There are four types of cooperatives that can be grouped into two categories. These include consumer, producer, shared services, and worker cooperatives. There are also mixed types called “multi-stakeholder” cooperatives which will be discussed in this article as well. Worker and many multi-stakeholder cooperatives fall under the “profit category” with the rest in the “service category.”
These cooperative types are connected to their distinct functions based on their niches. Function categories are determined by the purpose and needs set upon by the constituents, this can be summarized as their Member Expected Returns (MER). The needs inherent of a cooperative type define the typical configurations of policies, procedures, and practices. The order of the description of cooperative types below is their proliferation which is fitting for the purposes of promoting those types most underutilized.
The primary MER of this category are services or consummable products, it presents most commonly as the reception or transport of goods with higher quality / lower costs or greater availability / better fit than available otherwise.
Consumer cooperatives are the most common and popular type and exist to provide services, typically utilities, to consumers at cost. Utilities, particularly contentious services in terms of market competition, are very well served by cooperative arrangement. The geographical definition of most utilities demonstrates the concept of natural monopoly. In other words, while roads can be used by many and different types of delivery companies, there cannot be multiple companies using the same pipes for water, conduit for electricity, or cabling for data services. Free market necessitates competition as a release valve for consumer value or check against abuses of opposing interests. If a consumer wishes to use a different utility, they would need to sell their home, move to another town, and, probably, find a new job.
It is therefore the case that a market with a singular provider is a naturally closed market, not free, and a guarantee of for-profit corporate monopoly with unlimited means. A case of natural monopoly indicates a service better operated and controlled by those it services. The alternative is essentially thievery. Most consumer cooperatives today exist in rural areas though deserve to be adopted throughout the country’s urban and suburban zones an other service markets naturally devoid of competition. These need not arrest the development of competition with the invention of newer technologies.
Producer Cooperatives and Shared Services Cooperatives
Producer cooperatives are the second most common type proving an indisposable asset in agricultural, artisanal, and other niche needs. Similarly, shared services cooperatives are formed by groups of companies of all sizes and types working together to synthesize internal services for their organizations. These cooperative forms allow the member organizations and producers increased control and decreased costs of shared services like distribution, aggregation, processing, marketing, insurance, supplies, and training. This is especially beneficial for communities with a lack of such services or a deficiency of affordable or convenient options. Shared services cooperatives are underutilized but growth in this market can be anticipated given the overwhelming benefits provided.
The primary MER of this category are livelihood, careers, and profit, presenting most commonly as employment with large degrees of freedoms and determination.
Worker cooperatives, contradictorily, are the least common, most controversial, and second most popular cooperative form. They are different and much more likely to operate above cost for the profit of stakeholders. These organizations, as the name suggests, are operated by all the constituent individuals performing the work. Unlike more heirarchical corporations, the worker cooperative membership share ownership rights, decision making responsibilities, and profits.
The reason for its popularity is clearly in the democratic resemblance inherent and the promise of equality, equity, and determination thereof. Worker cooperatives, more so than the others types, give individuals much greater control over their livelihoods. People in worker cooperatives with some control over the direction of the organization regularly report greater job satisfaction and increased personal wellbeing. Worker cooperatives usually have specialized hiring practices to establish a good fit before the extension of membership equity is granted.
These are generally some mixture of the cooperative types with two or more classes of membership. The nature of such cooperatives demands complex systems of practices and policies to assure that all memberships receive fair representation reflecting their different MER. The greatest difficulty with such an arrangement, obviously, is the tendency for these interests and goals to have competing ends.
These adaptations of the cooperative style of business are the acknowledgement of the differing human needs that can be fulfilled in a fair and equitable manner. Their demonstrations are exciting and motivational to large-scale societal purposes of increasing options and improving systems.