Cooperative business: as foreign as frogs legs?

They underpin our country’s economy, have a collective turnover of more than $39 billion and significantly contribute to local community employment, yet to many the term ‘cooperative’ is as foreign as frogs legs.

Henry Lynch

Cooperatives are big business, impacting on our daily lives in a multitude of ways. From a cooperative of travel retailers with around 20 members, through to our growing credit union and mutual building societies with more than 210,000 owner members, cooperative business is an integral and important part of New Zealand.

We’re in the throes of celebrating the United Nations ‘International Year of Cooperatives’, a chance to highlight the substantial economic and social contributions made by cooperatives globally and in New Zealand. And I see it as a prime opportunity to encourage New Zealand businesses to work more cooperatively in order to thrive and grow.

Our larger businesses are already successfully doing this. A number of New Zealand’s most recognised cooperatives and mutuals rank in the world’s 300 largest cooperatives.

But there’s room for improvement in the realms of smaller business, where we still seem to operate with a ‘patch protection’ mentality. If SMEs collaborated more, I believe they could grow their business on a greater scale.

I’m not suggesting a dramatic change of business model. Cooperative arrangements can be informal or formal.

Informal collaborations can be mutually beneficial to all parties. It may be as simple as combining to achieve greater purchasing power, sharing resources like HR and training or even market intelligence. By adopting a cooperative mentality, smaller businesses can drive their cost base down, become more cost effective and, as a result, grow their business.

More formal cooperative arrangements have huge advantages. Take the credit union example. Individually, credit unions operate as small to medium size businesses in their local communities, each with their own local identity. But collectively, under the NZACU umbrella, they enjoy the synergies and scale derived from being part of a large cooperative. Because of this collaborative approach, credit unions rank as the country’s sixth largest financial service provider by financial transactions volume, with one of the largest ATM networks in New Zealand, outside of the major banks. For us, the cooperative model works – each credit union remains independent, but at the same time, is able to reap the benefits of a larger business entity and compete with banks.

True cooperatives are based on the values of self-help, self-responsibility, democracy and equity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness and social responsibility. I’d challenge anyone to argue against basing a business model on such a fair and positive philosophy.

I believe that understanding the worldwide impact of cooperatives and their context in our modern world is now more important than ever, as we recognise as a nation we are all going to have to work together for a better future, so let’s all try to cooperate a little more.

Henry Lynch is chief executive of the New Zealand Association of Credit Unions. Also see nz.coop for more on cooperatives