The Role of Cooperative and Social Enterprises: A Multifaceted Approach for an Economic Pluralism
20 Pages Posted: 8 Jun 2010
Date Written: November 2009
To date, the dominant economic approaches have downplayed and marginalised the role of cooperative and social enterprises in contemporary market economies. This insufficient attention derives from the limited applicability to the case of cooperative and social enterprises of two of the main assumptions of orthodox microeconomic theory: the presence of only self-interested individuals and profit-maximisation as the only possible firm objective. The mismatch between theoretical assumptions and empirical evidence has led to the underestimation of the growth potential, weight and role of cooperative and social enterprises. An explanation for the persistence and growth of these organisational types has not been provided by institutional theory either. We thus maintain that the assumptions of the main theoretical models must be enlarged and deepened in order to improve the scientific understanding of cooperatives and social enterprises. Individuals as well as institutions can no longer be characterised as purely self-interested and profit maximizers. Instead, the importance of motivational complexity and the diverse nature of preferences needs to be introduced in the model as suggested by the behavioural approach. Diverse motivations must be assumed to drive both individual and organisational decisions. Furthermore, firms can also be conceived as coordination mechanisms of economic activities, as suggested by the evolutionary approach. To this end, they develop specific organisational routines and their objectives can be diverse, ranging from purely private appropriation, to public benefit aims supported by altruistic preferences.
Keywords: Cooperatives, social enterprises, organizational pluralism, economic theories
JEL Classification: J81, L31, P50
Suggested Citation: Suggested Citation