Cooperative Integration and diferentiation: from sections to groups of societies
Abstract
In confronting global market challenges, cooperatives have often focused on strategies of growth all the while preoccupied about the degree to which cooperatives principles can be maintained. This paper illustrates cooperative legislation´s role in shaping a legal environment in which cooperatives can both utilize necessary competitive strategies and maintain cooperative principles. Given the recent global financial crisis and the resulting lack of confidence in the shareholder model as the overriding paradigm, this task is even more relevant. We are critical of certain legislative provisions which do not achieve their stated goals and hide economic realities, encouraging cooperatives to «engineer» around such legislation or, alternatively, utilize cooperative legal mechanisms to find «refuge». Notwithstanding the apparent «pro» cooperative legal environment in Spain, in particular, its emphasis on integra tion, we argue that the legislation is inadequate: Strategies of integration are often utilized not out of the necessity to pursue a justified economic growth strategy but simply to allow for the subsistence of small cooperatives. In addition, such integration strategies overlook the need for flexibility and differentiation (i.e. mechanisms within cooperative administrations to deal with particularities and distinct objectives). In the case of cooperatives with justified growth needs, the legislation creates limitations for development and expansion within the cooperative framework, thus encouraging resort to ingenious methods to dodge such limitations or change form to an investor owned firm. I argue for a legislative regime that acknowledges the necessity of both growth and differentiation, allowing flexibility so that cooperatives of varying size can continue in a socially valuable framework. I refer to other legislative mechanisms from selected countries as examples of what can be done to complement and make coherent the stated intent of the Spanish legislation and the actual results.
Received: 20 June 2010
Accepted: 02 July 2010
Published online: 18 December 2015
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