Business Cooperatives as a social response to unemployment

Type of paper :Exploratory, descriptive, case studyObjectives: In the wake of the global crisis, the role of the financial markets is being questioned and new forms of social innovations focusing on stakeholder governance and cooperation are being experimented. This paper looks into one such social innovation.Design/ Methodology :This is a case study on a social innovation where the institutions are being transformed to introduce new legal forms. This is a cooperative of entrepreneurs where the entrepreneurs are salaried employees. The research is being based on a review of laws and regulation, literature review supplemented with exploratory interviews of such entrepreneurs.Key results: The paper finds out differences between these cooperatives and concepts such as nurseries and incubators. It explains the process of evolution of these cooperatives. It points out the limitations of the regulatory regime.Value: The financing of microentrepreneurs without subsidies is a problematic issue. Over-reliance on Microcredit places stress. The sharing of expenses and cost reduction leads to lower needs for microcredit. It also provides the microentrepreneurs a new form of governance and opportunities for networking, developing citizenship and social wellbeing.Impact: If adopted in other parts of the (developed) world, such cooperatives could help overcome downside risk, loss aversion, isolation and poverty traps of unemployment benefits.