What Is a Cooperative

A business organization which is owned and run by a collection of individuals with the motive of mutual benefit is called Cooperative. It is an association that is mutually operated by a group of people to give shape to their aspirations and various needs including social, cultural as well as economic. The enterprise thus formed is democratically controlled and jointly owned by the group of people involved. Each partner shares the same profit and loss if any and each of them have the same share in the company or the enterprise.

A cooperative business is controlled and owned equally by all the people who receive the service of that organization or the workers of that firm. Cooperative economics involves the study of the various aspects involving cooperative enterprise. A cooperative enterprise is jointly owned and operated by a group of people having similar interest and needs who work for a mutual benefit.

There are 7 cooperative principles on which most cooperative enterprise work and they are all dedicated towards important values such as openness, caring and social responsibility. The economic benefits generated from the cooperative enterprise are generally distributed based on several factors. The prime of all is the level of involvement of its members. The dividend on purchase or sale is thus distributed based on this and not on the ratio of capital investment unlike Joint Stock Company.

Cooperatives are basically classified as consumer, worker, producer, housing or purchasing cooperatives. The basic criteria that differentiate cooperatives from others are in its profit sharing method. The economic stability or profit making are balanced by the involvement and keenness of the members involved in the cooperative business.

The cooperative Governance are of various types such as Retailer’s cooperative, Worker cooperative, Volunteer cooperative, Social Cooperative, Consumer cooperative, Business and Employment cooperative and New Generation Cooperative. Retailer’s cooperative is known by different names in some different countries such as marketing cooperative or secondary cooperative.

The cooperatives are also of various types and the most widely known type is Housing Cooperative. The equity structures of these Housing Cooperatives are broadly of 3 types: Market rate, Limited Equity and Group Equity Housing Cooperatives.

Utility cooperative and Agricultural Cooperative are the two other types of Cooperatives. These autonomous associations work towards particular field and have large significance. The word cooperative has a very wide spectrum and its primary functions remain the same in all cases. For example the cooperative nature is also encouraged among students while performing a laboratory test or working together for a field project. All these activities are seen to be done in cooperation with each other and each member has the same motive and similar interest.