For more than 150 years, co-operatives have been established as an instrument to enhance the social and economic position of workers, artisans and farmers. Over time and space, co-operatives have been (re)invented to address mutual problems by working together. Internationally, a co-operative movement evolved around a common set of values and principles, summarized by the ICA Statement on Co-operative Identity. Some of these principles, including ‘democratic member control’ and ‘concern for community’, predate the concept of ‘corporate social responsibility’ (CSR) for more than a century. This inspired some authors to identify co-operatives as ‘CSR avant-la-lettre’ or to talk about ‘co-operative social responsibility’. Scholarly work, including sociology, history, economics, and philosophy, however, remains undecided about the question whether co-operatives should have a higher inclination to engage in CSR or not, in comparison with alternative organisational forms.

Traditionally, economic theory repeatedly stressed the disadvantages of co-operatives as an organisational form (see Dow, 2003 for an overview). Mainstream economic theory, however, has been quiet on the question how to include the principles and values of co-operative identity into formal models (and subsequently, how to evaluate the stability of these values and principles within co-operatives). Nevertheless, interesting contributions have been made in recent years to include issues like motivation and identity into economic theory (Akerlof & Kranton, 2000, Besley & Ghatak, 2005, Bénabou & Tirole, 2003, 2006). Recent attempts to model CSR in economic theory (e.g. Besley & Ghatak, 2007), on the other hand, focused on outside ownership and non-profit organisations, leaving the question how co-operatives would perform untouched.

In this paper, we try to fill this gap, and address the question why (or why not) co-operatives should have a higher propensity to engage in CSR. To do so, we apply recent contributions to economic theory on issues like motivation and identity, as well as specific formal models on CSR. This allows us to assess whether co-operatives do (or do not) have a comparative institutional advantage in CSR compared to outside ownership and non-profit organisations. Most importantly, we question why potential differences between these organisational forms apply, and translate our main findings to co-operative entrepreneurs, policy makers and academics.

References:

Akerlof G. & Kranton R. (2000) Economics and identity. Quarterly Journal of Economics 115 (3): 715-753

Bénabou, R. & Tirole, J. (2003) Intrinsic and Extrinsic Motivation. The Review of Economic Studies 70 (3): 489-520.

Bénabou, R. & Tirole, J. (2006) A Cognitive Theory of Identity, Dignity and Taboos, mimeo

Besley, T. & Ghatak, M. (2005) Competition and incentives with motivated agents. American Economic Review 95 (3): 616-636.

Besley, T. & Ghatak, M. (2007) Retailing public goods: The economics of corporate social responsibility, Journal of Public Economics 91: 1645-1663

Dow G. (2003) Governing the Firm. Workers’ Control in Theory and Practice, Cambridge, Cambridge University Press, 323 p.