Governance Issues in European Co-ops: Are There Lessons Here for Their Canadian Cousins?

hanisch-2015

Markus Hanisch

The Centre’s second annual MacPherson Talk featured Dr. Markus Hanisch, managing director of the Institute for Research on Co-operatives at Humboldt University in Berlin.

Hanisch’s presentation — “Changing Governance in European Co-operatives: Simply Shifting or Losing Control?” — outlined a series of innovations occurring in European co-operative governance and the impact of these changes on co-operative performance. Based on data from 571 farmer co-operatives in the European Union, Hanisch concluded that co-operatives that have implemented certain governance innovations — professionalising and allowing outsiders to join their boards of directors, recruiting larger boards, and creating a governance model in which the co-op acts as a holding structure — have improved their performance. The research also notes, however, that these shifts towards corporate governance structures may affect member control.

Changes to co-operative governance have been spurred by a number of recent trends in the EU, including vertical integration along the value chain, competition among co-operatives, mergers to secure increased market share, and increased manager discretion, which have caused producers to fear marginalization. Innovations in response to these trends include:

  • shifting from director-managed boards to professional boards
  • allowing non-members to sit on management and supervisory boards
  • introducing proportional voting
  • professionalizing members by introducing a member council
  • strengthening product/customer-orientation, i.e., shifting the representation of the board from regional directors to product directors
  • attracting outside capital through a hybrid ownership structure, inviting non-members as owners
  • introducing a holding structure by legally separating the association and firm (what Hanisch calls a two-headed, or “Janus-faced,” model)

Questions remain as to whether members are able to maintain control under these new models. Recent crises in both internal and external governance indicate that control may be lost as the structures change.

Europe has a significant co-operative presence, Hanisch noted, but given the changes to the economic and organizational environment discussed above, he feels the nature of co-operatives will change. Policymakers, members, and managers will have to rethink a number of factors, including the relationship between producers and the market, numerous aspects of co-operative law, and the nature of competition policy. Despite these changes, the traditional role of the co-operative to provide a benchmark for pricing and service is likely to remain — but on a much different scale.

A video of the seminar is available here.

The MacPherson Talks take place annually at the Centre for the Study of Co-operatives in honour of the late Dr. Ian MacPherson, one of the leading lights of the international co-operative movement. Historian, educator, author, and passionate co-operator, Ian personified the relationship between Canadian co-operative academics and co-op practitioners. The talks feature international co-operative scholars or practitioners whose work reflects the values that Ian held dear.

— Summary of presentation prepared by Aasa Marshall
Research Assistant, Centre for the Study of Co-operatives

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