A group of The University of Western Australia Business School researchers will spend the next three years investigating the co-operative enterprise business model with the aim of learning more about the factors that influence its sustainability and competitiveness.
Professor Tim Mazzarol, Professor Geoffrey Soutar, Professor John Watson and Assistant Professor Joanne Sneddon have been awarded an Australian Research Council grant to study the sector under the Innovation Australia Linkage Projects scheme.
Professor Mazzarol, who is leading the project, has been involved with co-operatives and mutual societies for many years. He has provided marketing support for CPS Hardware Group and the State Credit Society, as well as assisting co-operatives through the running of small business management development programs.
Professor Mazzarol says that co-operative enterprises have largely been ignored by economics, due to the discipline's post-World War II emphasis on capitalism and neo-classical theory.
"The co-operative is a unique type of business venture, not a charitable organisation and not a shareholder owned enterprise," Professor Mazzarol said. "It is one of the more durable types of business models and co-ops are amongst the largest organisations in the world.
"Co-operative enterprise is an opportunity for small firms, rural producers and individuals to unite together in a common purpose to leverage their collective buying or selling power and compete on equal terms with larger organisations."
Co-operatives are primarily distinguished from investor owned enterprises by their democratic governance - that is, their giving of one vote to each member, regardless of that member's stake - a practice that has often caused co-operatives to be incorrectly labelled as socialist.
The study is particularly timely as the Co-operatives Act WA (2009) will come into force over the next two years. The new legislation will allow co-operatives to behave more like companies by allowing them to raise financial capital from non-members and trade across inter-state borders.
The legislation gives co-operatives an opportunity to reassess their operations, says Professor Mazzarol. ‘For those with entrepreneurial flair, the new legislation should encourage future growth. However, it is also designed to wipe out free riding and so many members of the existing coops may find that they will either have to deal more with their coop than they have traditionally or be asked to relinquish their membership.'
Although co-operatives exist to benefit their members, they can often encounter problems. These include an emphasis on short-term horizons, conflicts over shareholder rights, and divergence between member and co-operative interests. The study will examine the creation and maintenance of member loyalty and trust, as well as perceptions of mutual value.
The study will be completed in five stages. These will involve the identification of case studies, holding of focus groups, surveying of hundreds of respondents, convening of an expert panel, and consultation with legal and accounting professionals.
The research programme, titled Sustainable Co-operative Enterprise: An Investigation into the Factors Influencing the Sustainability and Competitiveness of Co-operative Enterprises, will be administered by UWA and overseen by a joint UWA/industry management group.
The research team will be working with Co-operatives WA, Co-operative Bulk Handling, and Capricorn Society Limited Australia as well as other members of the co-operatives movement.
In Australia the top 100 co-operative enterprises control a combined turnover of around $20 billion, and WA is home to about 70 co-operatives in such diverse areas as fishing, farming, retail and service.
Professor Tim Mazzarol (UWA Business School) (+61 8) 6488 3981
Heather Merritt (UWA Business School) (+618) 6488 8171
Janine MacDonald (UWA Public Affairs) (+61 8) 6488 5563 / (+61 4) 32 637 716