The role of cooperative education and of the participation of members in the performance of the cooperative: case study of a Brazilian agricultural cooperative PDF

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The role of cooperative education and of the participation of members in the performance of the cooperative: case study of a Brazilian agricultural cooperative Mônica Martins Mendes1 Cláudia Souza Passador2 Introduction Cooperativism is held as one of the main tools for the promotion of economic and...

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The role of cooperative education and of the participation of members in the performance of the cooperative: case study of a Brazilian agricultural cooperative Mônica Martins Mendes1 Cláudia Souza Passador2 Introduction Cooperativism is held as one of the main tools for the promotion of economic and social development as it generates and distributes income, and promotes the share capital in the communities which practice it. Moreover, the cooperative also revives a sense of citizenship through participation, and the practice of democracy, freedom and autonomy, being considered, thus, as one of the most advanced forms of organization of civil society. Despite the above, the cooperative organizations find difficulties to maintain themselves on the market. The causes are many, among which are problems in management, trouble with capitalization and the limitation of the cooperative‟s action due to its own principles and peculiarities. Unlike companies, cooperatives have to deal with the partners‟ specific demands, with the members‟ conflict of roles, in addition to the other problems inherent to its form of organization (CHADDAD, 2007a). Many authors, based in economical theories, assert that the solution would be to apply changes to the principles of cooperativism and adopt strategies of management similar to those of companies (CHADDAD, 2007b). On the other hand, another stream still believes the doctrine of cooperativism brings more advantages than problems, and that its principles can lead to greater competitiveness (SCHNEIDER 2007; NASCIMENTO, 2000; BARTON, 2000). Schneider (2007), for example, asserts that the relation of compromise between the cooperative and its members cannot be based only in the strength of the statute, and must be built based on the trust that the cooperative will satisfy the needs of its associates. Only then will there be real fidelity, which has direct impact in the performance of the cooperatives. However, in order to achieve this, the development of cooperative education and of everyone‟s participation is of utmost importance. These principles are the base of the cooperativist movement, without which it does not support itself. Cooperative education has as main duty to promote the social integration and the active participation of the members of the cooperative, that is, to make them intervene critically in the management of the venture and in the utilization of products and economical and assistance services offered by the institution. According to Nascimento (2000), most of the problems faced by the cooperatives, including financial and management problems, can be solved with a more active participation of all involved, and this goes through education. Therefore, studies concerning the education of the members of the cooperative can help elucidate the reasons behind the problems of the cooperatives and contribute to the elaboration of solutions which allow not only to enhance efficiency, but also the development and the perpetuation of the cooperativist model, which brings so many benefits to the economy and society. 1

Master student, FEARP Business School, University of São Paulo and Head of GPublic Research Center, Av. dos Bandeirantes 3900, Ribeirão Preto-SP, 14040-900, Brazil. 2 Professor of Public Administration, FEARP Business School, University of São Paulo and Head of GPublic Research Center, Av. dos Bandeirantes 3900, Ribeirão Preto-SP, 14040-900, Brazil.

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This work aims mainly at observing the relation between cooperative education, and the participation and satisfaction of a cooperative‟s partners as a way to better understand these aspects, so that, this way, it is possible to analyze their importance for the efficiency and sustainability of the cooperativist model. Thus, defined as specific goals are: (a) to analyze the cooperative education of the members of the cooperative; (b) to verify the level of participation and satisfaction of the members of the cooperative; (c) to analyze the profile of the members of the cooperative; and (d) to analyze the relation between cooperative education and the participation and satisfaction of the members of the cooperative. In order to do so, firstly, we review the literature on the subject and, after that, we present the methodology and the results of a case study in which we sought to observe these relations, and, finally, we state the conclusions and contributions for future research. 1. Review of Literature 1.1. Cooperative education Education is fundamental for the performance of the cooperative and the development of cooperativism. The comprehension of the relation between these concepts, education and cooperation, makes the organizational and institutional improvement of the cooperative practices possible, which, today, are so sought in the fight for competitiveness (FRANTZ e SCHÖNARDIE, 2007). As is stated by Ferreira and Presno Amodeo (2008 – p.8), besides business management, cooperatives must make use of social management, that is, the one that has as goal “to generate a greater sense of belonging, of identity of the associates with the cooperative of which they are part, reaching, thus, a rise in fidelity and trust”. Social management goes through, necessarily, education and participation of the associates and, according to the authors, configures an “indispensable tool to allow an effective and efficient cooperative management, and secure the development and competitiveness of the cooperative”. Schneider (2007, p. 25) also emphasizes the importance of education in the cooperative organizations by stating that “the values of cooperation must be more discussed among the associates, the leaders and the public, in general”, for they are the ones who give “meaning, motivation and reason of being to the cooperative action”. According to the author, this is the only way to achieve the loyalty of the members of the cooperative and the strengthening of the cooperative. Contrary to those who think of the economic and social dimensions separately, or even as contradictory, Frantz (19853 apud FRANTZ e SCHÖNARDIE, 2007) summarizes that the cooperativist practice becomes a political, social and cultural matter precisely as it takes on economical importance. The economical development, then, necessarily goes through social matters and, primarily, educational ones. Education has as central function the “interiorization of the social by the individuals, overcoming the situation of simple addition of self-interests to produce the group identity” (FRANTZ e SCHÖNARDIE, 2007 – p. 13). This way, it is important to bear in mind what is sought to reach with education, that is, which is its function in cooperativism. For Schneider (2003), education must promote the 3

FRANTZ, W. O Cooperativismo e a Prática Cooperativa. In: Perspectiva Econômica, ano XIX, nº 51, Série Cooperativismo nº 16, p.53-70. São Leopoldo: UNISINOS, 1985.

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reflection, discussion and action of everyone involved gradually and continually to arouse in them the interest for participation, and, thus, to turn them into agents of their own development. In this same line of thought, Frantz e Schönardie (2007) defend that, additionally to the transmission of technical and scientific knowledge, it is necessary for education to be a social and political practice supported, therefore, in communication and participation. Ferreira and Presno Amodeo (2008) share that idea and corroborate that the fidelity, trust and compromise of the members of the cooperative will only be achieved through their training and participation, which happens through the communication between them. Therefore, Ferreira and Presno Amodeo (2008) define as the main goal of the cooperative education: [...] to contribute for the associates to learn to cooperate, participate and manage the cooperative of which they are owners, understanding, thereby, what is their role in the organization. For such, it is necessary they understand what is a cooperative, what makes it different from other types of companies, how it works, how it is structured, noticing, at the same time, the values and principles which guide the cooperativism and which determine directly its identity and organizational culture. The employees also need to know the specificities of cooperatives, understanding what is their function in this organization (FERREIRA and PRESNO AMODEO, 2008 – p.3).

The authors further point out that the effective comprehension of the relations between associate and cooperative is important mainly due to the fact that they practice different functions simultaneously: owners, users and investors, which implies in different responsibilities and rewards. Additionally, Almeida and Souza (2006) state that cooperative education must contribute to the strengthening of the relations of the cooperative with other support entities and those representative of their social context, in a strategy of divulgation of the cooperativist philosophy to the communities and society, in general. In addition to all that, , Móglia et al. (2004) emphasize that education is one of the ways to stimulate the fidelity, reciprocity and participation of the members in the cooperative‟s activities, as can be observed in the following passage: The goal of stimulating fidelity and reciprocity is to assure the involvement of the members with the cooperative, with the effective participation to aggregate values to the productive chain, being necessary, for this, to increase [...] products and services, giving the members of the cooperative differentiated incentives. These problems can be solved, also, by education; the answer is related basically, to complete educational activities, as a normal part of the functioning of any cooperative - large, medium or small (MÓGLIA et al., 2004, p. 4).

In this sense, Lago (2008) states that the lack of cooperative education is the main origin of the problems of infidelity and opportunism of cooperativism. Since these problems, as already approached in economic theories, lead to the lack of results, to debt, to the harm of capitalization and even the sustainability of the cooperative, we may conclude that education 3

is an indispensible factor for the performance of this type of organization. Besides, another trend to come to notice which, contrary to the New Generation Cooperatives, promotes the exaltation, and not digression, of the principles of cooperativism as a way to overcome its structural problems. Additional to the aspects of the importance of education already mentioned, Lago (2008) indicates that it can also be looked at from the point of view of maintenance and application of another cooperativist principle: compromise with the community. This way, the “cooperative education is worried with the environment, culture, moral and social values, mutual assistance, honesty and income generation” (LAGO, 2008 - p.7). All of this shows how modern and advantageous the cooperativist doctrine is for the society, and the base for it to be really sustainable is education. Concerning this idea, Frantz and Schönardie (2007) wrote: Cooperativism can represent, theoretically, a fairer model of economical and social organization to produce and distribute wealth, for, due to its associative nature, it offers a structure of economical and political power closer to its participants. However, this model can only be built through the permanent communication and education of its participants, through the qualification of its associates, leaders and employees, through the political and economical participation of all associates in the elaboration of plans and project execution of their cooperatives (FRANTZ e SCHÖNARDIE, 2007 – p. 4).

For these authors, cooperativism still hasn‟t been able to reach all of its potential prodevelopment, for the economical focus is still very dominant, and changing this paradigm will only happen through education. In these authors‟s point of view, “it is necessary to built collective structures, of thought and behavior, which can encompass the individual freedom and, also, the economical freedom of their interests. However, without injuring the ethical relation of human beings” (FRANTZ and SCHÖNARDIE, 2007 – p.6). This way, once the importance of cooperative education has been proved, we discuss a second aspect which is also of fundamental importance for the success of cooperatives: participation. 1.2. Participation The associative nature of the cooperative demands integration among partners and between these and the direction and employees of the cooperative, that is, it demands participation. Thus, the democratic participation of the partners is one of the foundations of cooperation, being also reinforced in two of the cooperativism principles: 1) “democratic member control” and 2) “member economic participation”. The former entrusts the associates with the organization of the activities, with the decision making and highlights the power of participation by instructing the relation “one man, one vote”. The latter, on the other hand, refers to the issue of capital which belongs to everyone and, therefore, everyone has the right of participation in the yield and the decision making concerning its destination. It is understandable, thus, how participation is inherent to cooperativism and essential for its development and success. Ferreira (1999) emphasizes participation as one of the main characteristics that differentiate cooperatives from companies. According to the author, the 4

cooperative is a joint company in which the associates take part in the operations as much as in the decisions. Besides its intrinsic importance, participation can also bring advantages for the cooperatives. According to the Organization of Cooperatives of Paraná State (Organização das Cooperatives do Estado do Paraná) - OCEPAR (19924 apud SETTE, SETTE AND SOUZA 2005), the possibility of people to participate actively in the administration and results is what is most modern in a society, for it makes the administration of conflict easier. In this same sense, Stephanou and Villwock (2007) emphasize that the education and the training of leaders are important and should be encouraged, but only with participation, effective involvement of the members of the cooperative and compromise of everyone with the cooperative will the problems of agency be avoided. Bialoskorski Neto (2007 – p.119) also restates that “participation in collective projects, such as cooperatives, is of fundamental importance to generate transparency of cooperative governance” and, this way, to minimize the problems in the agency. The author concludes that the greater participation of the associates is the condition for the better performance of the cooperative. However, the good performance itself can demotivate participation, for participation is inversely related to the rise in cost of opportunity and in the largest number of members of the cooperative that results, normally, from good performance. This creates an inverse cycle, once a smaller participation demands additional costs of communication to supplant the deficiency of transparency, which also harms performance. Therefore, caution is needed to analyze participation in a cooperative. Despite the importance of social participation, very little is done to encourage and spread it. In most cases, the participation of associates is restrict to the economic, that is, to the delivery of product in the cooperative and to the search for advantageous services and prices concerning production. This fact was observed by Stephanou and Villwock (2007) when they investigated the perception of democracy by members of a cooperative. According to them, the main concern of the members of the cooperative concerning participation is only financial, that is, they are interested in the results, but not in the compromise as to how to reach them. The authors emphasize, then, that “in order for the cooperative to work as an economical organization, it is necessary to, also, stress the social aspect” (p.150), by what is understood of the effective participation in all activity and decision making of the cooperative. Sette, Sette and Souza (2005 – p. 6) stress, however, that “people only take part in what interest them and in what motivates them to participate”. Therefore, besides economical encouragement, education and communication are key factors for the associate to feel more reliant and believe that it is through the union of his participation that the cooperative can reach its goals and satisfy the needs of their members of the cooperative. 1.3. Satisfaction As has been discussed previously, cooperatives are peculiar and complex organizations. Besides the economic logic of companies, they have, also, a social logic, and, while companies have as their only goal the generation of profit, cooperatives are worried about developing and aggregating income to the members of the cooperative 4

OCEPAR – Organização das Cooperatives do Estado do Paraná. Autogestão – a função do cooperado: como organizar-se. 2nd ed. Curitiba: OCEPAR, 1992. 64p.

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(BIALOSKORSKI NETO, 2002). This way, the performance of a cooperative is influenced not only by financial matters, but also by the generation of benefits to its associates. Because of this, the satisfaction of the members of the cooperative is a component of the performance of the cooperative and has great importance for it. Once the cooperative is an “autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democraticallycontrolled enterprise” (ICA, 2009, emphasis added), the associates‟ satisfaction represents the reach of their goals and, therefore, their success. Therefore, measuring the performance of a cooperative is like measuring the performance of a company, taking into consideration the satisfaction of its clients and not only its profit by the end of the fiscal year. Some scholars of the marketing area actually praise the role of the client and his satisfaction in the success of companies. For Hopson and Scally (1995), for example, the only valid measure to assess the success of a business is the client‟s satisfaction. In the case of cooperatives, this affirmation is especially true, for the goal of this organization is precisely to satisfy the members of the cooperative. In addition to being important for the performance of cooperatives, measuring the satisfaction is also essential for strategic management. Through this it is possible to find the strong points, spot imperfections and determine actions that lead to the improvement of effectiveness. According to Denton (1991), listening to the client is the best way to obtain the necessary data for the development of strategies of improvement of quality, which, in turn, is indispensible to raise competitiveness. Hayes (2001) sustains this idea by claiming that knowledge of the perceptions and reactions of clients concerning the business of the organization raises responsibility in decision making. By having knowledge of the needs and expectations of their clients, the organizations acquire the capability of defining whether these are or not their goals. This way, the relation and the communication company/client becomes more and more important, not only so the organizations can know better their clients and be able to satisfy them, but also to raise trust and, mainly, the loyalty of the consumers towards them. The approximation to clients on the company‟s‟ behalf seeks to aggregate superior value for them so that, satisfied, they will not wish to quit consuming the product or using their services. According to Cajaraville (2000), in the new economy the companies to be successful will be those which improve their relation with their clients and employees, better satisfy their needs, and communicate and learn from them. This way, the idea that cooperatives must also worry about their „clients‟‟ satisfaction is reinforced, once the fidelity of the members of the cooperative is fundamental for the good performance of the organization. However, this is a two-way path, for only with the utilization of the services on the members of ...