Defining the co-operative difference

Abstract

The paper argues that co-operative firms play a set of roles in market economies, based on the co-operative values and principles that are rarely noted in economic literature. Among other, those roles are to internalize market externalities, to serve as laboratories for social innovation, to espouse social entrepreneurship, to promote ethical business practices, and to aid in development. While economic literature has been focused primarily on the ownership and control structure as a source of the difference, we argue that this focus paints an incomplete picture. The principles of co-operation may supply additional insights in addressing questions why co-operatives may thrive in areas of low labour mobility, prevalent market failures, oligopoly markets, and labour intensive industries. They may also offer insights into strategies and survival in global markets of successful co-operative firms.