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

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

TheoriesModel 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 theoryCompliance model To monitor and control the behavior of management to ensure it acts in the shareholders best interests Stewardship theoryPartnership 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 theoryStakeholder 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

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

Governance structure of PLCs B election internal control M exit S ｘ E external control

Governance structure of co-ops B election internal control M ｘ S E ｘ external control

Input-output model FIRM Supplier s Customers Investor s Employees

Stakeholder model FIRM Suppliers Customers Investors Employees Trade Assn. Political groups. Communitie s Governments

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

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

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

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.