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POOR MANAGEMENT - A STUMBLING STONE OF CONSUMER COOPERATIVES DEVELOPMENT

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Consumer cooperatives have long been hailed as vehicles for economic empowerment and community development, yet their success hinges greatly on effective management practices (Makower, 2019). The background of consumer cooperatives traces back to the 19th century, when the Rochdale Society of Equitable Pioneers in England pioneered the cooperative movement (Birchall, 2018). Since then, consumer cooperatives have proliferated worldwide, encompassing diverse sectors such as retail, agriculture, finance, and housing (Defourny & Nyssens, 2017). However, amidst their potential for fostering socio-economic growth, poor management often emerges as a critical impediment to their development (Veldhuizen & Kirsten, 2020).

One of the primary challenges faced by consumer cooperatives is the lack of professional management expertise (Kasongo, 2021). Unlike traditional corporations, where professional managers are hired based on merit and experience, cooperatives often rely on volunteer members who may lack the necessary skills and training (Birchall, 2018). This deficiency in management capacity can lead to inefficiencies in operations, decision-making, and resource allocation (Birchall, 2018). Moreover, it may hinder the ability of consumer cooperatives to compete effectively in the marketplace (Defourny & Nyssens, 2017).

In addition to managerial expertise, governance structures within consumer cooperatives play a crucial role in their success (Wilson & Moeller, 2018). Cooperative governance typically involves democratic decision-making processes where members have equal voting rights (Ostergaard & Pomeroy, 2020). While this democratic principle is fundamental to the cooperative identity, it can also pose challenges when consensus is difficult to achieve (Makower, 2019). Ineffective governance structures may lead to power struggles, conflicts of interest, and decision-making gridlock (Wilson & Moeller, 2018). Consequently, consumer cooperatives may struggle to adapt to changing market dynamics and capitalize on emerging opportunities (Veldhuizen & Kirsten, 2020).

Furthermore, financial management presents a significant hurdle for many consumer cooperatives (Svensson & Westerlund, 2022). Cooperative enterprises often face difficulties in accessing capital, particularly from traditional financial institutions that may view them as high-risk ventures (Svensson & Westerlund, 2022). Consequently, consumer cooperatives may struggle to invest in infrastructure, technology, and

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