The Role and Effectiveness of the Cooperative Business Model in Economic Recovery Strategy and Resilience Building Post-Covid-19: A Co-operative solution to disasters

Abstract

Whereas economic crises often require co-operative approaches to stabilize, recover and revive the free market system, Covid-19 has triggered a new debate regarding the role of the cooperative business model in the resilience of enterprises and economies. A major question donor community and development partners interested in private sector approach to resilience are asking is whether to go through Micro, Small and Medium-sized Enterprises (MSMEs) or cooperatives. The cooperative enterprise has been disparaged as an ineffective, non-attractive business model compared to the competitive enterprise MSME model. The main objective of the study was to assess the performance and effectiveness of the cooperative model vis-à-vis MSME model in supporting economic recovery and resilience building post-shocks. The study, based on Systems Theory, adopted a historical scoping research design and used a literature review approach. The findings revealed that economic recovery models that seek to recover, restore, and revive a collapsed capitalist system are mostly “co-operative” in nature, and are critical in stabilizing fragile economic systems. The cooperative business model: (i) is robust enough to rescue economies from collapse and reverse economic fortunes, and (ii) has capacity challenges in cooperative governance that need to be addressed for the model to effectively contribute to resilience building in future. Economic recovery from Covid-19 should focus on addressing capacity challenges in cooperative governance and establishing ‘Marshall Plan Style’ programme to strengthen their role in fostering economic resilience. The focus should be on levels of capitalisation of cooperatives, strengthened governance and cooperative entrepreneurship, ensuring robust oversight to cushion members, and de-risking them from the threat of governance-induced collapse, erring on the side of appropriate response in times of crises.