Historical Perspective

of
Co-operative Management
 Historical Perspective of
Co-operative Management

• Cooperation: Working Together

leading to the formation of a
Co-operative
 Historical Perspective of
Co-operative Management
• Quotes:

• We may have all come on different

ships, but we're in the same boat
now.

– Martin Luther King Jr. (1929-1968)

American black leader.
 Historical Perspective of
Co-operative Management

• If you want to be incrementally better:

Be competitive. If you want to be
exponentially better: Be cooperative.

– Unknown Source
 Historical Perspective of
Co-operative Management

• We are not put on this earth to see

through one another, but to see one
another through.

– Unknown Source
 Historical Perspective of
Co-operative Management
• In everyone's life, at some time, our inner
fire goes out. It is then burst into flame
by an encounter with another human being.
We should all be thankful for those people
who rekindle the inner spirit.

– Albert Schweitzer (1875-1965) German

theologian, philosopher, and physician.
Historical Perspective of
Co-operative Management
 Historical Perspective of
Co-operative Management
• "Founded on the principles of private initiative,
entrepreneurship and self-employment,
underpinned by the values of democracy, equality
and solidarity, the co-operative movement can help
pave the way to a more just and inclusive economic
order."

• In an age where community involvement and

partnerships with civil society are increasingly
being recognized as indispensable, there is clearly
a growing potential for cooperative development
and renewal worldwide.

-- Kofi Annan
Historical Perspective of
Co-operative Management
 Historical Perspective of
Co-operative Management
• "Co-operative enterprises provide the
organizational means whereby a significant
proportion of humanity is able to take into
its own hands the tasks of creating
productive employment, overcoming poverty
and achieving social integration."

-- Boutros Boutros-Ghali
 Historical Perspective of
Co-operative Management
• Rig-Veda: “May all work with the
same mind so that they could work
well.”

• Main Principle of a Co-operative is:

EACH FOR ALL AND ALL FOR EACH

 Historical Perspective of
Co-operative Management

• Origin of Co-operation is as old as

early civilization.
• But as a movement it is about two
centuries old.
• The essence of a Cooperation is the
Cooperative Spirit.
Historical Perspective of
Co-operative Management
Historical Perspective of
Co-operative Management

The Cloyne Court Hotel, a student

cooperative in Berkeley, California,
United States.
 Historical Perspective of
Co-operative Management
• A co-operative (often referred to as a
co-op or coop) is defined by the
International Co-operative Alliance's
Statement on the Co-operative Identit
y
as an autonomous association of
persons united voluntarily to meet
their common economic, social, and
cultural needs and aspirations through
a jointly-owned and democratically-
 Historical Perspective of
Co-operative Management
• It is a business organization owned
and operated by a group of
individuals for their mutual benefit.
A cooperative may also be defined as
a business owned and controlled
equally by the people who use it’s
services or who work at it.
Historical Perspective of
Co-operative Management

Consumers' cooperative shops in the

UK formed the world's first mass
cooperative movement
 Historical Perspective of
Co-operative Management
• Origins
• Although co-operation as a form of
individual and societal behavior is
intrinsic to human organization, the
history of modern co-operative forms
of organizing dates back to the
Agricultural and Industrial Revolutions
of the 18th and 19th centuries. The
'first co-operative' is under some
dispute, but there were various
milestones.
 Historical Perspective of
Co-operative Management

• In 1761, the
Fenwick Weavers' Society was formed
in Fenwick, East Ayrshire, Scotland to
sell discounted oatmeal to local
workers. Its services expanded to
include assistance with savings and
loans, emigration and education.
 Historical Perspective of
Co-operative Management

• In 1810, Welsh social reformer

Robert Owen, from Newtown in mid
Wales, and his partners purchased
New Lanark mill from Owen's father-in-
law and proceeded to introduce better
labor standards including discounted
retail shops where profits were passed
on to his employees.
 Historical Perspective of
Co-operative Management

• Owen left New Lanark to pursue

other forms of co-operative
organization and develop co-op ideas
through writing and lecture. Co-
operative communities were set up in
Glasgow, Indiana and Hampshire,
although ultimately unsuccessful.
 Historical Perspective of
Co-operative Management

• In 1828, William King set up a

newspaper, The Cooperator, to
promote Owen's thinking, having
already set up a co-operative store in
Brighton.
 Historical Perspective of
Co-operative Management

• The
Rochdale Society of Equitable Pioneers,
founded in 1844, is usually considered the
first successful co-operative enterprise,
used as a model for modern co-ops,
following the 'Rochdale Principles'.
 Historical Perspective of
Co-operative Management

• A group of 28 weavers and other

artisans in Rochdale, England set up
the society to open their own store
selling food items they could not
otherwise afford. Within ten years
there were over 1,000 co-operative
societies in the United Kingdom.
 Historical Perspective of
Co-operative Management
• The Rochdale Pioneers
• The Rochdale Society of Equitable
Pioneers was a group of 28 weavers and
other artisans in Rochdale, England, that
was formed in 1844. As the
mechanization of the Industrial
Revolution was forcing more and more
skilled workers into poverty, these
tradesmen decided to band together to
open their own store selling food items
they could not otherwise afford.
 Historical Perspective of
Co-operative Management

• With lessons from prior failed

attempts at co-operation in mind, they
designed the now famous
Rochdale Principles, and over a period
of four months they struggled to pool
together one pound sterling per person
for a total of 28 pounds of capital.
 Historical Perspective of
Co-operative Management
• On December 21, 1844, they opened
their store with a very meagre
selection of butter, sugar, flour,
oatmeal and a few candles. Within
three months, they expanded their
selection to include tea and tobacco,
and they were soon known for
providing high quality, unadulterated
goods.
 Historical Perspective of
Co-operative Management
• The Rochdale Principles according to the 1995 ICA
revision are detailed below.

• Voluntary and open membership

• The first of the Rochdale Principles states that

co-operative societies must have an open and
voluntary membership. According to the ICA's
Statement on the Co-operative Identity, "Co-
operatives 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."
Historical Perspective of
Co-operative Management
– Anti-discrimination

– To discriminate socially is to make a distinction

between people on the basis of class or category
without regard to individual merit. Examples of
social discrimination include racial, religious,
sexual, sexual orientation, disability, and ethnic
discrimination. To fulfill the first Rochdale
Principle, a Co-operative society should not
prevent anyone willing to participate from doing
so on any of these grounds.
– Contd…
Historical Perspective of
Co-operative Management
However, this does not prohibit the
co-operative from setting ground
rules for membership, such as
residing in a specific geographic
area or payment of a membership
fee to join, so long as all persons
meeting such criteria are able to
participate if they so choose.
Historical Perspective of
Co-operative Management
– Motivations and rewards

– Given the voluntary nature of co-

operatives, it requires a motivation to
encourage people to participate. Each
person's motivations will be unique, and
will vary from one co-operative to
another, but will often be a combination
of the following:

• Financial - Some co-operatives are able

to provide members with financial
benefits.
Historical Perspective of
Co-operative Management
• Quality of life – serving the
community through a co-operative
because doing service makes one's
own life better - is perhaps the
most significant motivation for
volunteering.
• Giving Back – many people have in
some way benefited from the work
of a co-operative, or more generally,
and volunteer to give back.
Historical Perspective of
Co-operative Management
• Altruism – volunteering for the
benefit of others. Most people
argue that there are no purely
altruistic volunteers – altruism is
a common motivation but never
the only motivation for sustained
commitment to serve – there is
always some aspect of personal
gain or satisfaction
Historical Perspective of
Co-operative Management
• A sense of duty – some see
participation in community as a
responsibility that comes with
citizenship – in this case they
may not describe themselves as
volunteers
• Career Experience - Volunteering
offers experiences that can add
to career prospects.
 Historical Perspective of
Co-operative Management
• Democratic member control

• The second of the Rochdale Principles states that

co-operative societies must have democratic
member control. According to the ICA's
Statement on the Co-operative Identity, “Co-
operatives 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 co-
operatives members have equal voting rights (one
member, one vote) and co-operatives at other
levels are also organised in a democratic manner.”
 Historical Perspective of
Co-operative Management
• Member economic participation is one of
the defining features of co-operative
societies, and constitutes the third
Rochdale Principle in the ICA's Statement
on the Co-operative Identity. According to
the ICA, co-operatives are enterprises in
which “Members contribute equitably to,
and democratically control, the capital of
their co-operative. At least part of that
capital is usually the common property of
the co-operative.
 Historical Perspective of
Co-operative Management
• 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 co-
operative, possibly by setting up reserves,
part of which at least would be indivisible;
benefiting members in proportion to their
transactions with the co-operative; and
supporting other activities approved by the
membership.” This principle, in turn, can be
broken down into a number of constituent
parts.
Historical Perspective of
Co-operative Management
– Democratic control
– The first part of this principle states
that “Members contribute equitably to,
and democratically control, the capital of
their co-operative. At least part of that
capital is usually the common property of
the co-operative.” This enshrines
democratic control over the co-
operative, and how its capital is used.
Historical Perspective of
Co-operative Management
– Limitations on member compensation and
appropriate use of surpluses
– The second part of the principle deals with how
members are compensated for funds invested
in a Co-operative, and how surpluses should be
used. Unlike for profit corporations, co-
operatives are a form of social enterprise.
Given this, there are at least three purposes
for which surplus funds can be used, or
distributed, by a Co-operative.
– “Members usually receive limited compensation,
if any, on capital subscribed as a condition of
membership.”
 Historical Perspective of
Co-operative Management
• “Developing their co-operative, possibly by setting
up reserves, part of which at least would be
indivisible;” in other words, the surplus can be
reinvested in the co-operative.
• Benefiting members in proportion to their
transactions with the co-operative;” for example,
a Consumers' Co-operative may decide to pay
dividends based on purchases.
• “Supporting other activities approved by the
membership.”
 Historical Perspective of
Co-operative Management
• Autonomy and independence
• The fourth of the Rochdale Principles states that
co-operative societies must be autonomous and
independent. According to the ICA's Statement
on the Co-operative Identity, “Co-operatives are
autonomous, self-help organizations controlled by
their members. If they enter to agreements with
other organizations, including governments, or
raise capital from external sources, they do so on
terms that ensure democratic control by their
members and maintain their co-operative
autonomy.”
 Historical Perspective of
Co-operative Management
• Education, training, and information
• The fifth of the Rochdale Principles states that
co-operative societies must provide education and
training to their members and the public.
According to the ICA's Statement on the Co-
operative Identity, “Co-operatives 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.”
 Historical Perspective of
Co-operative Management
• Cooperation among cooperatives
• The sixth of the Rochdale Principles
states that co-operatives cooperate with
each other. According to the ICA's
Statement on the Co-operative Identity,
“Co-operatives serve their members most
effectively and strengthen the co-
operative movement by working together
through local, national, regional and
international structures.”
 Historical Perspective of
Co-operative Management
• Concern for community
• The seventh of the Rochdale Principles
states that co-operative societies must
have concern for their communities.
According to the ICA's Statement on the
Co-operative Identity, “Co-operatives work
for the sustainable development of their
communities through policies approved by
their members.”
 Historical Perspective of
Co-operative Management
• Co-operative Movement – Review
• The history of the cooperative
movement concerns the origins and
history of cooperatives. Although
cooperative arrangements, such as
mutual insurance, and principles of
cooperation existed long before, the
cooperative movement began with the
application of cooperative principles to
business organizations.
 Historical Perspective of
Co-operative Management
• Beginnings
• The cooperative movement began in
Europe in the 19th century, primarily in
Britain and France, although
The Shore Porters Society claims to be
one of the world's first cooperatives,
being established in Aberdeen in 1498
(although it has since become a private
partnership).

• Contd…
 Historical Perspective of
Co-operative Management
• The industrial revolution and the
increasing mechanization of the
economy transformed society and
threatened the livelihoods of many
workers. The concurrent labor and
social movements and the issues they
attempted to address describe the
climate at the time.
• Contd…
 Historical Perspective of
Co-operative Management
• The first consumer cooperative may
have been founded on March 14, 1761, in
a barely-furnished cottage in
Fenwick, East Ayrshire, when local
weavers manhandled a sack of oatmeal
into John Walker's whitewashed front
room and began selling the contents at a
discount, forming the
Fenwick Weavers' Society.
Contd…
 Historical Perspective of
Co-operative Management
• In the decades that followed, several
cooperatives or cooperative societies
formed including Lennoxtown
Friendly Victualling Society, founded
in 1812.
• Contd…
 Historical Perspective of
Co-operative Management
• By 1830, there were several hundred co-
operatives. Some were initially successful,
but most cooperatives founded in the early
19th century had failed by 1840.
• However, Lockhurst Lane Industrial Co-
operative Society (founded in 1832 and
now Heart of England Co-operative Society
), and Galashiels and Hawick Co-operative
Societies (1839 or earlier, now
Lothian, Borders & Angus Co-operative Soc
iety
) still trade today.
• Contd…
 Historical Perspective of
Co-operative Management
• It was not until 1844 when the
Rochdale Society of Equitable Pionee
rs
established the ‘Rochdale Principles’
on which they ran their cooperative,
that the basis for development and
growth of the modern cooperative
movement was established.
• Contd…
 Historical Perspective of
Co-operative Management
• Robert Owen (1771–1858) is considered the
father of the cooperative movement. A
Welshman who made his fortune in the
cotton trade, Owen believed in putting his
workers in a good environment with access
to education for themselves and their
children. These ideas were put into effect
successfully in the cotton mills of
New Lanark, Scotland.
• Contd…
 Historical Perspective of
Co-operative Management
• It was here that the first co-operative
store was opened. Spurred on by the
success of this, he had the idea of forming
"villages of co-operation" where workers
would drag themselves out of poverty by
growing their own food, making their own
clothes and ultimately becoming self-
governing. He tried to form such
communities in Orbiston in Scotland and in
New Harmony, Indiana in the
United States of America, but both
communities failed.
• Contd…
 Historical Perspective of
Co-operative Management
• Although Owen inspired the co-operative
movement, others – such as
Dr William King (1786–1865) – took his
ideas and made them more workable and
practical. King believed in starting small,
and realized that the working classes
would need to set up co-operatives for
themselves, so he saw his role as one of
instruction. He founded a monthly
periodical called The Co-operator, the
first edition of which appeared on 1 May
1828. Contd…
 Historical Perspective of
Co-operative Management
• This gave a mixture of co-operative
philosophy and practical advice about running
a shop using cooperative principles. King
advised people not to cut themselves off
from society, but rather to form a society
within a society, and to start with a shop
because, "We must go to a shop every day to
buy food and necessaries - why then should
we not go to our own shop?" He proposed
sensible rules, such as having a weekly
account audit, having 3 trustees, and not
having meetings in pubs (to avoid the
temptation of drinking profits). Contd…
 Historical Perspective of
Co-operative Management
• Rochdale Pioneers
• The Rochdale Society of Equitable
Pioneers was a group of 28 weavers and
other artisans in Rochdale, England, that
was formed in 1844. As the mechanization
of the Industrial Revolution was forcing
more and more skilled workers into
poverty, these tradesmen decided to band
together to open their own store selling
food items they could not otherwise
afford.
• Contd…
 Historical Perspective of
Co-operative Management
• With lessons from prior failed
attempts at co-operation in mind, they
designed the now famous
Rochdale Principles, and over a period
of four months they struggled to pool
together one pound sterling per person
for a total of 28 pounds of capital.
• Contd…
 Historical Perspective of
Co-operative Management
• On December 21, 1844, they opened
their store with a very meager
selection of butter, sugar, flour,
oatmeal and a few candles. Within
three months, they expanded their
selection to include tea and tobacco,
and they were soon known for
providing high quality, unadulterated
goods. Contd…
 Historical Perspective of
Co-operative Management
• The Co-operative Group
• The Co-operative Group formed gradually
over 140 years from the merger of many
independent retail societies, and their
wholesale societies and federations. In 1863,
twenty years after the Rochdale Pioneers
opened their co-operative, the North of
England Co-operative Society was launched
by 300 individual co-ops across Yorkshire
and Lancashire. Contd…
 Historical Perspective of
Co-operative Management
• By 1872, it had become known as the
Co-operative Wholesale Society
(CWS). Through the 20th century,
smaller societies merged with CWS,
such as the Scottish Co-operative
Wholesale Society (1973) and the
South Suburban Co-operative Society
(1984).
• Contd…
 Historical Perspective of
Co-operative Management
• By the 1990s, CWS's share of the
market had declined considerably and
many came to doubt the viability of
co-operative model. CWS sold its
factories to Andrew Regan in 1994.
Regan returned in 1997 with a £1.2
billion bid for CWS.
• Contd…
 Historical Perspective of
Co-operative Management
• There were allegations of "
carpet-bagging" - new members who
joined simply to make money from
the sale - and more seriously fraud
and commercial leaks.
• Contd…
 Historical Perspective of
Co-operative Management
• After a lengthy battle, Regan's bid
was seen off and two senior CWS
executives were dismissed and
imprisoned for fraud. Regan was
cleared of charges. The episode
recharged CWS and its membership
base.
• Contd…
 Historical Perspective of
Co-operative Management
• Tony Blair's Co-operative Commission,
chaired by John Monks, made major
recommendations for the co-operative
movement, including the organisation
and marketing of the retail societies.
It was in this climate that, in 2000,
CWS merged with the UK's second
largest society,
Co-operative Retail Services.
• Contd…
 Historical Perspective of
Co-operative Management
• Other independent societies are part
owners of the Group. Representatives of
the societies that part own the Group are
elected to the Group's national board. The
Group manages The Co-operative brand and
the Co-operative Retail Trading Group
(CRTG), which sources and promotes goods
for food stores. There is a similar
purchasing group (CTTG) for co-operative
travel agents. Contd…
 Historical Perspective of
Co-operative Management
• Co-operatives Today:
• Co-operative communities are now widespread,
with one of the largest and most successful
examples being the
Mondragón Cooperative Corporation in the
Basque country of Spain. Co-operatives were
also successful in Yugoslavia under Tito where
Workers' Councils gained a significant role in
management.
• In many European countries, cooperative
institutions have a predominant market share in
the retail banking and insurance businesses.
Contd…
 Historical Perspective of
Co-operative Management
• In the UK, co-operatives formed the Co-operative Party
in the early 20th century to represent members of co-ops
in Parliament. The Co-operative Party now has a
permanent electoral pact with the Labour Party, and some
Labour MPs are Co-operative Party members. UK co-
operatives retain a significant market share in food retail
, insurance, banking, funeral services, and the travel
industry in many parts of the country.
 Historical Perspective of
Co-operative Management
• Raiffeisen Principles:
• Friedrich Wilhelm Raiffeisen (May
3, 1818, Hamm (Sieg) - March 11,
1888, Heddesdorf, currently known
as Neuwied, Germany) was a German
cooperative leader.
• Several credit union systems and
cooperative banks have been named
after Raiffeisen, who pioneered rural
credit unions.
Historical Perspective of
Co-operative Management
Friedrich Raiffeisen joined the
public service in 1843 and in 1845
became the mayor of the district of
Weyerbusch in Westerwald,
Germany. During the famine of
1846/47 he formed the benevolent
assistance organisation – Society
for bread and grain supply – which
ran a bakery as a means of relieving
starvation.
Historical Perspective of
Co-operative Management
Over the next 20 years a number of
other pre-cooperative societies
based on the principle of benevolent
assistance were established by
Raiffeisen.
Historical Perspective of
Co-operative Management
However he increasingly realised
that lasting successful work could
only be achieved through pooled
self-help and set about
transforming the benevolent
societies into Thrift and Loan
Societies.
Historical Perspective of
Co-operative Management
The first rural cooperative society
was established in 1864. During the
next 8 years the number of small
credit societies grew and in order to
secure their financial viability the
first cooperative union (bank) was
created in 1872.
 Historical Perspective of
Co-operative Management
• Basic Principles:
• 1. Self-help
• People in the same or similar situation join forces,
raise the necessary finance for a joint
cooperative undertaking themselves, and are
prepared to mutually support each other.
• They expect that membership in the Raiffeisen
cooperative society will compensate for the lack
of access to competitive markets and capital and
improve one’s own position in the market and
better satisfy their economic needs. They expect
in the broadest sense both access to the
marketplace and to capital.
 Historical Perspective of
Co-operative Management
• 2. Self-administration
• The members organise the internal conditions of
Raiffeisen cooperative societies themselves.
Thereby they protect the cooperative society
from external influences.
• This means that internally Raiffeisen cooperative
societies are not subject to any third party’s
direction or orders.
• The members decide through their internal bodies
on the economic activities of their joint
enterprise.
• This internal democracy is a vital element of the
Raiffeisen cooperative system.
 Historical Perspective of
Co-operative Management
• 3. Self-responsibility
• The members themselves are responsible
for establishment and upkeep of the
cooperative enterprise and also answer for
it to third parties.
• Mutual joint liability establishes
confidence towards other organisations in
economic life.
 Historical Perspective of
Co-operative Management
• 4. Voluntary participation
• Membership in a Raiffeisen cooperative
society is voluntary; whoever decides to
become a member does so of their own
choosing. However membership comprises
both a set of rights in the cooperative
society but also essential duties.
• Everyone has the right to join or leave a
cooperative. But as long as one is a member
of the cooperative, one has the duty to
cooperate with it.
 Historical Perspective of
Co-operative Management
• 5. Member’s promotion
• The activities of the Raiffeisen
cooperative society focus on the
member. The basic purpose of a
Raiffeisen cooperative society is to
offer the membership the services
needed by the members. This
member services orientation needs to
stand at the forefront of the
cooperative’s purpose.
 Historical Perspective of
Co-operative Management
• The member’s interest gets promoted. In
the long run, the fulfilment of promoting
the member’s interest can only be achieved
if market share is kept and added to,
growth is achieved and asset values and
solvency are safeguarded.
• Therefore
• The fulfilling of any socio-political
interest, general economic task or even
tasks assigned by the State can neither be
the aim nor the task of a Raiffeisen
cooperative society.
 Historical Perspective of
Co-operative Management
• 6. Open membership
• Everyone who wants to joint a cooperative
should have the possibility to do so within
the framework of legal and statutory
regulations. Raiffeisen cooperative
societies are not based on a restricted
number of members so that the
cooperative’s existence does not depend on
members joining or leaving.
 Historical Perspective of
Co-operative Management
• 7. Identity principle
• The cooperative society is at the same
time an association of persons, an
association of members and a business
enterprise. The enterprise is jointly owned
and used. There also exists a threefold
connection between a member and a
Raiffeisen cooperative society. The
member is a financial owner, the member
holds decision-making powers and control
functions and the member is a recipient of
cooperative services.
 Historical Perspective of
Co-operative Management
• The business relations between
members and the relations in the
social group of the association of
persons are interdependent: if the
cooperative enterprise does not
function, then the association of
persons does not function either and
vice versa.
 Historical Perspective of
Co-operative Management
• 8. Linking-up principle
• Raiffeisen cooperative societies join together
through a linking-up system. They do so because
of their size, their decentralisation and often
because of their regional orientation. This
enlarges the principle of self-help. The linking-up
system increases the promotion capacity of each
cooperative belonging to the link-up system. The
carrying out of tasks by enterprises engaged in
the link-up system results both in ensuring that
comprehensiveness is retained and on the other
that competitiveness is increased.
 Historical Perspective of
Co-operative Management
• Link-up enterprises carry out only
the tasks which cannot be carried
out by the local cooperatives
themselves. The cooperative principle
of subsidiarity is also the basis of
collaboration within the link-up
system.
 Historical Perspective of
Co-operative Management
• 9. Comprehensiveness – the regionalism
principle
• It should be possible to comprehend a
cooperative’s geographical range of action.
• The principle of decentralisation is based
on the fact that smaller units guarantee a
high degree of flexibility, more proximity
to the market and customers – and
therefore have a strategic competitive
advantage. In this way a cooperative can
both fulfil the needs and satisfy the
interests of its members.
 Historical Perspective of
Co-operative Management
• Having an exact knowledge of the
conditions on the spot in the broadest
sense makes it possible to have a short
communication chain and also a shorter
decision-making period. This closeness
helps to enhance personal relationships and
social control, preserves member
proximity, even if this locality principle is
exceeded in a narrow geographical sense.
 Historical Perspective of
Co-operative Management
• 10. Principle of the independence of
cooperatives from the State
• Raiffeisen cooperative societies belong to their
members and are committed to them. They are
independent form the State.
• Raiffeisen cooperative societies are not
instruments to realize social, socio-political or
economic policy objectives of the State. They
cannot and do not want to replace governmental
action. Raiffeisen cooperative societies
expectations of the State are that it guarantee
equal chances, no competitive distortion and a
clear political and legal framework.
 Historical Perspective of
Co-operative Management
• Cooperatives fulfil social functions only indirectly.
They contribute to the strengthening of their
members through spreading wealth and asset
ownership. They embody democratic principles,
they strengthen the self-responsible action of
free citizens, they affirm free competition, and
they put the individual and their performance at
the centre of their work. Cooperatives demand
solidarity but they deny collectivism.
• They do not realise common weal objectives and
have no public assignment, they only promote the
economy and the income of their members. They
are denominationally and politically independent.
 Historical Perspective of
Co-operative Management
• Schultz Principles:
• Raiffeisen had started banks with
the objective of meting the needs of
the middle and lower middle class
people.
• Schultz-Delltez ran the banks on
cooperative basis and enunciated the
following principles:
 Historical Perspective of
Co-operative Management
• Organization should be managed on
the basis of self help
• Maximum interest should be paid on
shares
• Surplus should be distributed on the
basis of cooperation
• Expanded territory should be avoided

• Contd…
 Historical Perspective of
Co-operative Management
• 10% of the surplus should be kept as
reserve
• Each bank should have some
specialization
• Members should have limited
liabilities.
 Historical Perspective of
Co-operative Management
• International Cooperative Alliance [ICA]
• Background
• Since its creation in 1895, the International
Cooperative Alliance has been the final
authority for defining cooperatives and for
elaborating the Principles upon which
cooperatives should be based. Previously, the
Alliance had made two formal declarations on
Cooperative Principles, the first in 1937, and
the second in 1966.
• These two earlier versions, like the 1995
reformulation, were attempts to explain how
Cooperative Principles should be interpreted
in the contemporary world.
 Historical Perspective of
Co-operative Management
• These periodic revisions in Principles are a
source of strength for the cooperative
Movement. They demonstrate how
cooperative thought can be applied in a
changing world; they suggest how
cooperatives can organize themselves to
meet new challenges; they involve
cooperators around the world in the re-
examination of the basic purpose for their
Movement.
 Historical Perspective of
Co-operative Management
• Throughout its history, the
Cooperative Movement has constantly
changed; it will continuously do so in
the future as well.
• Beneath the changes, however, lies a
fundamental respect for all human
beings and a belief in their capacity
to improve themselves economically
and socially through mutual self-help.
 Historical Perspective of
Co-operative Management
• Further, the Cooperative Movement
believes that democratic procedures
applied to economic activities are
feasible, desirable, and efficient.
• It believes that democratically-
controlled economic organizations
make a contribution to the common
good.
 Historical Perspective of
Co-operative Management
• Cooperatives first emerged as distinct,
legal institutions in Europe during the
nineteenth century. Achieving their first
permanent successes during the difficult
years of the 1840s, Cooperatives grew
within five distinct traditions:
• [i] The Consumer Cooperatives, whose
beginnings have long been popularly
associated with the Rochdale Pioneers;
• [ii] The Workers’ Cooperatives, which had
their greatest early strength in France;
 Historical Perspective of
Co-operative Management
• [iii] The Credit Cooperatives, which largely began
in Germany;
• [iv] The Agricultural Cooperatives, which had
their early roots in Denmark and Germany; and
• [v] Service Cooperatives, such as housing and
health cooperatives, which emerged in many parts
of industrial Europe as the century drew to an
end.
• Not only they had their shares of success in
respective countries but also found way into the
rest of the world in the twentieth century.
 Historical Perspective of
Co-operative Management
• Analysis of the Identity Statement
• Definition of a Cooperative: the Statement
defines a cooperative in the following way:
• “A cooperative is an autonomous
association of persons united voluntarily
to meet their common economic, social
and cultural needs and aspirations
through a jointly-owned and
democratically-controlled enterprise.”
 Historical Perspective of
Co-operative Management
• The definition emphasizes the following
characteristics of a cooperative:
• [A] The cooperative is autonomous – it is as
independent of government and private firms as
possible;
• [B] It is an association of persons. Cooperatives
are free to define ‘persons’ in any legal way they
choose – individual and or legal persons;
• [C] The persons are united ‘voluntarily’.
Membership should not be compulsory.
• Members should be free to join or to leave;
 Historical Perspective of
Co-operative Management
• [D] Members of a cooperative ‘meet
their common economic, social and
cultural needs’. Indeed in the future
helping to provide a better way of
life – cultural, intellectual and
spiritual – may become one of the
most important ways in which the
cooperatives can benefit their
members and contribute to their
communities;
 Historical Perspective of
Co-operative Management
• [E] The cooperative is a ‘jointly-owned and
democratically-controlled enterprise’.
• Within the cooperative control is
distributed among members on a
democratic basis. The dual characteristics
of ownership and democratic control are
particularly important in differentiating
cooperatives from other kinds of
organizations.
 Historical Perspective of
Co-operative Management
• The Basic Cooperative Values

• The basic cooperative values as enshrined

in the Statement are stated as follows:
• ‘Cooperatives are based on the values of
self-help, self-responsibility,
democracy, equality, equity and
solidarity. In the tradition of their
founders, cooperative members believe in
the ethical values of honesty, openness,
social responsibility and caring for
others.’
Historical Perspective of
Co-operative Management
 Historical Perspective of
Co-operative Management
• Danish cooperative movement
• The Danish cooperative movement was a
means of economical organization under
leadership of consumer- or producer-
controlled corporations, where each
individual member owned a part of the
corporation. The type of organization was
especially used in the farming industry and
in consumer organizations in Denmark from
the 1790s to the 1960s.
 Historical Perspective of
Co-operative Management
• The members of the corporations sought
to share the economic stress of producing
or buying goods, and divided the eventual
end-year financial surplus amongst them.
The type of ownership rules varied greatly
between individual corporations, as some
divided the financial risk equally, while
others gave more power to the most
financially involved individuals.
 Historical Perspective of
Co-operative Management
• Early history
• About 90% of all farming soil in Denmark
was cooperative from 1300, as the Black
Death depopulated the rural parts of the
country. Then, the inhabitants of a Danish
village would work together, forming
village communes. In order to distribute
land fairly between farmers, the land was
normally distributed between all farmers
in a village with each of them owning a
strip of land on every field.
 Historical Perspective of
Co-operative Management
• After the Second War in 1864, two
new movements hit Denmark. One was
a successful attempt to reclaim
moors for farming; mostly sandy land
abandoned in the 14th century as a
result of the Black Plague, but in
many cases good for potatoes. This
movement was initiated by the Heath
Association.
 Historical Perspective of
Co-operative Management
• Equally important was an influx to
the world market of grain from the
Russian provinces Ukraine and Poland,
resulting in a sharp drop in price.
This affected the income of many
Danish farmers and the result was a
change in production; from grain to
dairy products and meat. When a
farmer couldn't sell his grain, he fed
it to his cows and pigs.
 Historical Perspective of
Co-operative Management
• Cooperative production
• This change in production resulted in
a need for dairies and
slaughterhouses. The only way to pay
for such massive investments was for
a large group of farmers to share the
cost and risk between them, thus
creating the cooperative dairies and
slaughterhouses.
 Historical Perspective of
Co-operative Management
• The new situation implied that
farmers would buy cheap grain from
Russia and feed it to their livestock,
selling milk, butter, eggs and meat
for a much higher price. This
movement also resulted in the
creation of both the Danish Bacon
and Danish Lurpak Butter brands.
 Historical Perspective of
Co-operative Management
• The combination of the Cooperative
Movement and the switch away from
the production of grain resulted in a
great increase in wealth for the
average Danish farmer and it became
very important in the way Danish
farmers perceived themselves.
 Historical Perspective of
Co-operative Management
• The system was also attempted in
other places where Danes settled,
for example in the Danish
communities in the United States.
Before World War I, Denmark gained
a foothold on the Russian market, and
the Russian Revolution of 1917 cost
Danish industry dearly.
 Historical Perspective of
Co-operative Management
• Influence
• Dairies
In the 1950s, a joint stock company was
formed out of a series of dairies, uniting
into two rivals Mejeriselskaberne Danmark
and Kløver who later merged to found MD
Foods (now Arla Foods) which controls
almost all of the Danish milk market. The
Danish Crown meat processing company
also owes its existence to the cooperative
movement.
 Historical Perspective of
Co-operative Management
• Co-op shops
The cooperative movement also resulted in
a series of co-op stores known as Brugsen,
which were under the administration of
the The Danish Consumers Co-operative
Society. The stores kept a large share of
the Danish consumer goods market. It
merged with the similar retail chains in
Norway and Sweden in January 2002, to
form Coop Norden.
 Historical Perspective of
Co-operative Management
• Wind mills
The cooperative ownership model for
wind mills was developed in Denmark.
First for smaller wind mills, later for
wind farms. One of the biggest
coperatively owned windfarms are at
Middelgrunden in Copenhagen and at
the Samsø island.
 Historical Perspective of
Co-operative Management
• Communities
In the late 70's early 80's Collective
lifestyle, including cooperative production
was very popular. Some of these
collectives still exist like Svanholm, which
was started in 1978. Freetown Christiania
was established in 1971. People living in
these communities are often environment
conscious, and join the Danish Ecovillage
Network.
 Historical Perspective of
Co-operative Management
• Co-housing
Living in co-housing groups with a
common ground and common house is
relatively common in Denmark. The
common house is used for common
eatings, common washing machines,
meetings and fests.
Historical Perspective of
Co-operative Management
Historical Perspective of
Co-operative Management
Historical Perspective of
Co-operative Management