ABSTRACT
Despite the great potential of cooperatives for economic and social development, public awareness remains limited. In scaling up the global cooperative movement, an accurate understanding of what they are is crucial. With this in mind, Chapter 1 sets out a definition, with primary emphasis on the fact that a cooperative is a firm or an enterprise . In doing so, the chapter unpacks how current cooperative business models are guided by seven principles of the cooperative movement adopted by the International Cooperative Alliance (ICA) in 1996. Cooperatives have five characteristics due to these ICA principles. Firstly, they are equally owned by members, thanks to the ‘one-member-one-vote’ system. Secondly, cooperatives are more likely to be found in labor-intensive sectors than in capital-intensive sectors, since they may face higher barriers in entering capital-intensive sectors than conventional companies do. Thirdly, nearly all cooperatives are Small and Medium Enterprises (SMEs), as they have structural difficulties in mobilizing large capital sums and expanding beyond national boundaries. Fourthly, cooperatives are not Civil Society Organizations (CSOs), as they can distribute economic profits to members. Fifthly, cooperatives are cautious about the influence of governments, given the latter’s historical tendency for mismanagement of cooperatives in certain regions of the world.
