Cooperative degeneration-regeneration dynamics: evidence from Basque and Breton case studies

In the recent crisis period, when traditional economic organizations were not able to meet stakeholders’ expectations, non-profit organizations such as cooperatives became the optimal solution because they are expected to... [ view full abstract ]

In the recent crisis period, when traditional economic organizations were not able to meet stakeholders’ expectations, non-profit organizations such as cooperatives became the optimal solution because they are expected to serve social and economic purposes simultaneously. This theoretical assumption is questioned based on the downturn pressures that provoke fading cooperatives’ social purposes in favor of economic performance. This degeneration process (Cornforth, et al., 1998) is countered by some traditional cooperatives that have developed regeneration dynamics. This paper aims to illustrate the degeneration process in cooperatives and the way in which they achieve a balance between social and economic purposes and to identify the main issues in these regeneration dynamics. Six small and medium Basque and Breton cooperatives are studied.

The contribution of the paper is relevant to both scholars and practitioners. We show how the degeneration of democracy within worker cooperatives may take place. In addition, by focusing on the main dynamics developed by SMCs to reach this equilibrium in periods of economic crisis, we introduce governance and management issues as drivers in this context. This study has relevance for practitioners as it highlights the need for the development of specific managerial and governance capabilities to ensure both sustainable growth and the maintenance of cooperative principles in worker cooperatives. This means that a specific type of manager may be required to run a cooperative business — that is, a person who must be comfortable and adept at managing disequilibrium when they lead their companies through chaotic periods (Bayle-Cordier et al., 2014). In this sense, a sustainable equilibrium is promoted in SMCs if the cost of democracy is balanced by the appropriate democracy-supporting practices (Ng and Ng, 2009). This task must be ensured by both managers and the governance body to attain long-term societal wellbeing and progress.

Bayle-Cordier, J.; Mirvis, P.; Moingeon, B. (2014) “Projecting Different Identities: A Longitudinal Study of the ‘Whipsaw’ Effects of Changing Leadership Discourse about the Triple Bottom Line.” Paper accepted and forthcoming at The Journal of Applied Behavioral Science.

Cornforth, C., Thomas, A., Spear, R., & Lewis, J. (1988). Developing successful worker co-operatives. Sage Publications Ltd.

Ng, C.W. & Ng, E. (2009) Balancing the Democracy Dilemmas: Experiences of Three Women Workers' Cooperatives in Hong Kong Economic and Industrial Democracy May 1, 2009 30: 182-206