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The potential of co-operatives during the current recession; theorizing comparative advantage

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  • Johnston Birchall

    (University of Stirling)

Abstract

This paper asks how effective are co-operatives at surviving economic recession, and whether they can grow at the expense of investor-owned businesses and provide an alternative business model that is fairer, more stable and less risky. The paper begins by providing historical evidence concerning the resilience of co-operatives during economic crises. Then, taking a ‘member-owned business’ approach, it analyses the comparative advantages and disadvantages of co-ops along three dimensions: ownership, control and benefit. It broadens this out to consider advantages to the wider society, and theorises comparative advantages of other business types. It concludes by asking what it would take for the co-operative potential to be realized.

Suggested Citation

  • Johnston Birchall, 2013. "The potential of co-operatives during the current recession; theorizing comparative advantage," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 1-22, May.
    • Handle: RePEc:trn:csnjrn:v:2:i:1:p:1-22
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    References listed on IDEAS

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    1. Pencavel, John & Craig, Ben, 1994. "The Empirical Performance of Orthodox Models of the Firm: Conventional Firms and Worker Cooperatives," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 718-744, August.
    2. Craig, Ben & Pencavel, John, 1992. "The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest," American Economic Review, American Economic Association, vol. 82(5), pages 1083-1105, December.
    3. Johnston Birchall, 2013. "Finance in an Age of Austerity," Books, Edward Elgar Publishing, number 15074.
    4. Burdín, Gabriel & Dean, Andrés, 2009. "New evidence on wages and employment in worker cooperatives compared with capitalist firms," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 517-533, December.
    5. Fulton, Murray & Larson, Kathy A., 2009. "Overconfidence and Hubris: The Demise of Agricultural Co-operatives in Western Canada," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(2), pages 1-35.
    6. Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
    7. Johnston Birchall, 2012. "The Comparative Advantages of Member-owned Businesses," Review of Social Economy, Taylor & Francis Journals, vol. 70(3), pages 263-294, August.
    8. Fabio R. Chaddad & Michael L. Cook, 2004. "Understanding New Cooperative Models: An Ownership–Control Rights Typology," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(3), pages 348-360.
    9. Johnston Birchall & Richard Simmons, 2010. "The Co‐Operative Reform Process In Tanzania And Sri Lanka," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 81(3), pages 467-500, September.
    10. Johnston Birchall & Richard Simmons, 2004. "The Involvement of Members in the Governance of Large-Scale Co-operative and Mutual Businesses: A Formative Evaluation of the Co-operative Group," Review of Social Economy, Taylor & Francis Journals, vol. 62(4), pages 487-515.
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    Cited by:

    1. Anne Musson & Damien Rousselière, 2020. "Exploring the effect of crisis on cooperatives: a Bayesian performance analysis of French craftsmen cooperatives," Applied Economics, Taylor & Francis Journals, vol. 52(25), pages 2657-2678, May.
    2. Carmen GUZMAN & Francisco J. SANTOS & María de la O BARROSO, 2020. "Cooperative Essence And Entrepreneurial Quality: A Comparative Contextual Analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 95-118, March.
    3. Damien Rousselière, 2019. "A Flexible Approach to Age Dependence in Organizational Mortality: Comparing the Life Duration for Cooperative and Non-Cooperative Enterprises Using a Bayesian Generalized Additive Discrete Time Survi," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(4), pages 829-855, December.
    4. Giovanni Ferri & Panu Kalmi & Eeva Kerola, 2014. "Organizational Structure and Exposure to Crisis among European Banks: Evidence from Rating Changes," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 3(1), pages 35-55, June.
    5. Francesco Aiello & Graziella Bonanno, 2018. "Multilevel empirics for small banks in local markets," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1017-1037, November.
    6. Fabio Sabatini & Francesca Modena & Ermanno Tortia, 2014. "Do cooperative enterprises create social trust?," Small Business Economics, Springer, vol. 42(3), pages 621-641, March.
    7. Zaneta Simanaviciene & Rima Kontautiene & Arturas Simanavicius, 2017. "Assumptions of Corporate Social Responsibility as Competitiveness Factor," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 13(3), pages 149-160.
    8. Nick Bailey & Reinout Kleinhans & Jessica Lindbergh, 2018. "The Implications of Schumpeter’s Theories of Innovation for the Role, Organisation and Impact of Community-Based Social Enterprise in Three European Countries," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 7(1), pages 14-36.
    9. Giuseppe Terzo, 2021. "Social capital, social economy and economic resilience of Italian provinces," Papers in Regional Science, Wiley Blackwell, vol. 100(5), pages 1113-1135, October.
    10. Mariarosaria Savarese & Kerry Chamberlain & Guendalina Graffigna, 2020. "Co-Creating Value in Sustainable and Alternative Food Networks: The Case of Community Supported Agriculture in New Zealand," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    11. José Manuel Maside-Sanfiz & María-Celia López-Penabad & Ana Iglesias-Casal & Juan Torrelles Manent, 2024. "Determinants of the profitability of Sheltered Workshops: efficiency and effects of the COVID-19 crisis," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    12. Ivana Catturani & Carlo Borzaga, 2014. "Facts and Stereotypes about Cooperative Banks: To Whom Do CBs Actually Lend?," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 3(2), pages 7-13, December.
    13. Johannes Wessels & Etienne Nel, 2016. "A new co-operative revolution in South Africa? Reflections on the outcomes of state support in the Free State Province," Local Economy, London South Bank University, vol. 31(1-2), pages 187-203, February.
    14. Aiello, Francesco & Bonanno, Graziella, 2016. "Bank efficiency and local market conditions. Evidence from Italy," Journal of Economics and Business, Elsevier, vol. 83(C), pages 70-90.
    15. Lorea Narvaiza & Cristina Aragon & Cristina Iturrioz & Julie Bayle-Cordier & Sandrine Stervinou, 2017. "Cooperative Dynamics During the Financial Crisis: Evidence From Basque and Breton Case Studies," Post-Print hal-01414168, HAL.
    16. Florian Hanke & Jens Lowitzsch, 2020. "Empowering Vulnerable Consumers to Join Renewable Energy Communities—Towards an Inclusive Design of the Clean Energy Package," Energies, MDPI, vol. 13(7), pages 1-27, April.
    17. Benjamin HUYBRECHTS & Sybille MERTENS, 2014. "The Relevance Of The Cooperative Model In The Field Of Renewable Energy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(2), pages 193-212, June.
    18. Silvia Sacchetti & Ermanno C. Tortia, 2013. "The Internal and External Governance of Cooperatives: Membership and Consistency of Values," Euricse Working Papers 1362, Euricse (European Research Institute on Cooperative and Social Enterprises).
    19. Paolo Carnazza & Attilio Pasetto, 2014. "L?andamento dell?occupazione nelle cooperative italiane negli anni della crisi: alcune evidenze a livello regionale," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2014(2), pages 5-33.
    20. Jalal El Fadil & Helyoth Hessou, 2024. "Performance and Assets and Liabilities Management in the U.S. Credit Union," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 14(1), pages 1-6.
    21. repec:mje:mjejnl:v:12:y:2017:i:3:p:149-160 is not listed on IDEAS
    22. Carmen Guzmán & Francisco J. Santos & María de la O. Barroso, 2020. "Analysing the links between cooperative principles, entrepreneurial orientation and performance," Small Business Economics, Springer, vol. 55(4), pages 1075-1089, December.

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    More about this item

    Keywords

    comparative advantage; co-operative business model; resilience during recession;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

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