Frontiers of Entrepreneurship Research
1997 Edition

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THE STRUCTURAL, SUPPORT AND IDEOLOGICAL FACTORS THAT ENCOURAGE THE CREATION OF COOPERATIVE ENTERPRISES

Louis Jacques Filion

HEC, the University of Montreal Business School
3000 Chemin de la Côte Ste-Catherine
Montreal (Quebec) H3T 2A7, Canada

Telephone: 514-340-6339
Fax: 514-340-6382
E-mail: louisjacques.filion@hec.ca

Principal Topics

The number of new cooperatives created annually in Quebec has declined in recent years, but the size and presence of such enterprises in new service sectors has increased.  For example, they are becoming increasingly common in the field of home-based care for elderly people.  Similarly, ten years ago, Quebec had no cooperative enterprise in the ambulance sector.  Today, however, cooperatives hold 15% of the market, and the sector leader is a cooperative created in 1988 which now employs 200 people.

The purpose of the research described in this paper was to identify one or more models of cooperative entrepreneurship in Quebec's new service sectors.  Since very little work has been done on the subject of cooperative entrepreneurship in the past, our study was exploratory in nature.

Methodology

An inventory of cooperatives created between 1986 and 1995 was prepared from data provided by the Regional Development Cooperatives in eight regions of Quebec.  A total of fifteen cooperatives created during the period were identified as representing the new cooperative trend in sectors such as home-based care, health care, radio, education, theatre and ambulance services.  All fifteen were visited, ten were studied, and three were analyzed in detail to create case studies.

Semi-structured interviews with the cooperative founders, lasting between two and three hours each, were carried out by the principal researcher and an assistant.  All the interviews were recorded and four were transcribed.  We used the same method as in previous research:  background, and then identification of the activity systems of the founder, the general management and the organization as a whole.  The goal was to understand the process leading to the creation of a cooperative in the service sector.  The activities of each unit studied were mapped to produce a general model.
 
Results

It is important to distinguish between two categories of cooperatives in this research:  consumer cooperatives, owned by consumers, and worker cooperatives, owned by workers.  Our sample included four of the former and six of the latter.

A number of creation phases were identified in each group.  For the consumer cooperatives the phases were:  1. Need identified; 2. Need clarified; 3. Structured solution; 4. Obstacles; 5. Creation; 6. Start-up.  For the worker cooperatives they were:  1. Need/crisis; 2. Scenarios; 3. Creation; 4. Start-up.  These various phases are described and explained.  The important role played by the "champion" is noted, as is past exposure to the cooperative formula.  The consumer cooperatives created in new service sectors occupy a section of the market that is often not profitable enough to attract private enterprise but too costly for the state to operate.  These new forms of cooperative enable communities to take charge of the services they need at a much lower cost than would be possible for the public sector.  The difficulties of creating a cooperative, together with the special features of cooperative management, are discussed.

The values conveyed by the leaders of these cooperatives more closely resemble those of social leaders than those of small business owner-managers, being more concerned with service quality than with profitability.  However, the sample was too small for these findings to be generalized.

Implications

The implications of the research can be divided into three categories:  awareness, training and logistic support.  It would be useful to raise awareness of the cooperative formula through conferences and seminars.  We observed that in two of the cases studied, the success of the cooperative, especially at the start-up stage, was made possible by the training received by cooperative management specialists.  Such training should be more widely available to a broader range of people, and it would be useful to draw a clear distinction between the management of worker cooperatives and the management of consumer cooperatives.  Finally, it is important for each region to have a certain level of logistic support from organizations such as the Regional Development Cooperatives.  The people providing such support should be properly trained in management and have practical experience in cooperative management.

On a more general level, the research examines an element of social entrepreneurship.  The creation of a cooperative involves a much more complex social pattern than venture creation by an individual working alone.  The relationship between social values and forms of social entrepreneurship provides some interesting possibilities for future work.
 

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