Trust, Social Capital and the Coordination of Relationships between the Members of Cooperatives – A Comparison between Member-focused Cooperatives and Third-party-focused Cooperative

The resource titled "Trust, Social Capital and the Coordination of Relationships between the Members of Cooperatives – A Comparison between Member-focused Cooperatives and Third-party-focused Cooperative" is published in VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations. The authors of this paper are Isabella Hatak, Richard Lang, and Dietmar Roessl. The paper delves into the evolving landscape of cooperative organizations, particularly highlighting the differences between member-focused cooperatives and those that are third-party-focused.

In recent years, there has been a growing interest in cooperative organizations as alternative providers of public and social services. This shift has been influenced by deregulation and liberalization, creating opportunities for cooperatives to redefine their societal roles. Traditional cooperatives have primarily focused on generating economic benefits for their members. However, new forms have emerged that emphasize community benefits, acting in the public interest rather than strictly within a member-focused framework. These third-party-focused cooperatives aim to provide services that enhance the quality of life for local communities.

The paper emphasizes the importance of trust and social capital in cooperative relationships. Trust serves as a vital coordination mechanism, and cooperatives are characterized by their reliance on social capital, which facilitates collective action. Distinct types of trust—maxim-based and norm-based—affect how member relationships are coordinated. Member-focused cooperatives tend to rely on maxim-based trust, while third-party-focused cooperatives utilize norm-based trust, which is bolstered by shared community norms and values.

The authors introduce a differentiation between member-focused cooperatives, which prioritize individual member benefits, and third-party-focused cooperatives, which aim for broader community impact. This distinction is essential in understanding how these organizations mobilize resources and social capital. Third-party-focused cooperatives often incorporate a variety of stakeholders, thus enhancing their community ties and social influence.

The paper discusses how the network structures of these cooperatives differ. Member-focused cooperatives are typically characterized by dense networks with strong ties, facilitating bonding social capital. In contrast, third-party-focused cooperatives often have open networks with weaker ties, which allows for bridging and linking social capital. This structural difference is crucial for understanding how cooperatives can effectively mobilize resources and achieve their objectives.

The governance structures within these cooperatives also play a critical role in facilitating social capital. For member-focused cooperatives, the emphasis should be on enhancing the perceived value of membership to sustain trust and engagement. Conversely, third-party-focused cooperatives should foster norm-based trust and community engagement to ensure broad participation and resource mobilization. Effective governance can help balance the objectives of economic goals with social benefits, enabling cooperatives to thrive in diverse contexts.

The emergence of third-party-focused cooperatives highlights the ongoing evolution within the cooperative sector, presenting both challenges and opportunities. Through a meticulous examination of trust, social capital, and cooperative governance, the paper contributes to a deeper understanding of how these organizations can adapt to serve their communities better while maintaining their cooperative identity.