What Are the Strengths and Weaknesses of Cooperative Business?

In comparison with regular commercial business, cooperation has certain advantages or strengths and certain disadvantages or weaknesses.

Its main advantage is that it exists and operates for the benefit of its patron members. At the same time, since the members are also the owners, they have a financial interest in the success of the cooperative which sways them toward giving it their full support and patronage. Cooperative members also have a voice in the control of the organization, and, within the limits of majority rule, it therefore supplies the kind of service they want.

These advantages, which tend to tie the patrons to the organization by making them full partners, help build an assured volume of business. This in turn is favorable to efficient operation of the cooperative. A commercial business, on the other hand, has no claim on its patrons except the good will built up through past service.

Cooperatives have the weaknesses of democratic organizations. The manager must always remember that he is responsible to a membership group, and this may put a brake on the initiative and flexibility he can use in operating the co-op. He may be at a real disadvantage in competition with a commercial business whose manager is concerned primarily with making a profit and who has a relatively free hand or can consult the owner quickly and frequently.

Sometimes cooperative businesses show an unwillingness to pay the kind of salary needed to attract and hold competent managers and other employees. In consequence managers and good workers are often drawn to higher-paid jobs in commercial businesses.

Another weakness of cooperation is that the mass of members may lose interest in running the organization and let a small group take it over and manage it for their own benefit.