Demutualization and Its Problems

Abstract

Over the last three decades cooperatives experienced acceleration of institutional innovation with the introduction of many variations to the reference model. It is certainly not surprising that coops changed their organizational structure over time to face the challenges of world. In the United States and in Canada they are commonly referred to as New generation cooperatives, in Italy and Spain as cooperative groups or network of cooperatives. One of the main feature of these new organizational structures is their attempt to take some advantages of the investor oriented firms (above all in capital raising activities) while retaining the mutual/cooperative status. Many of these changes have been undertaken to facilitate the growth of the enterprises both in domestic market and abroad. Due to the wideness of the phenomenon we could name the last three decades the age of hybridization. However in some cases the search for new structures went further and assumed the aspect of conversion of mutuals into stock firms. Our paper will deal with this latter part of the story, focusing on cooperatives that preferred conversion or demutualization to hybridization. The paper describes the chronology and the geography of demutualization and analyses the forces that drove it over the last decades. The main conclusion is that demutualization provided solutions for real problems, as hybridization did, however the choice between these two options seems to have been more a matter of ideology than of efficiency.

Member preference heterogeneity and system-lifeworld dichotomy in cooperatives

“…In North America, the collapse of the successful consumer cooperative in Berkeley, California, has been attributed by more than 14 experts to the ever-increasing levels of member preference heterogeneity (Fullerton, 1992). Similar devastating outcomes have been observed in European countries and Japan where various types of cooperatives have had a hard time adjusting their organizational model to the diverging preferences of member patrons (Garrido, 2007; Battilani and Schröter, 2012). Conversely, when cooperatives manage to adopt an organizational design that minimizes intra-organizational conflicts arising from the divergence of member preferences, their success has been tremendous (e.g.…”

General Introduction

“…moreover, an organized collaboration between capital and labour that seems unthinkable in the uk and the uS is regarded in some european countries as well as Japan as an important foundation of economic competitiveness. Finally, cooperative societies, a special form of enterprise management, are now regaining a significant economic position again after two decades of demutualization (Battilani and Schröter [2012]).…”

Social innovation practices in the regional tourism industry: case study of a cooperative in Brazil

“…Cooperativism is a type of economic organization that has its foundations in mutual aid and the participation of its members in the organization, development and management of economic activities. Its central principles are free and voluntary membership, democratic management, economic participation by its members, autonomy and independence, access to education, skills and information, inter-cooperation and social responsibility, expressing a commitment to human values and social development (Battilani and Schröter, 2013).…”