Co-Operatives and Mutuals as a Successful Form of Business

Critical Reflection


The social economy develops as a response to societal issues that cannot be addressed through traditional businesses and approaches. This paper reflects on the purpose of social enterprises, more specifically focusing on co-operatives and mutuals and their validity and capability to generate profits for the owners. The course materials that contribute to a better comprehension of the topic are the official website of the International Cooperative Alliance (ICA), a guest lecture by Shayan Sen, and articles by MacPherson. The concept of the social economy implies an intersection of economic and societal benefits, achieved through the business activity of an enterprise. This critical reflection argues that co-operatives and mutuals can be a successful form of business that is formed to serve a specific purpose, and that can become a successful form of cooperation between individuals.

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Social Economy

The guest lecture by Shayan Sen on co-operatives and mutuals in Canada and their meaning highlights their position and the development process of such enterprises. Wawanesa Insurance is an example of a social economy enterprise since the business is owned by policyholders. The approach chosen by Wawanesa Insurance is a mutual ownership structure, which means that either clients or policyholders own the business and receive dividends from its activity. This lecture presented a real-life example of a company that is a part of the social economy, as opposed to traditional approaches to business.

A social economy means a combination of social benefits and profit generated by the organization’s operations. In the case of Wawanesa Insurance, the company helped resolve the issue of insurance for farmers, which was the purpose of the organization’s establishment. This helps one understand the purpose of creating enterprises in the social economy and how the process is carried out. For instance, in the case of Wawanesa, farmers collectively invested in this insurance company, and it has been developing and growing since. As clients, they were able to ensure their property, and as owners, they also received profits as dividends. Based on this example, one can learn that similar enterprises allow for better efficiency and distribution of financial services.

The social economy is formed through a variety of different organizations, one example being co-operatives and mutuals. In order to understand social exclusion in the private sector, one can evaluate the reasons for establishing business with ownership structure such as co-operatives or mutuals. According to the ICAf, they are “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise” (“Cooperative Identity, Values & Principles”). Therefore, co-operatives allow workers to combine their efforts and form a single business structure, in which members control the operations and work to achieve the success of operations.

ICA principles outline the key characteristics of co-operatives, which help explain the ideas that guide these organizations’ establishment and development. The main focus is on combining the co-operative’s economic viability and social responsibility. Arguably, this is a challenging task that can often result in dilemmas and other problems. Hence, the actual viability of such businesses can be questioned. ICA argues that with this ownership structure, the members since they own the business can share the profits of the business while in traditional structures, the financial gain is usually distributed among shareholders (“ICA Fact Sheet”). One should note that shareholders do not always work for the business they own, meaning that they do not have direct interaction with the business, its objectives, its customers, and other important aspects. This can be a vital and essential benefit of co-operatives that allows them to succeed since each member depends on the profits that the organization will obtain. This is also a model that can be compared to traditional employment, where a company is obliged to pay the worker regularly, regardless of its financial results.

The information from the lecture and additional materials adds to one’s learning since it highlights the examples and the purpose of establishing a co-operative or a mutual. The purpose that guides the idea of creating a co-operative is a mutual benefit and the ability to control the operations of an organization. As such, the reading materials help examine the benefit each member of a co-operative has as opposed to working alone or establishing a company.

Values and ethical principles are the core elements of co-operatives. ICA established seven core principles of co-operatives – open membership, democracy, economic participation, autonomy, training, cooperation, and regard for the community (“Cooperative Identity, Values & Principles”). These principles support the general assumptions about co-operatives and based on this, and one can conclude that co-operatives allow developing structures at different levels for cooperation and organizational work. Arguably, this allows for better efficiency since the members work together and share their knowledge.

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The nature of co-operatives implies each member’s interest in the further development of the organization. Notably, ICA states that members of a co-operative usually can receive a small compensation, while the majority of funds are allocated towards the development of the organization (“Cooperative Identity, Values & Principles”). Hence, the focus is not on individual benefit, but rather on the development of the entire enterprise. From this, one can notice many similarities with corporations, which choose to withhold dividends of shareholders to invest in development. However, in co-operatives and mutuals, the workers or company owners make these decisions either directly or through elected representatives. Thus, businesses of the social economy employ democracy as the primary approach to decision-making.

Co-operatives add to the development of society while performing important business operations. Mutuals are typically organizations created to share risks and provide services such as insurance. Notably, both of these types of organizations emerged a long type ago, suggesting a long history of business enterprises that address social issues. In the essay “Alphonse Desjardins: A Co-operative Icon for English-Canadians,” MacPherson reflects on the experience of Desjardins as the first man who established a co-operative credit union on the territory of Canada (MacPherson, “Alphonse Desjardins,” 277). Desjardins’ work focused on the promotion of co-operatives, more specifically, banks with this type of ownership, and legislations that would support their establishment and operations. Moreover, Desjardins noted an important function of credit unions – their ability to support communities.

The strengths of social economy and co-operatives, in particular, are their principles of work. Usually, such enterprises fulfill a gap that exists within a community. One example is provided by MacPherson, according to the author, credit unions often emerge in areas where there are no banks (MacPherson, “Historic Changes,” 19). Moreover, in Canada, the importance of these organizations is continuing to increase, with 1,700 credit unions across the state. The nature of these facilities enables their swift response to any changes within the society (MacPherson, “Historic Changes,” 20). Their main characteristics are the employment of democratic principles and response to social pressures.

The ideas of the course’s readings are connected to the information presented by the guest lecturer, since credit unions, as an element of the social economy is created and controlled through shared ownership. As such, they have a different scope of interest, when compared to traditional banks or other financial institutions. The ethical values and contributions to the community are essential for these organizations. Based on the information from the guest lecture and reading materials about cooperations, it can be concluded that this type of ownership is effective. Considering that these types of organizations began to be popular over a hundred years ago, with the efforts of Desjardins to develop and popularize co-operatives, credit unions, and other cooperation approaches were established, the validity of these businesses cannot be questioned. Their distinct feature is their contribution to the society where they operate, because these organizations, although the focus on profits, also consider the moral standards and the needs of the community.


This essay focused on a critical reflection regarding the social economy and co-operatives as one of the examples of it, based on the lecture by Shayan Sen. Sen’s discussion about Wawanesa Insurance serves as an important example of a business with a mutual ownership structure. In the context of learning, the examined material helps understand the broader meaning of business and its structures beyond traditional hierarchies. Additionally, it helps examine businesses that serve the social purpose of address a societal issue. It is possible that in the future, more organizations will be developed based on structures such as the one applied by Wawanesa Insurance.

Works Cited

“Cooperative Identity, Values & Principles.” International Co-operative Alliance. Web.

“ICA Fact Sheet – UN International Year of Co-operatives.” International Co-operative Alliance. Web.

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MacPherson, Ian. “Alphonse Desjardins: A Co-operative Icon for English-Canadians.” One Path to Co-operative Studies, edited by Ian MacPherson. New Rochdale Press, 2007, pp. 277-281.

“Historic Changes in the Canadian Credit Union Movement.” Business with a Difference: Balancing the Social and Economic, edited by Jack Quarter, Laurie Mook, and Sherida Ryan, University of Toronto Press, 2012, pp. 19-39.

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