🔰Corporation vs Cooperative: Which is a Better Business Model?🔰
When starting a business it is very important to decide the business model and objective. For many years Corporation vs Cooperative debate has been a moot point between different business ideologies. In this post I will try to cover some of the main differences between both of the business models and their way of functioning and conducting a business. At the end of the post I will share my opinion why I think one is a better way of doing a business.
Corporation
What is a Corporation?
A corporation is a legal entity owned by its shareholders. That means corporation is legally liable for its actions and debts, not the shareholders. The owner's of the corporation doesn't have to risk their personal assets in case if the corporation fails to meet its obligations.
The owners of the corporation are called shareholders and share of stock represent their ownership interests. A corporation must at least have one owner. There is usually no limit on the number of shareholders a corporation can have.
Profit maximization is the murderous strategy of the global corporation hierarchies. - Jean Zigler
Below is a basic structure of Corporation:
Cooperatives
History of Co-op movement
The cooperative revolution started back in 1844 in England when a group of weavers who were fed up with the high prices of store groceries decided to pool their money to buy their own food and created a new form of business the Cooperative.
On the same line in the US the president Mr. Roesevelt gave electric cooperative a kick start with the foundation of rural electrification administration. The objective was to tell American farmers if you need electricity you can do it yourself. Soon this mission spread all across the US where people started pooling funds for electricity. Finally because of the team work and hard work it resulted in electricity access to millions of Americans.
How do Cooperatives work?
Cooperatives are not just about the money. Co-ops exist to serve their members. They may have a unique set of principles. Anyone can be a part of Co-ops regardless of their religion, caste or creed. Co-ops have a voluntary and open membership. Members vote for the co-op leader to lead their co-op programs. Co-ops have a democratic way of functioning. Members vote on issues and the majority votes have the say in the matter.
All the members pay a little money to become a member. Cooperatives work together to educate, train and inform members to make them independent. Cooperatives deeply demonstrate the principle of community and a sense of unity to strengthen the base of the co-ops movement.
Cooperative is the reminder to the international community that it is possible to pursue both economic viability and social responsibility.
Difference between Corporation and Cooperative
I found this below image concise and to the point to distinguish the core business model of the both the entities.
Which is better Corporation or Cooperative?
I'm sure many people will have different opinions regarding which business model is more right. What I feel cooperative is definitely a different way to do business than most people think is a traditional stock company perspective. It's a great opportunity to bring people from all around the world together to work together towards a unified objective to maximize benefits and return to the members.
If your goal is just to make money then co-op is not the right place for you. I agree profits are not that high compared to a corporate business model, but money is not the only criteria to have a happy and meaningful life. The pleasure and satisfaction to grow along with your community members can only be experienced in a co-operative business model.
The beauty of the cooperative business model is that people many of whom have no familiarity with workplace democracy make it an exciting and gratifying experience for them. The major issue with the cooperative business model is that currently everything is fragmented into different domains. The real power will be when everything will be consolidated and also I think the government will play a bigger role in promoting the cooperative business model.
Let me know what you guys think which is a better way to setup a business, the corporation or the cooperative business model.
References and further reads: 1, 2 & 3
Nice article @vj1309....Some how it sound like same thing, however a cooperative is owned by a group of people voluntarily for their mutual benefit.
Where as a corporation has limited liability for risk bearing where the shareholders only lose their investment while the employees lose their jobs.
So we need to rectify the proper business model to hit the six in the business.
Yes, completely agree to your point. I also believe it is very important to set your priorities straight before opting for a particular business model. As I mentioned in the post cooperative business model won't suit those people who just want to earn a lot of money.
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