Control Structure and Stakeholder Involvement in Co-operative Governance: A Comparatives Analysis

Akira Kurimoto 　　　　　　　　　 Director, CCIJ

Corporate governance facing challenges

Principal-agency theory Managerial firm Shareholder's firm Questioned control and audit after Enron and

WorldCom

Stakeholder theory How to define objective functions How to make tradeoffs among stakeholders

Theories Model of boards

Roles of boards

Democratic perspective

Democratic model

To represent members’ interests and resolve among interests of different groups and set the overall policy

Agency theory Compliance model

To monitor and control the behavior of management to ensure it acts in the shareholders best interests

Stewardship theory Partnership model

To work with management to improve organizational performance, thus add values to top decisions

Resource dependency theory

Co-option model

To maintain good relations with key external stakeholder in order to ensure the flow of resources into/from organization

Stakeholder theory Stakeholder model

To coordinate various stakeholders interests in order to determine the organization’s objectives and policy

Managerial hegemony theory

Rubber stamp model

To legitimize management’s actions without critical assessment

Corporate Governance Theories and corresponding models of boards

Ｂａｓｉｃ Difference between PLC and Co-op

PLC:investor ≠ customer ≠ manager Primary position of shareholders seeking for m

aximized gains from investment

Ｃｏｏｐ： investor ＝ customer ＝ manager Primary position of members for meeting eco/s

oc/cultural needs and aspirations USDA :User-owned,controlled and benefit Münkner: User-driven vs. Investor-driven

Governance structure of PLCs

　　　　　　　　　　 B 　　　　　　　 election 　 internal control　　　　　　　　　　　　　 M 　 exit 　 S 　 ｘ　　 E 　　　　　 external control 　　

Governance structure of co-ops

　　　　　　　　　　 B 　　　　　　　　 election 　 internal control　　　　　　　　　　　　　 M 　 ｘ　　 S 　 　　 E 　　　　　　　　ｘ　　 external control 　　

Input-output model

FIRMSuppliers

Customers

Investors

Employees

Stakeholder model　

FIRMSuppliers Customers

Investors

EmployeesTrade Assn.

Political groups .

Communities

Governments

Pluralistic Governance Model of Co-os General meeting

Board

Management

Employees

Members

Decision-making/control flow

　　　

Information/feedback flow

Intermediary organizations

Governance Structure of Japanese Co-op

BoardAGM

ACAC AC

DC

Han Han Han

DC DC

SC

Society Level

Municipality level

Community level

Neighborhood

DC: District/store Committees, AC: Area/regional Committees, SC: Specialized Committees

Communication/reporting 　 Electing delegates 　 Counsel

Governance Structure of Eroski Co-op

AGM

Board

Management

Social Council

District Com.

Consumer Council

District Com.

Auditors

Conclusion

Analyze the co-op’s governance structure in comparison with PLCs and other forms.

Identify the strength and weakness in co-op’s governance structure.

Improve governance thru corrective actions: making AGM effective, education/training of board members, independent auditors, and active member participation.