterprise supports the growth and
the adaptation process, aiming at the market survival. The new generation of 
co-operatives enterprise would succeed if their organizational architectural changed 
with more business agility and strategic alliances with other organizations. The theses
will be on discussion in Brazil and there will be more resolutions about how to increase
the co-operative performance on the global business. There are already some
 talking and planned strategic alliances and alternative to co-operatives capital 
structure.

This paper concludes that it is needed more studies in this area to obtain 
co-operative enterprises with a doctrinal foundation added to the necessary 
business agility for the incoming global market.

SASKATCHEWAN WHEAT POOL:  EVALUATIONS AND ANALYSES ON
BECOMING A PUBLICLY TRADED CO-OPERATIVE.

Murray R. Bryck, Saskatchewan Wheat Pool, Executive Assistant to the 
President, Canada

Within the context of the 1997 theme "The Co-operative Advantage in a Civil
 Economy", a case study is presented on the process of Saskatchewan Wheat Pool 
(SWP) becoming a publicly traded co-operative.  The study outlines activities/decisions
 which led to the financial restructuring of SWP along with a critique of developments
 based on the first year and a half of operation as a publicly traded co-operative.

On April 2, 1996, SWP's Class "B" non-voting shares were listed and began trading on the
Toronto Stock Exchange.  The listing was a culmination of several years of intense
discussions within the organization reflecting both its history and future all within the
context of the specific requirements of co-operative and democratic structures and
processes.  Key aspects of the financial restructuring (equity conversion) included a
combination of financial reviews and significant internal and external discussions and
debates.  In terms of legislative requirements, changes were made to the Saskatchewan
Wheat Pool Act.  During the process, the organization was exposed to a scrutiny by the
public, specifically the media never before encountered.  At a special meeting in July of
1994, delegates approved the financial restructuring plan at a level of 80%.  Class "A"
member shares and Class "B" shareholder investment shares were created.

As a publicly traded co-operative, the organization has both continued and changed its
multi-faceted structure involving its membership and shareholders.  From a policy
perspective, the organization continues to be one of the most effective in advancing the
interests and causes of its farmer members and shareholders.  In terms of commercial
activities, the organization has grown to become Canada's largest agri-food co-operative
and continues to pursue its aggressive program of focused diversification.

The concluding section of the paper outlines the organization's new vision, mission and
core values regarding future challenges and opportunities.  These elements reflect the
rural potential within the concept of globalization, specifically as related to
innovation and reinvention.  In essence, the greatest success of SWP is that it has
become an organization which combines the benefits of co-operation,  democracy, 
participation and control, while providing commercial capabilities/services and policy
development and advancement.

NEW FACES OF THE KIBBUTZ - LEGAL ASPECTS.

Prof. Smadar Ottolenghi, Israel

The Kibbutz has already established itself as a well known phenomenon. It is identified
by its special characteristics, such as lack of private property on the part of the
members, maintaining equality in  every aspect of life, giving to each member what he/she
needs and the member giving his/her utmost to the Kibbutz. The Kibbutz was also known for
 having its children raised together in children's homes, the members having all their
meals together in the common dining room, and the gathering of all the Kibbutz members
every Saturday evening to participate in the most democratic form of the General
Assembly, whereby all the decisions which concern the Kibbutz were passed. However, all
these are part of the past.

The Kibbutz is no longer this way today. Over the years, the Kibbutz has undergone
radical changes. Collectivity has been reduced; children live with their parents up to a
certain age; Kibbutz members are allocated sums of money to spend according to their
personal desires; members may choose to eat their meals in privacy, and meals at the
dining room are paid for;  members get paid for their work; and there are even Kibbutzim,
that have decided upon differential salaries for their members!

Many are the reasons for these changes, of which the following are but a few: many
children decide not to continue the Kibbutz life, so the Kibbutz society has started to
age, with only few of the younger generation remaining; the pretences of the members
serving in managerial positions, who compare what they get in the Kibbutz with what they
are continually offered "outside"; the emphasis on equality, albeit false, as there are
those members who bear all the responsibility and the others, who simply benefit from
living in the Kibbutz, enjoying the fact that they do not have to spend money for their
welfare; and, finally, the growing debts, which demand economy in order to reduce
expenses.

The influence of the surrounding society had its impact as well. The Kibbutz has found it
difficult to keep itself in total isolation from its environment. It could not continue
to close its eyes to the general inclination of the whole population toward a capitalist
approach to life. The results have been modifications in the main concepts of the
Kibbutz. From total equality, which was taken to an extreme, the motto of today is
diversity; from unification - to the acceptance of pluralism in every aspect. Whereas in
the past, the Kibbutz Movement required all its Kibbutzim to maintain a unique form and
structure, today the Movement is ready to accept a variety of structures and different
types of comportment on the part of its Kibbutzim members.

So what is a Kibbutz nowadays? How can we define it?

The first statutory legal definition of the Kibbutz was given in 1973; and in reality,
since then the Kibbutz has deviated from it. From the  legal point of view there are
major problems. To name but a few: When Israeli laws refer in their stipulations to the
"Kibbutz", do they also apply to the Kibbutz in its present form? When contracts confer
upon the Kibbutz particular rights, given its true traits according to the definition -
are they still in force, when the Kibbutz has undergone considerable changes since they
were signed and is no longer the same?

And the last problem which faces the Kibbutz, derives out of the new mode of the
usufructus  of its land, which is not utilised for agricultural purposes only. The
growing population in Israel needs  lodgings, and Kibbutzim - like any other holder of
land in Israel nowadays  - aim at making profit out of the situation. The Kibbutzim offer
people to stay on their premises, and to pay for all the services they get from the
Kibbutz - from meals served in the dining room, laundry services, schooling for their
children, to swimming pool and other sport activities in the country club, etc. The
Kibbutzim don't foresee, however, that these advantages may also lead to their own
destruction - once the population of  these residents grows, these new comers will start
demanding their privilege to exercise their own civil rights, such as electing their
representatives to the local committee. Once they have their vote (which today they do
not, according to a special Order by the Minister of Interior Affairs, even though they
do have to pay municipal taxes), they may outvote the Kibbutz members. This process may
signal the beginning of the end of the Kibbutz.

INNOVATION AND CHANGE IN FEDERATIVE DECISION-MAKING 
SYSTEMS: THE CASE OF CUFIS AND THE CREDIT UNION SYSTEM OF
SASKATCHEWAN.

Dr Lou Hammond-Ketilson, University of Sakatchewan, Canada

Innovation is the key to success within the financial services industry. It is
particularly important to credit unions in Canada, where they face fierce competition
from banks and trust companies, and very soon the insurance industry. The long term
ability of the decentralized Canadian credit union system to compete with the highly
centralized structures of other members of the financial sector is a central question
examined in this paper.

Although innovation has been examined from many perspectives in the literature-diffusion
of innovation, characteristics of organizational innovativeness and innovation
processes-the issues around the introduction of innovation into systems of organizations
has received limited scrutiny.

Using a case study methodology, this paper examines one attempt by a federation to create
a structure that would stimulate innovation within the entire system. The federation in
question is the Credit Union System of Saskatchewan, Canada; the structural innovation is
Credit Union Financial Information Services (CUFIS).

A federative decision making systems is made up of autonomous organizations loosely
joined together by a central administrative organization providing services to the
individual affiliates. Such systems are characterized by a decentralized power base and
consensus decision making processes. The impact of these characteristics is specifically
examined with regard to the innovative ability of federative decision making systems. The
results indicate that federative decision making systems facilitate innovation in certain
situations, however the decision-making structures present challenges to the diffusion
process.