What is a Co-operative or Mutual Enterprise?

What is a Co-operative Enterprise?

According to the ICA: 

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Co-operatives come in a wide range of different types and with a variety of different business structures, however, what they have in common is that they are established for the benefits of their members who are also usually the owners of the business. This makes them different to conventional investor owned firms (IOF) that exist for the benefits of their investors who may not be trading with the enterprise and who only view it as of important for its return on the capital invested.

Although a co-operative is a social enterprise, it is a business that has been established to generate economic as well as social benefits. As a result the co-operative enterprise must not be confused with the non-profit or charitable business sector. Co-operatives exist for the economic benefit of their members, not the economic benefit of others who might be in need of assistance. They are about economic self-development not welfare.

Co-operatives are also characterised by not being associated with government or religious organisations. They are independent of these and membership to a co-op is not determined by a person's race, religion, gender or political affiliation. This has been an important aspect of co-operative enterprises throughout their long history.

Co-operative Principles

Co-operatives are one of the oldest and most enduring forms of social enterprise. For example, the Shore Porters' Society of Aberdeen, Scotland, was founded in 1498, while the Fenwick Weaver's Society, also from Scotland, was established in 1761. In France there were co-operatives formed among cheese makers as early as 1750, and the co-operative bakery Caisse de Pain was founded in Alsace at Guebwiller in 1828.

However, the modern co-operative enterprise tends to draw its foundations from the formation in 1844 of the Rochdale Society of Equitable Pioneers (see image). This co-operative was established to enhance the economic status of its members and was founded on a set of principles (the Rochdale Principles) that continue to be the guiding values of the international co-operative movement. 

These principles have been amended only twice since 1844, once in 1937 and again in 1966. Today the modern ICA has seven guiding principles of co-operation:

  • Voluntary and open membership
  • Democratic member control
  • Member economic participation
  • Autonomy and independence
  • Education, training and information
  • Co-operation among co-operatives
  • Concern for community