A critical look at cooperative governance mechanisms

The cooperative is a hybrid form of enterprise that seeks to reconcile capital with the socio-economic and/or cultural concerns of its members. It is both a company and an association, and places human beings at the heart of economic activity.

Through a three-dimensional theoretical analysis describing the cooperative reality, the author clearly exposes a number of governance issues facing Quebec cooperatives.

Firstly, the agency theory that allows us to observe the cooperative reality of financial profit maximization despite certain limits (a legal reality based on the cooperative investment regime and the Cooperatives Act) reveals several contradictions in its governance mechanisms. This is the case, for example, with the principle of limited interest on capital from the point of view of holders of participating preference shares (Chapter 1).
Secondly, the theory of the social contract, which describes the balance between the cooperative reality of profit maximization for external investors and the satisfaction of the interests of internal members (in terms of cooperative law), notes the divergence of their interests. This raises the question of the profile of the Board of Directors (BoD). Even the notion of cooperative is out of step with the reality of profit and the satisfaction of internal members' interests (Chapter 2).

Thirdly, the theory of the psychological contract, which highlights the informal dimension of reciprocity in relations between cooperators and the cooperative in the realization of their real and abstract expectations (from the point of view of the values laid down by the International Cooperative Alliance "ICA"), reveals that none of these governance mechanisms objectively guarantees respect for this reciprocity. It is simply utopian to believe that all cooperators and the cooperative act in accordance with the various values laid down by the ICA in the realization of their real expectations (Chapter 3).