Control Structure and Stakeholder Involvement in Co-operative Governance: A Comparatives Analysis

1. Control Structure and Stakeholder Involvement in Co-operative Governance: A Comparatives Analysis Akira Kurimoto Director, CCIJ

2. Corporate governance facing challenges • Principal-agency theory • Managerial firm • Shareholder's firm • Questioned control and audit after Enron and WorldCom • Stakeholder theory • How to define objective functions • How to make tradeoffs among stakeholders

3. Theories Model of boards Roles of boards Democratic perspective Democratic model To represent members’ interests and resolve among interests of different groups and set the overall policy Agency theory Compliance model To monitor and control the behavior of management to ensure it acts in the shareholders best interests Stewardship theory Partnership model To work with management to improve organizational performance, thus add values to top decisions Resource dependency theory Co-option model To maintain good relations with key external stakeholder in order to ensure the flow of resources into/from organization Stakeholder theory Stakeholder model To coordinate various stakeholders interests in order to determine the organization’s objectives and policy Managerial hegemony theory Rubber stamp model To legitimize management’s actions without critical assessment Corporate Governance Theories and corresponding models of boards

4. Ｂａｓｉｃ Difference between PLC and Co-op • PLC:investor ≠ customer ≠ manager • Primary position of shareholders seeking for maximized gains from investment • Ｃｏｏｐ： investor＝customer＝manager • Primary position of members for meeting eco/soc/cultural needs and aspirations • USDA :User-owned,controlled and benefit • Münkner: User-driven vs. Investor-driven

5. Governance structure of PLCs B electioninternal control MexitS　 ｘ　　E external control

6. Governance structure of co-ops B electioninternal control M　 ｘ　　SE 　　　　　　ｘ external control

7. Input-output model Investors Suppliers FIRM Customers Employees

8. Stakeholder model Governments Investors Political groups . Customers Suppliers FIRM Trade Assn. Employees Communities

9. Pluralistic Governance Model of Co-os General meeting Decision-making/control flow Board Information/feedback flow Management Employees Intermediary organizations Members

10. Governance Structure of Japanese Co-op AGM Society Level Board SC AC AC AC Municipality level Community level DC DC DC Neighborhood Han Han Han DC: District/store Committees, AC: Area/regional Committees, SC: Specialized Committees Communication/reporting Electing delegates Counsel

11. Governance Structure of Eroski Co-op AGM Auditors Consumer Council Social Council Board District Com. Management District Com.

12. Conclusion • Analyze the co-op’s governance structure in comparison with PLCs and other forms. • Identify the strength and weakness in co-op’s governance structure. • Improve governance thru corrective actions: making AGM effective, education/training of board members, independent auditors, and active member participation.