Cooperative Business Models

Categories: Business Innovation Policy Sustainability

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Concept explanation:

In recent years, besides shareholder of a business, there are a big variety of active elements in the economy, no limited in investors, suppliers, customers. Freeman (1984) addressed that the managers and business owners should consider certain cluster of entities as stakeholders namely those who existing in a voluntary or an involuntary relationship with the firm (Mitchell, Agle & Wood, 1997).

The stakeholders can affect or is affected by the achievement of the organization's objectives (Freeman, 1984). Applying the stakeholder theory in cooperative business models, the cooperative subjects could be any pairing within the stakeholder definition, there are several different possibilities of the cooperative forms, such as Business-Business collaboration, Business and Non-governmental organizations (NGOs), or Multi-stakeholder initiative.

Cooperatives are gathered and aiming to solve a problem in the market, which cannot be resolved solely by any single stakeholder (Reynolds, 2013).

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Nowadays, businesses become more active to develop successful cross-sector partnerships, especial the relationship with NGOs.

There are three main distinguish types within the NGOs and business cooperative dimensions, namely Philanthropy Corporate Responsibility Integration and Corporate Responsibility Innovation (Halme & Laurila, 2009).

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The Philanthropy focus on the charity and employee voluntarism. Corporate Responsibility Integration peruses a more responsibly in existing business operation. CR Innovation aims to develop new business models for solving social and environmental problems.

Solution Explanation

In this scenario, we conduct two approaches to the resolve the moral dilemma, these two approaches integrate Philanthropy and Corporate Responsibility Integration.

Solution 1: Research cooperation and strategic partnership

Eczac?ba?? provides financial support to the Forest Stewardship Council(NGO), and they both provide resources for a research project.

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The research project is aiming to reduce the domestic (in Turkey) sustainable material cost. According to the product information provided by Eczac?ba??, their A-brands achieved 100% sustainably product already, cause the high price remedy the higher material cost.

With the new technic and new supply chain codeveloped by cooperation and NGO, Eczac?ba?? has the possibility to use a low retail price of the economic product to achieve the break even. The funding can be seen as a main financial resource for NGOs as well. Cooperation and NGO can keep a long term relationship and combine various forms of cooperation, such as Sponsorship or employee training.

Solution 2: Common projects/Programs

Eczac?ba?? can form a partnership with the NGO like Appalachian Woodlands Alliance (AWA). AWA together with forest products manufactures to engage individual landowners in sustainable forestry management, in order to help economically source the fiber required to make the paper products.

In this case, even if Eczac?ba?? cannot guarantee they use 100% recycled fiber, at least they can improve the virgin wood fiber are produced in a sustainable way. And by investing in the region and its natural resources, both ecosystem and livelihoods of landowners will be protected.

References

Freeman, R. E.(1984). Strategic management: A stakeholder approach. Boston: Pitman.
Halme, M., & Laurila, J. (2009). Philanthropy, integration or innovation? Exploring the financial and societal outcomes of different types of corporate responsibility. Journal of business ethics, 84(3), 325-339.
Mitchell, R., Agle, B., & Wood, D. (1997). Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts. The Academy of Management Review, 22(4), 853-886. Retrieved from A. (2013). Defining the value of the cooperative business model: an introduction. CHS Center for cooperative growth, dostupno na: internetska stranica uwcc. wisc. edu/pdf/Reynolds_WhitePaper_values. pdf.