New perspectives of the cooperative system

Table of Contents

Introduction

First part: The cooperatives as social responsible companies
1. Corporate Social Responsibility in the DNA of the cooperative model (Mario Mazzoleni)

Second part: Cooperatives and profit
2. Profit and corporate social responsibility (Mario Mazzoleni)
3. Cooperatives and economic balance (Mario Mazzoleni, Davide Giacomini, Diego Paredi)

Third part: The new challenges for the cooperative system
4. Rethinking the potential of the territories (Mario Mazzoleni)
5. Synergies in the cooperative system: the case of mergers (Laura Rocca & Elisa Chiaf)
6. Training and innovation to face the future (Stefania Marcozzi & Mario Mazzoleni)
7. The cooperation and the challenge of artificial intelligence (Mario Mazzoleni)
8. The strategic perspectives for the cooperative enterprises and the role of management (Mario Mazzoleni)

Introduction

Cooperation is now an experience in "doing business" that has been consolidated over time, becoming increasingly widespread throughout the world. It is able to adapt both to the different phases that the economic system faces, and to the various challenges that sectoral, organizational and technological innovation impose systematically.

The cooperative system's ability to adapt and to maintain its own autonomous capacity to develop economically consolidated experiences over time, offers numerous food for thought for all those interested in managerial and entrepreneurial issues.

The values on which, for more than one hundred and fifty years, the entrepreneurial experience has been developed with reference to this type of company represent an important element of reflection. They are also a source of learning, for those who want to evaluate the effects that the search for consistent behavior and the application of appropriate management and strategic methods determines in the development of companies with these institutional characteristics.

Another interesting factor that can be deduced from a careful analysis of how cooperative companies operate is linked to their ability to support, through a strong and systematic investment in terms of processes and internal and external communication, the motivation of members, workers, while generating important opportunities for partnership with other stakeholder reference group.

In this lecture we outline some relevant aspects about the way cooperative enterprises operate in their own external reference context (market), representing the levers they use to strengthen their management: the primary objective of the paper is, therefore, to draw inspiration from these experiences to be able to assess the possibility of applying experiences and tools in different institutional contexts.

From this point of view, it is clear that a business model strongly oriented towards developing participatory logics, which has always been attentive to environmental and sustainability issues (in a sense anticipating new managerial theories), and which bases a large part of internal management on respect for rules and guidelines that today we define as "organizational well-being", represents an important and very useful experiential front for those who today are equipped to follow the same managerial logics.

The report also highlights the consolidated propensity to innovation, emphasizing the way cooperatives have been able to profitably occupy the most disparate sectors of the economy, but have also ended up determining new orientations of values and strategies that have become common even in the business world.

This influence has meant that over time companies have ended up adopting many of the values of reference of these businesses but have also drawn on experience and processes developed in companies of a mutualistic and participatory nature.

This process of comparison has increasingly legitimized the cooperative world to be a reliable partner for developing complex projects in which companies with different institutional forms (public administration, credit institutions, private companies) operate.

The strategic vision that sees the cooperative world increasingly active as a point of reference in its own environment is another element of reflection remarked in this paper.

This makes it possible to highlight how much the future of the territories requires approaches linked to glocal visions, that is, capable of giving rise to customized interventions but able not to renounce the elements of rationalization that the complex activities suggest to adopt.

This lecture closes by recalling some considerations on the new challenges that the cooperative world is facing, underlining, once again, the way they are in line with what other companies have to manage. Among these, the most important are those related to the issues of artificial intelligence and the way, even faced with these "innovations", the cooperative world must move in line with its guiding principles and its values.

First part: The cooperatives as social responsible companies

1. Corporate Social Responsibility in the DNA of the cooperative model (Mario Mazzoleni)

What is a cooperative?

Cooperatives are people-centred companies owned, controlled and run by and for their members to realise their common economic, social, and cultural needs and aspirations (ICA, 2019). The theme of the relationship between Cooperation and Corporate Social Responsibility (CSR) can be approached from various points of view, involving interesting analysis points on which to focus some in-depth analysis.

First of all, it is clear that a reflection on the responsible orientation in the action of cooperatives should refer to being a cooperative as a company (Giacomini, Chiaf & Mazzoleni, 2016).

In this case it is worth referring to what has been written by various authors regarding the increasingly stringent link between social responsibility and being and doing business (Maier, Meyer & Steinbereithner, 2014, Mazzoleni, 2005, Friederick, 1988)) to underline how the pressures to rethink the management logics of companies based on a recognized need to pay attention to "ethical" responsibilities or those which go beyond the strict institutional goals are increasingly clearly present both at a theoretical level and with regard to the identification of operating methods (Shiller, 2012).

A second interesting approach leads us to rethink the relationship between cooperation and our own environmental context by virtue of the changed institutional conditions and the consequent role that cooperative companies have assumed and tend to cover as a result of important changes that have occurred especially in the Italian context (Borzaga, 2015; Mazzoleni, 1996; Mori, 2015)

In this case, the theme can be developed starting from the definition of the positioning of the cooperative enterprises and from the consequent needs to move in their own "market" taking care to pay attention to the stakeholders of reference.

In particular, it is interesting to point out that in recent years the cooperative system has assumed a sort of double presence in the economic and social system, on the one hand by consolidating its role in different markets (also with important percentages of protection or, indeed, prominent such as in the large-scale retail sector, logistics, housing and services), on the other hand presenting itself as a system capable of supporting the welfare system as an alternative or in collaboration with what is offered by public institutions4.

It should also be emphasized that, from this point of view, the recent evolution of needs and the increasingly evident need to coordinate interventions in the territories that see more subjects acting in coordination between them, determine an increasingly important role of cooperation also, to above all, in relation to one's natural propensities to link the economic, environmental and social approaches in a virtuous way (Borzaga, 2018; Szekely & Dossa, 2017).

Entering into the merits of the relationship between orientation towards social responsibility and the development of cooperative enterprises, the location, also for these companies, of a social economic system where individuals interact to satisfy their own needs, placing themselves in a systemic relationship with each other in the respect, therefore, also for conditions of a social nature in a framework that thus becomes socially responsible. This affirmation constitutes the theoretical support on which the line of Corporate Social Responsibility is based6: companies as social actors who can no longer limit themselves to producing profits, but must have wider objectives7.

Before delving into the implications of the current subject, it seems useful to recall that this vision, in addition to having a strong following in the current economic literature, also constitutes the foundation of the constitutional meaning of enterprise: "Private economic initiative is free. It cannot take place in contrast with social utility or in such a way as to damage safety, freedom and human dignity. The law determines the appropriate programs and controls so that the public and private economic initiative can be addressed and coordinated for social purposes " (Italian Constitution, 1948).

Therefore, it can be noted that the aims and constraints placed on the company by Article 41 of the Constitution of the Italian Republic outline the contours of its social responsibility towards the community. Even in the academic field the concept is not new, even if only in recent years has it been better defined gaining an important role in the economic literature. Peter Drucker, already in the 1940s, argued that companies have a social purpose alongside economic objectives (Drucker, 1939; Drucker, 1942). In this framework, the "virtuous" and necessary interdependence between the multiple social partners, competitive results and profit is evident; in other words, these elements feed each other and are the necessary conditions and, at the same time, a consequence of the others (see Fig 1).

Figure 1. A representation of the links between social, economic and competitive results.

Abbildung in dieser Leseprobe nicht enthalten

Author’s own work.

With regard to this, it is important to note that the concept of social interlocutors has also gradually changed, affirming the concept of stakeholders, or “[…] any group or individual that can influence or be influenced by the achievement of the organization's objectives [...] " (Freeman, 1984). They are mainly workers and collaborators, customers, shareholders, suppliers, public bodies, territory (Ackerman, 2008; Pickering, H., Crawford, J., & McLelland, D., 1996).

In other words, it can be summarized that such an enterprise acts with the awareness that the activity carried out:

✓ is not aimed solely at profit;

✓ must be legitimized by its social utility;

✓ must be guided by a transparent business ethic.

Therefore, a sort of circular concept must be established in which the pursuit of economy, social goals and attention to service cannot be considered stand-alone elements, as they find their meaning only if they are married to one another within a dynamic system (Coda, 1988). In this circular conception, economic efficiency - hence the lasting attitude to produce income - is qualified by the fact that it springs from a superior capacity to respond to the expectations of social partners; this, in turn, can represent an element capable of raising the motivational drive, dedication and identification with the company. There is no separation between the economic and the human dimension. Social responsibility therefore requires the continuous commitment of the company to ethical behavior and to contribute to economic development while at the same time improving the quality of life of workers and their families, as well as that of the local community and society in general. Well defined themes and concepts and the basis of the capacity of cooperative enterprises to act over time within the different markets. If then profit is seen in its instrumentality and functionality due to the continuation of the enterprise, the reference to the characteristics of the institutional model of cooperatives appears even more clear and explicit.

Figure 2. Requests to the company.

Abbildung in dieser Leseprobe nicht enthalten

Author’s own work.

To make explicit the "institutional" link between cooperation and CSR it is useful to take inspiration from what is defined by the principles to which these companies must conform in order to be concretely defined as cooperatives. The reference guidelines to guide the functioning of the cooperatives derive directly from the statements of principle established by the "probing pioneers" of Rochdale (Desroche, 1988). Over time these principles have been gradually updated by the International Cooperative Alliance (ICA, 2019) and today these principles define the rules of conduct and the membership criteria for all cooperative enterprises.

The reference principles are seven and describe, albeit roughly, the characteristics of each cooperative in the following way:
- Voluntary and open membership;
- Democratic member control;
- Member economic participation;
- Autonomy and independence;
- Education, training and information;
- Cooperation among Cooperatives;
- Concern for community.

Without going deeper into the analysis of the single principles, it is useful to underline how in the guidelines they appear, alongside addresses able to directly influence the management (limited interest on the capital, distribution of the residuals) others that, while generating effects on the working methods of the cooperative enterprises, lead them to operate giving relevance to particular interests such as those of the community and through systems able to "democratically" involve their members and generate collaborative methods between companies with the same institutional characteristics.

The cooperative principles lead to highlighting what we could call the "pillars" of cooperation, namely:

- Democracy, which is expressed through free membership and economic participation and decision-making by members;

- Mutuality, which leads to offering members economic and extra-economic conditions useful for the satisfaction of their needs;

- The solidarity that is manifested through interventions and initiatives aimed at the community and the reference territory and which are also directed outside the context of direct reference.

The orientation for the functioning of the cooperatives appears to be in tune with that cited by the guiding principles that lead to the definition of CSR, when for the company are associated with economic and legal obligations also those of an ethical and philanthropic nature (Carroll, Brown & Buchholtz, 1993). In the same way, the cooperative principles legitimately find citizenship with reference to the Stakeholder

Theory where the need is stressed for the company to operate taking care to satisfy the interests of vast categories of subjects whose different expectations converge and are measured with the company operation (Freeman, 1984).

Finally, the link between the reference to the interests towards the community mentioned by the seventh principle and the information reported by the Green Paper of the European Commission when it states that CSR also means "integration on a voluntary basis of social and ecological concerns ..." is evident (European Commission, 2001).

The cooperative principles are presented, on the one hand, as bearers of a business culture that leads the company to operate by paying attention to its own reference environment and the needs of the community, for another aspect they facilitate the application of the recommendations typically linked to theories of stakeholders in terms of attention to the various stakeholders, first and foremost the shareholders, who are placed on an equal footing with each other by virtue of belonging to the company and without any difference in rights linked to patrimonial conditions. In the same way, the references of a solidarity nature found in the cooperative principles open the door to behaviors aimed at satisfying social needs and, even if not explicitly, also ecological or environmental in a broad sense.

Figure 3. The DNA of the cooperative system

Abbildung in dieser Leseprobe nicht enthalten

Author’s own work.

The cooperative principles therefore represent an important cultural and ideological reference base for these companies, also to lead them with determination on the road that is traced by CSR theories, leading to underline how the themes of Corporate Social Responsibility are present in the DNA (fig. 3) of the cooperative enterprises naturally conditioning and directing their operations.

1.1 The relationship between cooperative enterprises and the reference context

Another interesting element that can help interpret the role of cooperation in the economic and social system can be deduced through the study of what we could define the positioning of cooperation in the Italian economic system in the first hundred and fifty years of the history of the cooperative movement.

The cooperative system in Italy has developed since the end of the 19th century, satisfying needs in the most diverse sectors of the economy (Degl'Innocenti, 1988; Mazzoleni, 1996; Zamagni, 2005). The space that the cooperative system has occupied over the years has been fueled, first of all, by the ability of these companies to occupy supply spaces effectively through management methods that were able to generate durability even on the economic front, also through the to affirm itself of some "privileges" that the system has been recognized as a function of its own way of operating in the different sectors and to the formalization of its own orientation to the non-profit. At the same time, it should be emphasized that the strategic direction that led the cooperative system to cover important spaces in the offer of products and services stems from a declared desire to occupy spaces in the economic and social system that are connected to the manifestation of needs hardly able to be satisfied through the logics that guide the market approach or the "invisible hand" or by delegating the intervention to the capacity of garrison of the State or its emanations on the territory.

The cooperative movement has confirmed in its action the will to be formed by companies driven by the desire to satisfy the needs that are not adequately answered through the normal supply processes managed by the market or manned according to the institutional directions delegated to the public administration. The "social" mission that the cooperative system has ended up with has seen the privilege of being a subject capable of satisfying poor, marginal or simply unable to support itself according to a classic economic approach, thus ending up affirming a guiding principle of the cooperative system that focuses on the needs of people and aims to satisfy them through "alternative" supply methods that are different from those canonically ascribable to classical economic models.

The willingness to act also in these difficult contexts, the ability to effectively integrate between the market and the public system, has allowed the cooperative system to legitimize itself as an institutional subject able to offer answers even in complex situations that cannot be traced back to established practices, but, at at the same time, it ended up realizing the vocation to "diversity" that the cooperative model has had from the beginning of its history to affirm, translating into daily practice an attention to the general values that have characterized the "responsible" and "social" approach of the cooperative movement.

In retracing the path that led cooperative enterprises to play an important role in the economy and in Italian society, it is possible to recognize the guidelines that have "addressed socially and responsibly" and supported action (Fig. 4).

Figure 4. The economic space manned by cooperatives in Italy

Abbildung in dieser Leseprobe nicht enthalten

Author’s own work.

Proceeding by synthesis we can underline how the beginning of the "history" of the cooperative movement in Italy has seen these companies occupy spaces of offer mainly oriented to satisfy the primary needs of their members. Thus, the first cooperatives began to intervene in the agricultural sector and in the assistance to the people with the first mutual societies, to then begin to intervene in the housing sector and consolidate their legitimacy as an economic actor within the commerce sector with the proliferation of consumer cooperatives. The emergence of the first banking cooperatives (the popular banks and the rural banks) then allowed the cooperative movement to start overseeing the financial sector to generate ways of supporting its members that were able to bypass the stringent market logic then in force (Cesarini, Ferri & Giardino, 1997). The synthetic reconstruction just outlined (certainly not exhaustive in terms of reconstructing the affirmation of cooperative enterprises in the Italian economic and social system), allows us to underline how, in a first phase of its intervention, cooperation has oriented its action, socially and responsibly geared to overseeing interventions not guaranteed by the market, coming to erode a first slice of business-type economic space and, often, going to compare with guided intervention methods regulated by “market” laws and this concerns interventions in the sectors agricultural, real estate, financial and production in a broad sense. At the same time, the social vocation ended up placing cooperation in the conditions of joining, often replacing, families by offering solutions to needs that historically had been manned and satisfied in the family environment. The last years of the last century brought cooperation to consolidate this ability to position itself among the three institutes (public administration, business and family) ending up improving their ability to intervene in the sectors mentioned above (Baglini e Catino, 1999). At the same time, the social evolution and the evolution of needs, associated with a redefinition of the intervention logics of the public administration, also a consequence of a substantial reduction in the spending capacity of the latter, has generated a new scenario in which the cooperation has been able to consolidate his vocation "differently responsible". Families have increasingly lost the ability to meet basic needs such as social needs, from the care and education of young people to the care and attention of older people, from the assistance of people with disabilities to interventions for recovery and reintegration of drug addicts, prisoners and subjects affected by highly incapacitating events. The State and its emanations have reduced its vocation to intervene in the welfare sphere, failing at the same time to satisfy the new demands that the social system was making evident.

Once again, and in an absolutely relevant way, the cooperative movement has been able to represent the answer to a difficult situation on the social front that cannot be governed through the classic solutions institutionally and economically adopted in the past. In practice, cooperation has generated supply capacity both by creating social cooperatives aimed at providing adequate services to meet the needs of those who could not find institutions capable of responding to them, either by creating cooperatives directly aimed at insertion and recovery of people otherwise held at the margin of the economic system (Bandini, 2004). In this way the cooperation, in addition to consolidating its presence in typically market sectors, ended up replacing families in the defense of individual and socially relevant needs, and generated a new way of dealing with welfare issues by acting "instead” of the public administration. It should be emphasized that this consolidation of the role of the cooperative system not only reconfirms a vocation to "responsibility in and for society" allows to underline two other elements that can allow to enhance the coherence of the behaviors of the cooperative system with the guidelines (the DNA) represented by cooperative principles. Being able to create opportunities for collaboration through interventions aimed at achieving vertical and horizontal integration facilitates the positioning on the economic (Mazzoleni, 2006) front for cooperative companies and creates the prerequisites for efficiency that consolidate the market position, but, at the same time, offers innovative solutions also as regards the possibility of generating interventions oriented to the principles of solidarity and mutualism. From this point of view, purely by way of example, the synergies that have been created in the agri-food supply chains that bring the entire process from agricultural production up to commercial distribution through the phases appear to be interesting, among others. of processing and production. The virtuous relationship that has been created between cooperative enterprises and other institutional forms is very interesting and confirms the tendency of the system to operate also through transversal interventions always oriented to satisfy needs otherwise difficult to deal with in purely market logic. Moreover, it is undeniable that this kind of initiative has ended up determining a socially important presence of the cooperative system that now operates as a leading actor in the provision of welfare interventions, arriving in some sectors to almost completely replace the role once played by the State and its emanations.

Box: The cooperatives principles defined by the International Co-operatives Alliance

In 1995, the ICA adopted the revised Statement on the Cooperative Identity which contains the definition of a cooperative, the values of cooperatives, and the seven cooperative principles as described below. You can also consult the Guidance Notes on the Cooperative Principles and Values which give detailed guidance and advice on the practical application of the Principles to the cooperative enterprises.

Cooperative Principles

The cooperative principles are guidelines by which cooperatives put their values into practice.

1. Voluntary and Open Membership

Cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2. Democratic Member Control

Cooperatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organised in a democratic manner.

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

4. Autonomy and Independence

Cooperatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

5. Education, Training, and Information

Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6. Cooperation among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

7. Concern for Community

Cooperatives work for the sustainable development of their communities through policies approved by their members.

References

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Baglioni, G., & Catino, M. (1999). Operai e ingegneri. Bologna: Il Mulino.

Bandini, F. (2004). Le cooperative sociali di tipo B e le politiche attive del lavoro. Rimini: Maggioli.

Borzaga, C. (2015). Economia cooperativa. Rilevanza, evoluzione e nuove frontiere della cooperazione italiana. Euricse.

Borzaga, C. (2018). Cooperative da riscoprire. Donzelli.

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Coda, V. (1988). Per una nuova cultura d'impresa. Aggiornamenti Sociali, 2/3.

Degl'Innocenti, M. (1988). Il movimento cooperativo nella storia d'Europa. Milano: Angeli.

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Second part: Cooperatives and profit

2. Profit and corporate social responsibility (Mario Mazzoleni)

The socially responsible company is characterized by the application of logics, practices and tools aimed at satisfying the needs and demands of different stakeholders (Mazzoleni, 2006). What role, or should it assume, in these companies the creation of economic value and, therefore, profit? Does it represent a finality or a means that acts as a driving force for the achievement of the most varied and multiple objectives of a company?

The risk involved in this historical phase is that of falling into the pendulum trap, while it must remain evident that a socially responsible company must include, among its priority objectives, the creation of economic value that allows it to activate a virtuous circle. with the practices of social responsibility in order to create the best conditions to last over time.

Starting from a brief excursus on the evolution of the concept of business finalism, the dual approach to company profitability (short and long term) and the consequences that it can generate will be highlighted. An instrumental approach to profit, in fact, becomes a driving force not only for an increase in competitiveness (a direct consequence) but also for an improvement in the social goals that the company, as an institution, must try to achieve. This logical path leads to underline the importance of contextual achieving of economic and social goals that characterize companies that act according to this logic as "excellent".

After having exposed the peculiarities of companies that can be defined as excellent, we move on to a reflection of the relationship between profit and corporate social responsibility, strategic logic once considered distant, if not, and of which today, instead, the character of interaction and complementarity to achieve the fundamental purpose for each company order: durability.

2.1 Profit purposefulness is a dynamic concept

The result currently achieved by the mere diffusion of the concept of social responsibility leads to the awareness of the relevance of social responsibility practices and, therefore, on what the aims of business are (fasan & Bianci, 2017).

The business finalism has been a strongly debated topic among scholars over time, which have broadened the field of investigation by not relegating it to the economic sphere (Masini, 1979) alone since the company, as an economic-social institution, has various values ​​and objectives and composites as well as operating conditions that determine their logic, strategies and results.

The business finalism has been a strongly debated topic among scholars over time, which have broadened the field of investigation by not relegating it to the economic sphere alone since the company, as an economic-social institution, has various values ​​and objectives and composites as well as operating conditions that determine their logic, strategies and results. The company, as an economic order of the institution, is a complex reality that is created so that, over time, the aims of the institution of which it is an expression and consequence can be satisfied. When, in fact, a group of people is associated creating rules and structures of behavior that are relatively stable over time (Airoldi, Brunetti & Coda, 2010) - behavior inherent in the very nature of the person - then an institution takes shape whose purpose is precisely to satisfy the needs of the people who compose it. Strong evidence, especially for families, non-profit institutions and institutions of public administration, is the intergenerational character that distinguishes this social structure that has its own value and its purpose regardless of the people who are part of it at any given time. Some peculiarities of the institute, such as, for example, durability, autonomy, unity or dynamism are therefore naturally attributable also to the company which is the systematic instrument of expression of economic activity.

This logical passage allows us to better understand the essentiality of some characteristics of the company of which in doctrine it is possible to find numerous definitions that highlight and focus on particular aspects of the same phenomenon and, in this sense, all the definitions should be considered in a complementary (Ferrero, 1968) way given the multidimensionality of the object of study.

For reasons of conciseness, and because a deepening of these questions would be beyond the scope of this paper, it is possible to refer to the Ardemani (1968) classification which distinguished, in the economic-business history, the different business concepts referring to the "center" that can be identified in it.

Thus we have passed from the thinking of the nineteenth century that "reduced" the enterprise to a center of juridical relationships, to the concept of center of factors in the early years of the last century where the heritage was considered an essential element, becoming the main object of study. Subsequently, and until the First World War, the company was seen as a center of economic operations: they lose the character of family businesses and take the form of a joint-stock company, thus marking the development of large industrial companies.

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