The Governance of Large Co-operative Businesses

Summary

Co-operative governance emerges on balance as healthy and effective compared to investor-owned business. The quality that marks out the most successful is being member-centred. However, there are also risks associated with a more participative model of ownership.

In producer co-operatives, there have been few governance failures, and the ones that have happened have been confined to individual businesses. Consumer co-operatives have been more prone to governance failure. Because they tend to have many members whose relationship with the co-operative is slight, they face the risk that they are more easily captured by special interest groups or by ambitious managers, sometimes without the members even noticing. a) Competition over resources – people and money.

There are three qualities of governance systems that emerge as most relevant, with different emphasis in different co-operatives in terms of a settlement on where the balance should lie. These are to achieve representation, expertise or member voice.

Only when all three types of authority are present can a co-operative be governed effectively. However, there can be trade-offs between them, and the challenge of governance design is to encourage an optimal balance for the co-operative over time.