CO-OPERATIVES AS SOCIAL INNOVATION

The Rochdale Pioneers founded the first modern co-operative that

we know today. Co-operatives have become major players in some
sectors of the national economy in many parts of the world, and
they continue to get inspiration from the Pioneers.

The Rochdale Pioneers opened for business their humble consumers co-operative
store on December 21, 1844. This is the day now recognized as the birth-date of the
International Co-operative Movement. There were previous attempts to organize co-
operatives before them but all failed.
The Pioneers are credited with establishing the first ever successful co-operative.
They succeeded because they put business sense into their Socialist ideals. They
succeeded because they founded their co-operative enterprise on a number of key
principles, which are now embedded in the Statement of the Co-operative Identity
that guides successful co-operatives around the world.
It is important to put the formation of the first co-operative store in historical context:
This was during the first industrial revolution and capitalism was at its crudest form.
People moved from villages to crowded towns, joining the army of unskilled workers
in new factories. Skilled workers were replaced by machines, entire families including
women and children had to work for meager wages. Illness exacerbated the miserable
living conditions of much of the population who suffered extreme poverty and
exploitation.
The co-operative became the people’s own solution and the way out of their dire
situation. And lest we forget the real significance of the first co-operative, Brett
Fairbairn rightly points out: “the Pioneers commenced business with the purpose of
pioneering the way to a new and better social order.”
Given these historical circumstances and the subsequent economic and social
transformation brought about by co-operatives in many parts of the world, the co-
operative can truly be said to be the most enduring social innovation of the kind.
Noted Simel Esim of the ILO: “Co-operatives were a micro level social innovation in
the 19th century where collective action was needed to respond to the challenges of
the then industrial revolution.”
Continuing Social Innovation
Geoff Mulgan defines social innovation as “innovative activities and services that are
motivated by the goal of meeting a social need.” In his paper, Social Innovation in the
New Co-operative Model, Dr. Makino Matsuyo explains that social innovation signifies
explicit social aims and involves “responding to social problems and challenges such
as: economic crisis and resulting unemployment, poverty and inequality issues at
local, regional, and global level, social exclusion and marginalization, and sustainable
development (the triple bottom line of economic, environmental, and social).”
Here are some examples of how the co-operative model is synonymous with social
innovation.
In Europe, RESco-ops are involved in environmentally beneficial technology of
renewable energy (wind, solar, small hydro, biomass, and geothermal) to cope with
climate change. Dr. Matsuyo describes a RESco-op as “a group of citizens that co-
operate in the field of renewable energy (RES), developing new production, selling
renewable energy or providing services to new initiatives.”
In Italy, in particular, social co-operatives promote labor integration or the integration
of unemployed people into the workforce, supporting people with learning disabilities
and others previously excluded from the labor market. These co-operatives provide
various forms of social services, forming the core element of the delivery of such
services in various municipalities in partnership with local governments.
In Japan, workers’ co-operatives create jobs necessary for people and local
communities, putting great value on the dignity of human life, decent work, and
livelihood. These co-operatives are essential support systems for the elderly (home
and personal care, preventive care), for children and parents (nursery school, after-
school program, childcare support), for people with disabilities (vocational training,
job assistance), and for the youth (job assistance, internship).
Earlier on, during the 2001 economic crisis in Argentina, many small and medium-size
enterprises were rescued by the workers by organizing themselves into co-operatives
and taking over their operation. A
study by the Workers’ Confederation
of Argentina in 2009 concluded:
“First, they pay higher average
salaries than the minimum wage,
sometimes twice as much. Second,
they have all grown in size
(measured by the number of workers
participating) by an average 321 per
cent. Third, their development has
not taken place in a vacuum, but
rather in close relation with
improvements in the communities in
which they are organized,
demonstrating the importance for
the co-operative movement of being
closely involved in the social
context.” (Bruno Dubrosin,
Workers’ Co-operatives in
Argentina, The Self-Administered
Workers’ Association)
There are many more examples of
new generation co-operatives formed
by people from all walks of life for the
purpose of creating alternative
solutions to pressing social problems
otherwise ignored by private business
or even by governments.
The Continuing Challenge of
Innovation
Today, co-operatives are established
enterprises in both developed and
developing countries. In some sectors
of the national economy, particularly
agriculture, co-operatives capture
from 70% to 95% market share in countriesdevelopment
Finland (meat products), Kenya (cotton), Korea (fishery), and Nicaraguainnovation
operatives’ contribution to the gross domestic product (GDP) of their respective
The Alphonse and Dorimène
Desjardins International Institute for
Co-operatives conducted in 2016 a
global study on innovation priorities of
co-operatives, entitled: Innovation:
Priorities and Practices in Co-
operatives. Among the conclusions of
the study are:
“Almost 70% place innovation among
their top three priorities. Over the next
three to five years, co-operatives will
prioritize the expansion of new
services (91%), the development of
capacity in innovation (84%),
technology platforms (83%), and
speed of adopting new technologies
(81%). Co-operatives pursue
innovation in order to take advantage
of new opportunities (85%), as well as
to counter threats (81%).
“Financial co-operatives have a
greater number of priorities and that
they tend to focus on additional
aspects of innovation, such as
distribution channels (93%), mobile
applications (90%), and speed of
adopting new technologies (90%).
These results confirm the need to
rethink many aspects of the business
models of financial co-operatives.
“Moreover, co-operatives placed
additional importance on specific
areas of innovation compared with
non-co-operatives. This was due to
their co-operative model and social
role, such
as: renewing member relationships
(89%), supporting the social economy
(89%), and improving sustainable
like New Zealand (dairy),
(87%). In Uruguay (dairy),
consideration of (maize). Co-
management, 44% of co-operatives
relied on decentralized or coordinated
organizations, compared with 33% of
non-co-operatives.”
countries is also significant – 20% in New Zealand, 18% in France, and 18% in the
Netherlands.
Can co-operatives continue to be the embodiment of social innovation or else
contribute consciously to solving society’s problems when they become successful
enterprises? Can they remain as viable options for people wanting to carve out their
own space in the economy and make positive their contribution to society?
To the Rochdale Pioneers and those who continue to be inspired by their example,
there is only one obvious answer to these questions. Yes, there is no other way, and
co-operatives can be exemplars of social innovation if they remain true to their
purpose and be a real alternative for people who would otherwise be left behind.