January 10th, 2018
Potential of Cooperatives in addressing challenges posed by Capitalism
The MCC offers insight into the ability of cooperatives to solve social challenges posed by capitalism. Although capitalistic organizations establish social responsibility programs to reduce the discrepancy between shareholders’ profit-maximization interest and interests of other stakeholders, such an approach is only temporal in addressing social equity (O’Toole & Vogel 2011). This is for instance exemplified by the recent financial crisis where corporates engaged in imprudent practices to extract supernormal profits at the expense of the common good (Kirkpatrick 2009). Such inability of firms to balance their profit maximization goal and corporate social responsibility, necessitates evaluation of alternative modes of doing business. Cooperatives offer such an alternative since they provide a way for an entity to achieve growth while remaining committed to the social outcomes of its activities.
The effectiveness of cooperatives as an alternative to capitalistic corporations is evident from MCC case. For instance, even with its high concern for employees welfare, MCC was able to enhance its profits by 39 percent in the period 2001 to 2006 (Fuller & Jonas 2010). Such profitability, in addition to the social benefits that the entity helps to achieve (e.g. reduction in social inequalities by offering more people jobs at the expense of achieving a profit-maximization goal), highlights the potential of cooperatives in balancing the divergent interests of multiple stakeholders (Jeurisen 2007). For instance, while employees benefit from increased participation in decision-making and fair profit distributions, shareholders would benefit from increased employee commitment to the organization’s goals, thus reducing the risk of imprudent practices occurring within the entity. Such reduced risk in turn leads to the development of a positive corporate reputation that increases the entity’s customer base. Go to conclusion here.