The Coordination of Relationships between the Members of Cooperatives – A Trust and Reciprocity based Perspective

In recent years, there has been a renewal in political and academic interest in cooperative organisations as potential alternative providers of public services. Both deregulation and liberalisation have served to generate new... [ view full abstract ]

In recent years, there has been a renewal in political and academic interest in cooperative organisations as potential alternative providers of public services. Both deregulation and liberalisation have served to generate new opportunities for cooperatives but have also created a need to evaluate and redefine their role and identity within society. Laville and Nyssens (2001) state that this development should not be viewed as a conceptual shift from traditional organisational forms within the third sector, but rather indicates a new era of hybridisation and broadening which is taking place in the sector. Specifically, from an organisational theoretical point of view, the shift from benefitting members to benefitting third parties might initially appear to be a small deviation of the collective character of cooperatives, leading to very subtle distinctions between social cooperatives and many traditional cooperatives.
Building on these initial insights and specifically, to highlight key differences to traditional member-focused cooperatives, the paper introduces the term third-party-focused cooperatives to describe the recent occurrence of new forms of cooperative organisations, which provide their services to a broader community, and which address the common good, therefore acting in a quasi-public or community interest rather than being solely member-focused in their actions. Nevertheless, they clearly exhibit a cooperative identity as they remain a democratic, community-owned and controlled organisation. The study adds to the work of previous studies on non-profit and civil-society governance in general, and focusses on the nature of member-focused and third-party-focused cooperatives in particular, and their relation to trust and reciprocity.
The key result of the paper illustrates that with this move from member- to community-focus in cooperatives, the main coordination mechanism has become one of norm-based trust, which is shaped on the basis of generalised reciprocity, whereas, member-focused cooperatives are based on maxim-based trust and on relation-specific reciprocity. Generalized reciprocity and norm-based trust facilitate third-party-focused cooperatives in enabling higher levels of collective action aimed towards addressing wider community interests.
Therefore, in this paper, we argue that the coordination and governance mechanisms of member-focused cooperatives and third-party-focused cooperatives are indeed fundamentally different in nature. This represents a new form of governance challenge for third-party-focused cooperatives, as they look to secure member engagement, as well as willingness to volunteer for the cooperative and sufficient levels of donations to the cooperative. In order to meet this challenge third-party-focused cooperatives have to continuously assess and address the intrinsic motivations of members as they seek to fulfil their reciprocal societal and moral obligations towards their community.