1. Cooperative answers to the current economic crisis –
The MemberValue concept
Eric Meyer
University of Münster
Germany

2. Roots of the economic crisis1
Decoupling of the financial system from real economic needs 2
Exploitation of information asymmetries 3
„Short-termism“ 4
Misguided executive incentives (executive compensation) 5
Misguided and undifferentiated regulation, lacking or poor supervision
Member-based economic relations needed

3. MemberValue contribution
How can the MemberValue concept contribute
to the answers to the economic crisis? 1
Cooperative managers 2
Polititians
Regulators

4. Maximizes Value WITH the customers
Short term ShareholderValue
Customers
COMPANY
Maximizes Value WITH the customers
FOR the owners
Owners/Shareholders

5. Maximizes Value WITH the owner/customer FOR the owner/customers
Long-term MemberValue
Indirect
Member
Value
Direct
MemberValue
Sustainable
Member
Value
Property
Services/products
Investment
Maximizes Value WITH the owner/customer FOR the owner/customers
Members

6. MemberValue components
Indirect
Direct
Sustainable
Interest payments
Cooperative Governance (owner involment)
Benefits of owner control …
Supporting member in their value creating activities
Conditions
Reimbursements
Education
Marketing
Risk mitigation …
Long-term ability to support members (option value)
Ability to innovate
Stocks
Reserves …

7. Implementation Example of a cooperative bank
Services /Products
UMV_1 (+)
Adisory services
UMV_2 (+)
Direct MemberValue
Framework
H_1 (+)
UMV_3 (+)
Communication
UMV_4 (+)
Membership
UMV_5 (+)
MemberValue
Indirect
MemberValue
Dividends
H_2 (+)
MMV_1 (+)
Control
NMV_1 (+)
Real option
Sustainable MemberValue
NMV_2 (+)
H_3 (+)
Investment
NMV_3 (+)
Interaction
NMV_4 (+)
Source: Tschöpel (2011)

8. MemberValue implications
Direct MV
Anchored in the real economy
Indirect MV
Responsibility as an entrepreneur / providing equity
Sustainable MV
Option value of the cooperative, long-term vision

9. MemberValue implications1
Decoupling of the financial
system from real economic needs
MemberValue integrates customer and owner interests
MemberValue provides real world anchoring 2
Exploitation of information
asymmetries
MemberValue strategies mitigate information asymmetries by the cooperative governance (trust, owner control …) 3
„Short-termism“
Sustainable MemberValue component provides a long-term perspective 4
Misguided executive incentives
(executive compensation)
Close control of the board by the members provide customer/member based incentives 5
Misguided and undifferentiated regulation, lacking or poor supervision
MemberValue strategies reduce regulation needs

10. What do people want?
Representative IfG poll of people‘s knowledge about cooperatives and
their attitudes towards (selected) characteristics of cooperatives
 People‘s attitudes are close to cooperative characteristics and values
Question: Your attitude towards this characteristic? Answers „very good“ or „good“ in per cent Rest: „indifferent“, „bad“, „very bad“

11. Polititians / Regulators
Lessons
Cooperative managers
Polititians / Regulators
Structuring the MemberValue is fundamental for managing cooperatives
MemberValue strategies re-integrate the financial and the real world
Every cooperative has ist own MemberValue structure
MemberValue focus provides sustainable long-term solution
MemberValue strategies improve the resilience of the cooperative
Cooperatives should NOT be submitted to the same regulation as shareholder value companies