- The development of co-operatives in Slovenia10-26
- Hybrid tendencies in consumer co-operatives: the case of Sweden10-25
- The Effect of Cooperatives on Quality-Enhancing Innovation04-01
- Do farmers benefit from participating in specialty markets and cooperatives? ——The case of10-11
- RESTRUCTURED AGRICULTURAL COOPERATIVE MARKETING SYSTEM IN UGANDA: STUDY OF THE “TRIPARTIT10-21
- The resilience of co-operative food networks: a case study from Stroud, England10-22
- A ‘member-owned business’approach to the classification of co-operatives and mutuals10-24
- Collective Action for Smallholder Market Access: Evidence and Implications for Africa04-01
- The Future of U.S. Agricultural Cooperatives: A Neo-Institutional Approach02-28
- Production, information costs, and economic organization02-28
Co-operatives are hybrid organisations that pursue multiple goals rather than having a single purpose. In fact, their very raison d‘être is to pursue both economic and social goals. Co-operatives in the past and still today play a significant role in Scandinavian societies. As hybrid organisations with multiple goals they attract the attention of academics researching within various disciplines. However, given differences between disciplines economists ask different questions than political scientists, even when studying similar subject matter, like associations and co-operatives. Thus, the political science interest in co-operatives is not so much a question of why they exist, but rather what and how they can contribute to society. Moreover, we want to know if and how they can facilitate the functioning of democracy. This essay considers co-operatives and democracy in Scandinavia, taking the Swedish case as an illustration.
The founder of the Grameen Bank warns against putting too much faith in hybrids that combine an interest in producing social value with the goals of enterprises in the mainstream market economy. 'In the real world, it will be very difficult to operate businesses with the two conflicting goals of profit maximization and social benefits. The executives of these hybrid businesses will gradually inch toward the profit-maximization goal, no matter how the company's mission is designed.'1 However, the unique capacity to combine social and economic goals is seen as a strong advantage by many observers. If co-ops can combine sound economic practices, democratic control by members, the promotion of their members' interest and good employment conditions, that can provide a clear alternative to competing firms on the market. The basic dilemma facing the Swedish co-operative movements and most hybrid organisations is how best to combine their social goals with the demands of the market. The social dimension of co-operatives clearly helps to set them apart and make them different from their competitors. The active promotion of social values can provide them with a clear profile, help to distinguish them from their competitors and give them a competitive advantage, if properly understood and promoted. By contrast, the failure to promote their social values would deny the co-ops their natural profile, make it harder for their members and ordinary consumers to distinguish between them and their competitors and thereby deny them a natural competitive advantage.
This essay deals with the importance of major social change for organisational development, the importance of organisational growth and size for internal democracy, the importance of social goals for co-operative identity and the need to develop methods to counteract the instability often found in hybrid organisations like co-operatives. A dynamic model for co-operative development is presented to introduce the major stakeholders in this type of hybrid organisation. This model is based on four separate and often opposing logics. Maintaining stability in organisations that have several rather than a single logic and several rather than one dominant stakeholder can be problematic. Often a single logic will dominate, but if this happens for too long it can change the very nature of an organisation or co-op. Dominance of the logic of competition resulted in weakening the logics of membership, influence and personnel management, as the history of the Swedish consumer co-operative movement shows. Then, at the beginning of the new millennium a major amalgamation resulted in Co-op Norden that combined the activities of consumer co-ops in Denmark, Norway and Sweden into a new Scandinavian consumer co-operative movement. However, it removed the last vestiges of democracy in internal decision-making in the Swedish consumer co-ops and made membership trivial. Finally, a road-map for reintroducing democracy into the co-operative movements is proposed. It includes a discussion of co-production and multi-stakeholding in order to create greater trust in the provision of co-op social services. Together with social accounting, these concepts can help to provide a counter-weight to major destabilizing factors found in hybrid organisations like co-ops and they can help to make membership meaningful again. Some conclusions are reached about stabilizing hybrid organisations in the final section.
Major social change in the twentieth century
Sweden, Swedish society and the Swedish consumer co-operative movement are light years from the conditions that prevailed when the Swedish Co-operative Union and Wholesale Society (Kooperativa forbundet, KF) was founded in 1890. Industrialisation and urbanisation are often seen as the prime drivers of early societal change. In brief, the transition from a rural, agrarian society to post-industrial cosmopolitan society has been dramatic in recent generations in Scandinavia. Today's post-modern Western society is composed mostly of urban and suburban dwellers, many of whom live in multiple storey and multiple family housing. Many are highly educated, hold jobs in highly advanced industries or services, and they are also highly interdependent economically, socially and in other ways. They may travel greater distances by car or mass transportation to and from work every day, than their ancestors normally did in a year or more. They take for granted things like hot and cold running water, showers, toilets, and some even a Jacuzzi, rather than having to dig their own wells or pump their own water. They also have electricity, a refrigerator and freezer, a stove, radio, TV, microwave, dishwashers, and washing machines. Given the informatics revolution, they come home to read their personal e-mail or chat on the internet, and perhaps watch a DVD or download music or a film from the internet, rather than 'spin yarns' or exchange local 'news' during their visit to town or to their church, as their ancestors did only a few generations ago.
Some of the major social changes to impact upon Sweden, Swedish society and its consumer co-operatives during the past 120 years include the following. Alongside industrialisation and urbanisation, Sweden saw the rapid growth of unions and other forms of collective action; continual growth in the standard of living for most citizens; the development of the welfare state and public bureaucracy to provide public services, particularly the social services, that many citizens have become highly dependent on today. In terms of political change we note the introduction of universal suffrage and parliamentarism, the Soviet Revolution and growth of Nazism in Germany, neutrality during World War II and the Cold War, the fall of the Soviet Union and communism in their proximity, the growth of new economic, political and social structures at the European level through European integration and membership in the European Union; the growth of 'organised society' with big organisations on both sides of the public/private divide;2 the deregulation of the Swedish economy, in part to qualify for EU membership; the de-corporatization of political institutions; and finally the easing of restrictions on public financing of alternatively provided social services and privatization of many public services in recent years. Clearly, the Swedish consumer co-operatives must adapt and adjust to such broad sweeping social and political changes in order to survive. The question is how they adapted to them and at what cost to their co-operative values?
A dynamic model of co-operative development
This section presents an interactive model of co-operative developments, after which I discuss some of the major changes in the Swedish consumer co-operative movement in the twentieth century. This interactive model underlines the importance for co-operatives to adapt and adjust7. Hybrid tendencies in consumer co-operatives: the case of Swedento major changes in their environment. It also points to the need for co-operatives as hybrid organisations to balance the claims of various stakeholders or strategic groups, so that no single group dominates it permanently. If management continues to ignore the demands of some important stakeholders and pursues only one goal, like maintaining its market shares or increasing its efficiency, then it risks changing the co-op into another type of organisation and losing the support of some of its original stakeholders. This is seen clearly in the Swedish consumer co-ops, but is also evident in the agricultural co-ops in Sweden as well. We need, therefore, to consider each environment or dimension in this interactive model more closely.
The four most important environments for co-operatives as hybrid organisations in industrial and post-industrial societies are: the market, their members, their employees and the authorities. Together they set clear limits on the actions and decisions of co-operatives and their managers. Each of them acts as a powerful constraint on the freedom of co-operative leaders and their decisions. Each of them promotes their own particular values and represents their own particular goals, which at times may come in conflict. Each of them is based on a separate logic, making it possible to speak of four competing logics or principles of co-operatives: the logic of (efficient) competition, the logic of (democratic) membership, the logic of (political) influence and the logic of (personnel) management. These are depicted in Figure 3 below.
Both members and employees comprise the internal environment of co-operatives, as they are part of the organisation; while markets and authorities comprise the external environment of co-operatives, since they are outside the organisation itself. At the same time, co-operatives can also be analyzed in terms of their commercial and social/political dimensions. Here markets and employees comprise the commercial dimension, while members and authorities comprise the social/political dimension of co-operatives. The commercial dimension is something co-operatives share with other firms in the market while also competing with them. The social/political dimension of co-operatives is something they hold in common with other popular movements, non-governmental organisations, voluntary associations and third sector organisations.
The logic of competition or amalgamations and concentration?
Sweden experienced a dramatic reorganisation of its local democratic institutions in the 1950s and again in the 1970s that reduced the number of municipalities from approximately 2,500 in 1950 to 290 in 1980. This was done with the aim of creating the demographic and financial base necessary for expanding the welfare state, but it came at the price of local democracy. Moreover, it seems that certain popular movements, in particular the consumer co-operative movement, followed suit and adopted the logic that 'big is beautiful' in their own organisation. The 1960s and 1970s saw the consumer co-operative movement, or Konsum, promoting much larger local units, with more professional employees and fewer elected offices.3Today Sweden is a very different society compared with a century ago when the Swedish consumer co-ops started providing goods for their members. In 1899, when the Swedish Co-operative Union & Wholesale Society (Kooperativa F?rbundet, KF) was established, the consumer co-operative movement had a clear social profile. This profile included cash-only sales, unadulterated products, breaking up production and/or sales monopolies, and democratic decision-making structures, almost two decades before Sweden adopted universal suffrage. The table below provides a brief overview of the development of the consumer co-op movement from 1910 to 2010, in terms of the number of members, local societies, employees and shops. *After 1991 'members' in Co-op Sweden, who represent more than 60% of all members, have the same trivial rights and responsibilities as 'members' of American Express or the IKEA 'family'. These rights and responsibilities are purely commercial, not democratic. They can apply for bonus cards to register their purchases and get occasional bonuses, based on their purchases. Most retail firms provide similar benefits for their customers today.
At the beginning of the twentieth century the Swedish consumer co-operative movement was mainly comprised of numerous semi-independent local co-operative societies. In 1910 there were nearly 75,000 individual members organised into nearly four hundred local consumer co-operative societies, for an average size of less than two hundred members. Just ten years later these figures had increased dramatically: the number of members approached 250,000, the number of local societies was nearly 1,000, but the average size of the local societies was still only 250. By 1950 there were nearly 1 million members in nearly 700 local societies, with an average size of nearly 1,500 members. Forty years later, in 1990, membership reached over 2.1 million, but the number of local societies decreased to only 120, with an average of 17,500 members per society. Then in the year 2000, the number of 'members' increased to over 2.5 million, while the number of local societies decreased to only 75, resulting in an average size of over 34,000 'members' per local/ regional society. Two major amalgamations, discussed below, only helped to accentuate this development. Ten years later, there were nearly two million 'members' in the five regional members of Co-op Sweden together, while more than one million remained in the thirty-nine remaining local Konsum societies.4 Thus, in the past one hundred years the number of members has increased by several hundred percent, while the number of local co-operative societies was reduced to only a fraction. As a consequence, the average size of local co-operative societies increased from about two hundred members in 1910 to more than 70,000 in 2010. In the process, the semi-independent small local co-operative societies, which were the backbone of the movement in the late nineteenth and early twentieth centuries, were relegated to a marginal position compared with the mega-societies formed in major urban areas through a process of amalgamations starting in the 1960s.5Not only has the average size of the local and regional co-op societies increased dramatically in recent decades. The gap between big and small societies is huge today, ranging from 608,751 in the largest to only 179 members in the smallest. Only in the dozen smallest societies do the conditions necessary for active membership appear to exist. By contrast, in the larger regional co-op societies these conditions either do not prevail or 'members' have been stripped of their voting rights and the co-op society is run as a limited company, without any bothersome member 'voice' or influence, except for 'exit'.
The logic of membership or disappearing democratic structures?
Comparing amalgamations in the consumer co-operatives (Konsum & KF) with that found in the building and tenant co-operatives (HSB) provides some interesting contrasts, in particular on the impact of amalgamations on democratic structures. Both organisations grew steadily in membership during the first seven or eight decades of the twentieth century: HSB grew from 10,303 members in 1930 to 595,426 in 1988; while Konsum & KF grew from 74,000 members in 1910 to 2.1 million in 1990.
Amalgamations had a different impact on these consumer co-operative movements. In the building and tenant co-operatives (HSB) they primarily affected the municipal or regional level, but not the individual small local building and tenant co-ops, where most of its members live and managed their own apartments. In the Swedish consumer co-ops amalgamations mostly impacted the lowest level, where rank-and-file members have most of their regular contacts and where they can first hope to gain an elected office or honorary post if they want to become engaged and involved However, local building and tenant co-operatives register their stock of apartment buildings as separate legal entities, which cannot be amalgamated, thus amalgamations in HSB at the municipal or regional level somewhat unintentionally preserved the local democratic structures. In the consumer co-operatives (Konsum & KF) the number of local co-ops began to decrease early in the organisation's history, as they moved from democratically controlled shop co-operatives to town or city-wide co-ops, and later regional consumer co-operative societies. This resulted in a steady decrease in the number of democratic structures where members could have influence, become active and hope to gain an elective or honorary office.
During the period of radical reorganisation and growth in the average size of local governments in Sweden, the consumer co-ops grew dramatically. Between 1950 and the end of the 1970s the size of the co-ops' democratic units grew, going from fifty-four to eighty-six members in HSB and from 1,413 to 11,092 members in Konsum & KF. By the year 2007 the average number of members reached 138 for HSB and over 60,000 for Konsum. This implies that a member's chance of gaining an elective office or honorary post in either of these popular movements decreased in relation to the growth in size of the local organisation. Thus, by the end of this period, chances for members to gain an elective office were much greater in building and tenant co-ops than in the consumer co-operatives. As a member's chance to gain an elective office or honorary post in a co-operative movement decreased, many co-operatives clearly lost their ability to perform their often noted function as schools of democratic values and virtues.
In addition, there was also a rapid growth in the number of employees that reflects a change in the balance of power between the two groups of leaders, elected and hired. This can be expressed in terms of a ratio of elected to paid leaders, or an index of democratic control. Organisational size and democracy remain a crucial issue in political science.6 It may be difficult or impossible to derive an optimum size for co-operatives with varied conditions. However, it should be clear that when a co-op grows from an average size of 250 members per local unit to over 70,000 members per local co-op during 100 years (1910-2010)， it becomes a very different organisation from when it started. By contrast, the development of the Swedish building and tenant co-ops, HSB, shows that it is possible to grow without sacrificing membership democracy at the local level. The average size of the local building and tenant co-ops grew from fifty-four in 1950 to 138 in 2007 and this seems closer to the optimum than the size of the consumer co-ops or Konsum. One lesson that can be learned from comparing the established co-operative movements in Sweden is that in order to sustain local democratic structures they should adopt a federative rather than a unitary organisational model, one that protects small local units at any cost, since the latter appears to be the life blood of local democracy and active membership.
The logic of influence or co-operatives and policy-making?
Swedish consumer co-operatives played an instrumental role in the development of Swedish consumer policy in the post-war period. Until Sweden joined the EU, it pursued an active consumer policy, in line with its better known active labour market policy. The government played a central role in regulating many issues that were left to the market in more liberal countries. In doing so, Sweden attempted to develop a countervailing power to its well organised business interests of industry and the wholesale and retail sectors.7 Thus, the consumer co-operatives were important in developing this active consumer policy; they often set the business standards that later became codified into consumer laws and regulations.
However, by pursuing the logic of influence, the logic of membership became crowded out once again. In a competitive market the higher standards set by the co-operatives were once seen as a7. Hybrid tendencies in consumer co-operatives: the case of Swedencompetitive advantage that attracted many families. However, once codified into law, they became very reluctant to provide anything more for their customers and members than their competitors. So, this one-time floor for the consumer co-operatives soon became a ceiling for all commerce, including the consumer co-operatives. Over time consumers became aware of the loss of the co-operative role as a standard bearer for consumers, which led to the loss of their competitive advantage. The local consumer co-operative gradually became just another shop in the eyes of many customers and members. Thus, the consumer co-ops lost one of their main competitive advantages on the market, their unique possibility to promote the political and social interest of their members as consumers.
The logic of personnel management
For reasons of space, the fourth and final logic of co-operative associative action, the logic of personnel management, will not be considered closely in this essay. Nevertheless, we can note that the logic of personnel management suffered from a similar atrophy as the logic of membership and the logic of influence. What was once a floor became a ceiling over time and the logic of competition was allowed to dominate once again. Lofty standards of being a model employer lost ground and were eventually sacrificed in the name of competition. Differences in wages and working conditions were viewed solely in terms of costs that needed to be kept to a minimum, not as means for retaining an engaged staff. This resulted in the consumer co-operatives reverting to the national labour court to prevent higher standards from being applied to them than their private competitors.
Two major amalgamations eliminate the last vestiges of democracy
Two major amalgamations at the end of the twentieth century illustrated just how far the Swedish consumer co-operative movement had gone in allowing a single logic or goal to dominate its activities. The first took place in 1991 and resulted in completely new institutional structures, ones that ruptured ties with their members and replaced formal democratic structures with ordinary commercial relations for the majority of them. The new organisation, called Co-op Sweden, was a complicated conglomerate that owned five of the biggest regional societies, and they in turn owned the central organisation, KF.8 These five regional societies function as 'integrated consumer societies', while the remaining 115 local Konsum societies continued as semi-independent members of KF and retained their democratic structures. This resulted in very complex decision-making structures that few knowledgeable and well-informed persons can truly understand. Moreover, Co-op Sweden and its five regional members also changed their legal status from economic associations to limited companies, thereby formalizing the elimination of member influence. Then, in 2001 the FBD, NKL and KF, wholesale societies of the Danish, Norwegian and Swedish consumer co-operative movements, decided to create Co-op Norden, in order to protect their market shares in the respective Nordic countries against foreign competitors.9The nature of the membership in the Swedish consumer co-operative movement has changed dramatically, from active to passive membership. In the 1960s the Swedish consumer co-ops still required that members save all their sales slips and report their grocery and household purchases at the end of the year in order to get the annual dividend that depended on the amount they spent. By contrast, today such mundane tasks are replaced by a plastic card that electronically records all sales and provides bonus points on their purchases similar to those provided by most other commercial chains. Thus, today 'membership' in a consumer co-op means as much or as little as 'membership' in American Express, the IKEA Family or the H&M Club. There are no longer any democratic rights and responsibilities associated with membership in the bigger regional consumer co-ops. Thus, the Swedish consumer co-operative movement, Konsum & KF has been transformed into huge commercial conglomerates, operating successfully in several countries, but far removed from their origin as popular movements that promoted social values, and that were democratically run.
One final illustration of the total domination of commercial values in the Swedish consumer co-operative movement to the detriment of its earlier social values is found in Konsum & KF's advanced tax planning. Co-op Norden sold 130 commercial buildings in Sweden in 2005 to pay back bank loans and to open new mega shops and department stores in Sweden. The buyer was the huge Dutch property management company, ING. According to Erik Sk?nsberg, the financial director of Co-op Norden, KF received 4.2 billion crowns for its share of the 130 commercial buildings sold in 2005. However, the Swedish tax authorities (Skatteverket) rejected the manner in which this transaction took place. Skatteverket considered it merely another example of advanced tax planning to avoid paying taxes in Sweden. Therefore, KF found its taxes retroactively increased by 1.8 billion crowns for 2005. KF appealed this decision to the county courts (L?nsr?tten)， but it lost the case in August, 2010. The court reasoned that KF, together with its daughter company in Holland, created several joint companies (kommanditbolag) in Holland that bought the 130 commercial buildings from Co-op Norden. These joint companies were then sold to ING. But, the profit from selling these joint companies and their commercial holdings in Sweden went to KF's Dutch subsidiary to the extent of 99.9 per cent, rather than to KF in Sweden and this profit was not subject to taxation in Holland. However, the Swedish tax authorities argued that the profit should have been taxed in Sweden since it was the Swedish firm that contributed the 130 commercial buildings and therefore created their commercial value. At the same time, a separate legal conflict with the Swedish Skatteverket concerns KF's sale of buildings in Kvarnholmen, just outside Stockholm, where the expected tax increase for KF will add another 600 million crowns, for a total of 2.4 billion crowns in increased tax value for these two sales of properties.10 Both these cases brought by the Swedish tax authorities against KF for trying to avoid taxes for Swedish properties sold abroad through advanced tax planning clearly illustrate the degree to which the logic of the market rather than the logic of membership or any social values dominate the thinking of KF's directors. They have clearly moved very far from a firm or co-op that takes both its social and economic goals seriously and tries to combine or balance them.
The International Co-operative Alliance's definition of a co-operative emphasises the hybrid nature of organisations that pursue multiple goals rather than having a single purpose. Most co-operatives combine several different types of goals, economic, political and social. In fact, the very raison d'etre for co-ops is to pursue multiple goals. A co-op's economic goal is clearly seen and measured by the balance sheet, turn-over figures, number of employees, number of shops, and so on. But its political and social goals are more difficult to measure. Social accounting provides a method that helps put an organisation's social goals in focus.11 Its social goals should be found in its statutes, but they may need revising with time and changing circumstances. Many organisations outlive their original social goals and purpose, but they may find a new goal and purpose. Many organisations, especially those that survive for several decades, may need to revisit their statutes from time to time, in order to ensure their relevance and to relate them to changing circumstances and major societal changes. Similarly, without clear social goals and democratic structures for internal decision-making, co-ops cease to be co-operatives with any demonstrable differences that distinguish them from their private competitors.
In particular, a successful consumer co-op that continues to grow and expand its activities during several decades needs to examine the relevance of its social goals. It needs to ask, from time to time, how relevant its activities are for the well-being of its members. Do its goals and activities comprise an important part of their daily life? Are similar goods and services perhaps available7. Hybrid tendencies in consumer co-operatives: the case of Swedenon the local market at competitive prices? If such goods and services are provided by several competitors, what is the social value added by the co-ops? If there is little or no social value added, then such co-ops need to ask whether they should continue to provide such goods and services, or perhaps instead invest in providing some other goods or services that have a greater relevance for their members and the local community. Similarly, without clear democratic structures co-operatives do not differ significantly from their competitors, and there is little reason to treat them as special organisational forms that somehow differ from their private competitors, nor to expect them to behave differently.
Quite simply, without clear social goals and democratic structures for internal decision-making, co-ops cease to be different or retain their co-operative identity, except in name only. They cease to be co-operatives with any demonstrable differences that distinguish them from their private competitors. However, such co-ops may nevertheless differ from their competitors in one important respect. They represent the collective accumulation of their members' financial sacrifices and capital during many decades. They represent their parents' and their own collective capital, primarily in the form of buildings, production facilities and various funds that should perhaps be sold or liquidated and reinvested to provide more highly relevant goods and services to meet their current needs. Such goods and services should be provided in a co-operative fashion, with clear social goals and through democratic structures. The ICA notes that the capital in a co-op is the common property of the members and it should be allocated to activities approved by its membership. However, the 2005 sale of 130 commercial buildings by KF or Co-op Sweden does not appear to have been discussed by the members of these five big regional co-op societies.
Co-production and economic democracy: a roadmap for the future?
I maintain that democracy and the market could and should be more closely related, through intelligent organisational design. Here co-production and a multi-stakeholder model can provide important concepts, models and institutions for understanding, developing and promoting democracy at the micro-level in the daily lives of ordinary citizens, both as consumers and workers. Co-operatives could make a unique contribution to renewing social services, enriching the work-life and to rejuvenating democracy. Co-operatives could provide a good example and set the best practices, both in services and manufacturing.
This section makes some proposals for addressing the disappearance of local democratic structures and the loss of relevance of co-operative solutions in Scandinavian societies today. Quite simply co-ops must find ways to make membership meaningful once again. Carlo Borzaga touched on this in his Keynote address at the ICA Research Conference in Finland in 2011. He focused on the new opportunities for co-operatives and social enterprises in the changing landscape of the welfare systems in recent decades.12 He noted, already thirty years ago that Laidlaw's report to the ICA Conference in Moscow in 1980 emphasised the evolution of co-operatives in the pursuit of general interest goals. Laidlaw challenged the ability of co-operatives to meet new social needs not adequately served by either the market or state. This opened up new spaces of action for co-operatives around the world, particularly as providers of welfare and social services. However, Borzaga notes that co-operatives in most countries were not able to exploit the new challenges and opportunities in recent decades, in spite of Laidlaw's clear analysis of these new opportunities and challenges. However, Borzaga went on to provide several examples of how the Italian co-operatives and social enterprises successfully adapted to changing circumstances and were therefore able to develop many new welfare services not available from either the state or market.Co-production and welfare service co-operativesOne way to promote democracy in the daily lives of co-operative members and ordinary citizens would be to actively promote co-operative alternatives to both public and private for-profit provision of basic welfare services. Co-operatives and social enterprises facilitate greater citizen participation in the provision of social services by promoting greater co-production and co-governance in public services. Co-production is the mix of activities that both public service agents and citizens contribute to the provision of public services. The former are involved as professionals or 'regular producers', while 'citizen production' is based on voluntary efforts by individuals or groups to enhance the quality and/or quantity of services they use. In complex societies there is a division of labour and most persons are engaged in full-time production of goods and services as regular producers. However, individual consumers or groups of consumers may also contribute to the production of goods and services, as consumer-producers.14 The participation of citizens in the provision of welfare services through co-operatives makes a unique contribution to democratic governance not found either in public services or private for-profit firms.15There are four kinds or dimensions of citizen participation in the provision of public-financed welfare services, including economic, social, political and service-specific participation. In an interesting study, Vamstad compared four types of childcare providers: parent co-operatives, worker co-operatives, municipal services and small-scale for-profit firms in two Swedish municipalities: Stockholm and Ostersund.16 It is clear that most forms for providing childcare may allow a limited degree of parent participation in public-financed childcare, but this study showed that the parent co-operatives provide parents with unique possibilities for active participation in the management and running of their childcare facility. Only this form allows parents to become active co-producers of high quality childcare services for their own and others' children.
Co-operatives are hybrid organisations that normally combine two functions or roles. The owners not only finance the co-op, they also supply the raw materials, provide the necessary labour or purchase its products. However, traditional co-operatives are single stakeholder firms, like agricultural or producer co-ops, worker co-ops, consumer co-ops, or building and tenant co-ops to name a few. Here a single group of stakeholders provides all or most of the finances, they 'own' the co-op and they thereby control it. Other stakeholders may contribute to the goods or services produced, but they do not own the co-op, nor do they have a voice in running it. They are therefore denied any influence in decision-making and have no claim to the eventual surplus produced. Thus, some important stakeholders, like the staff and/or consumers commonly find themselves excluded from influence in the management of the co-op and they lack a share in its surplus or profit. This clearly influences the incentive structures available to all groups that contribute to the co-op's surplus, since many have no influence or ownership claim.
A multi-stakeholder organisation is a firm or co-op that legally recognises more than one type of stakeholder, gives several of them representation in its decision-making structures and provides them with a share in the organisation's surplus or profit. Multi-stakeholder co-ops, therefore, make several stakeholders its owners, create governance structures that include various groups in the co-op's internal decision-making and provide them with a share in the surplus or profit. In addition, by virtue of doing so, they also contribute to the growth and spread of democratic attitudes and habits among the various owners, something that is highly uncommon in today's co-ops. Thus, multi-stakeholder organisations could conceivably play an important indirect role in7. Hybrid tendencies in consumer co-operatives: the case of Swedeninculcating and spreading democratic attitudes and habits among the general public, particularly for the staff, since it would expose them to a different reality forty hours per week for nearly forty-eight weeks per year as long as they worked there. This could contribute by making democracy a non-trivial aspect of the daily life of some ordinary citizens. Thus, multi-stakeholder co-ops would include citizens in their daily lives, perhaps in several roles, as financiers, suppliers, workers and consumers.
Creating trust and the provision of welfare services
Many countries in Europe are searching for new ways to engage citizens and involve the third sector in the provision and governance of social services. At a general level the reasons are similar throughout Europe. First is the challenge of an aging population, second is the growing democracy deficit at all levels, local, regional, national and European, and third is the semi-permanent austerity in public finances. In any given EU member state the reasons will vary and may be more specific; however taken together they imply a major legitimacy crisis for the public sector as a provider of welfare services.
In a European context, we need to consider the future of democracy and the welfare state, as well as the role of voluntary associations and co-operatives in renewing both of them. However, in order to do so, we also need to pay more attention to trust and understand how such organisations can create trust in the absence of a non-distribution constraint or American tax laws. Trust could and should provide many organisations found in the third sector, like social enterprises and co-ops, with a natural competitive advantage in the provision of welfare services, if correctly understood and actively put to use.
Social enterprises take several different forms in Sweden, including consumer co-ops, worker co-ops and voluntary organisations. Consumer co-ops can engage their members in the provision of welfare services, they can empower them as co-producers and can provide them with greater influence and control than many other alternatives. Consumer co-ops can, therefore, create trust between the consumers and providers of social services. Worker co-ops usually result in more engaged, committed and enthusiastic staff, which is often reflected in the quality of the services provided. Better quality services and more engaged staff can also result in greater trust between the consumers and providers of social services. Voluntary organisations that combine both the staff and clients as members function as multi-stakeholder organisations and can also contribute to greater dialogue, understanding and trust between the consumers and producers of welfare services.17Trust is the key to the future in business, in particular when it comes to social services. Private commercial firms, on the one hand, recognise this, but they often lack natural ways of generating trust. They must rely on advertising and other strategies to try to achieve what comes naturally to co-operatives. The growing interest in corporate social responsibility (CSR) and consumer relationship marketing (CRM) in business schools are two expressions of the need for private companies to create more trust. Co-ops, on the other hand, have it naturally, but often fail to recognise trust as a natural competitive advantage of the co-operative form.
Conclusions and discussion: Making Membership Meaningful
Several theoretical and practical issues of political importance were dealt with in this essay. In brief, this essay dealt with the importance of major social change for organisational development, the importance of organisational growth and size for internal democracy, the importance of social goals for co-operative identity and the need to develop methods to promote greater stability in hybrid organisations like co-operatives. In particular, a dynamic model for co-operative development introduced the major stakeholders in co-operatives. This model was based on four separate and often opposing logics. Maintaining stability in organisations that have several logics rather than a single one and several dominant stakeholders rather than just one can prove problematic in the long run. Often a single logic will dominate, but if this happens for too long it can change the very nature of an organisation or co-op. We found clear evidence of this in the Swedish consumer co-ops, particularly in recent years.
More than fifteen years after the Centennial Meeting of the World Congress of the International Co-operative Alliance, ICA in Manchester, it is perhaps time to reflect more seriously on the theme of the report delivered at its 100th Jubilee. It was given the title Making Membership Meaningful.18 All too often consumer co-operatives and other co-operative movements have done just the opposite recently, they have made membership meaningless, with the result that members eventually lose interest in them. Co-operatives in post-industrial society need to reinvent membership and relate it to activities and services that are more meaningful to their members and their daily lives. They need to develop a unique profile, one based on human needs and social values. They need to rediscover their social dimension in order to emphasise and take advantage of their natural competitive advantage. It is by promoting their social values and responding to the growing demand for welfare services that consumer co-operatives can play important economic, political and social roles in a globalized economy. In this way they could also contribute to the development and renewal of democracy and the welfare state in the twenty-first century.
The provision of co-operative social services becomes increasingly feasible and necessary for rejuvenating and sustaining both the co-operative movements and the welfare state. Co-ops must adapt to the changing needs and demands of their members and the citizens. In doing so, they can revitalize themselves and renew democracy, both internally and externally. They can make membership more meaningful and citizenship more participative. They can once again serve as a school of democracy and help to democratize the welfare state from within.
The time has perhaps come in many post-industrial societies to ask whether consumer co-ops should perhaps consider selling off some or all of their stores and reinvest their collective resources in the development of welfare services, where co-ops could and should have a natural competitive advantage.
Unfortunately, many such facilities were already sold by Co-op Sweden in 2005, not to reinvent or rejuvenate the consumer co-ops, but merely to keep afloat. This decision was made without any individual member discussion or participation. In the post-industrial or service society of Europe, citizens are increasingly dependent on social services in their daily lives. This motivates closer collaboration between the established co-operative movements and new social service co-operatives of the type found in Italy, Sweden and elsewhere and/or more sustained efforts by established co-operatives to provide basic social services for their members and all citizens.
It is often argued that when an organisation pursues multiple goals, some of which may conflict with each other, and that when it attempts to combine the interest of multiple stakeholders, some of which may compete with each other for scarce resources, it will be difficult for it to maintain7. Hybrid tendencies in consumer co-operatives: the case of Swedenits stability over time. Hybrid organisations are pulled in different directions, or torn apart by competing logics. Hansmann argued that the high transaction costs of decision-making in worker co-ops make them highly vulnerable and unstable.19 The present study, however, also illustrates risks of allowing a single logic to dominate for too long in hybrid organisations, especially if it comes at the expense of other competing logics. Does this study simply illustrate the impossibility of ever marrying democracy with the market, of democratic control in co-ops; or does it perhaps suggest that the need to explore methods to ensure greater stability? Two methods were identified herein to help preserve organisational goals or prevent 'goal displacement', and to facilitate internal democracy. Both are highly central for maintaining democratic structures in co-operatives and other hybrid organisations with multiple goals and stakeholders. They are a regular social accounting and audit and multi-stakeholder representation in the internal decision-making of the co-op. These two methods, together with clear limits on the size of local co-ops and prohibitions against amalgamating them, would help to provide much greater stability to co-operatives and other hybrid organisations.
1 M. Yanis, Creating a World without Poverty (2007) quoted in Lars Hulgaard, 'Social Economy and Social Enterprise: An Emerging Alternative to Mainstream Market Economy?' RCSW China Journal of Social Work (2011)， p. 13.
2 P. Hirst, Associative Democracy: New Forms of Economic and Social Governance (Amherst, 2004)。
3 V. Pestoff, Between Markets and Politics: Co-operatives in Sweden (Frankfurt and Bolder, 1991)。
4 Members in these thirty-nine local and regional societies retained their democratic rights of one member/one vote. However, only four per cent of them attended the Annual General Meeting in 2007.
5 The rural village of ?mot has a small local Konsum society. It was first started in the 1860s and re-established in the mid-1920s. Then in 1930 it purchased the grounds for its present store. In 1936 the association had 256 members, while sixty years later it claimed 372 members, from a total population of 497 inhabitants. In 2010 it remained an independent Konsum society, with 309 members. It continued to provide a dividend to its members in recent decades.
6 R. Dahl and E. Tufte, Size and Democracy (Stanford, 1973)。
7 V. Pestoff, Konsumentinflytande och konsumentorganisering - den svenska modellen (Stockholm, 1984)。
8 They are Svea (several large cities in middle Sweden)， Stockholm, Norrort (the northern suburbs of Stockholm)， V?st (Gothenburg & Bohus)， and Solid?r (southern Sweden, including Malm?)。 Together they claim nearly two million 'members', or more than three-fifths of the total three million 'members' of KF www.kf.se, 17 Aug., 2008.
9 It broke up again in 2008, but was replaced by a joint purchasing company, Co-op Trading A/S. The Finnish SOK wholesale unit of the consumer co-ops became a partner.
10 Dagens Nyheter, 13 Aug. 2010.
11 R. Gray, D. Owen, and C. Adams, Accounting and Accountability. Changes and Challenges in Social and Environmental Reporting (London and New York, 1996)。
12 C. Borzaga, 'New Opportunities for Co-operatives and Social Enterprises in the Changing Landscape of the Welfare Systems' Keynote speech at the International Co-operative Alliance's Research Conference (Mikkeli, Finland, 2011) To be published in J. Defourey, L. Hulgaard and V. Pestoff, Social Enterprise and the Third Sector - Changing European Landscapes in a Comparative Perspective (London and New York, forthcoming)。
13 Borgaza, 'New Opportunities'.
14 E. Ostrom, 'Crossing the Great Divide: Coproduction, Synergy, and Development', in M. D. McGinnis (ed.)， Polycentric Governance and Development. Readings from the Workshop in Political Theory and Policy Analysis (Ann Arbor, 1999)， ch. 15; R. B. Park, P. C. Baker, L. Kiser, R. Oakerson, E. Ostrom, V. Ostrom, S. L. Perry, M. B. Vandivort, G. P. Whitaker and R. Wilson, 'Consumers as Co- Producers of Public Services: Some Economic and Institutional Considerations' Policy Studies Journal 9 (1981)：1001-11.
15 V. Pestoff, 'Towards a Paradigm of Democratic Participation: Citizens Participation and Co-Production of Personal Social Services in Sweden', Annals of Public and Co-operative Economics, 80/2 (2009)： 197-224.
16 J. Vamstad, Governing Welfare. The Third Sector and the Challenges to the Swedish Welfare State (?stersund: Mid-Sweden University Unpublished PhD thesis 2007)， p. 37.
17 V. Pestoff, Beyond the Market and State: Social Enterprises and Civil Democracy in a Welfare Society (Aldershot, 1998)。
18 International Co-operative Alliance, Making Membership Meaningful: Participatory Democracy in Co-operatives (Manchester and Geneva, 1995)。
19 H. Hansmann, The Ownership of Enterprise (Cambridge MA and Oxford, 1996)。