All Firms are Cooperatives – And so are Governments

Abstract

To both the scholar and the layman, cooperatives often appear to be something of a sideshow in the world of enterprise organization. Properly understood, however, virtually all private enterprise, and democratic governments as well, exhibit the basic form of a cooperative. As a consequence, the study of cooperatives (in the narrower, conventional sense of that term) illuminates our understanding of both investor-owned firms and governments and, conversely, much can be learned about cooperatives by examining other forms of organization. This is already evident when we examine the power and limitations of contemporary economic theories of the firm. At present, however, we know much more about the economic factors that govern the viability of cooperative enterprise than we do about the forms of internal corporate governance and external regulation that also play a critical role.

Keywords: Entrepreneurship, cooperatives, nonprofit organizations, public enterprises, private enterprises, governance, firm organization

JEL Classification: D21, L22 L31, L32, L33