Case Studies of Organisational Resilience in the Co-operative Business Model
Edited by Tim Mazzarol, Sophie Reboud, Elena Mamouni Limnios and Delwyn Clark
Chapter 9: Pacemaker co-operatives across primary industries: what drives organisational resilience?
Co-operatives can reduce member transaction costs through backward or forward integration in the supply chain (Bonus 1986; Nilsson 2001) and can have a significant impact on market dynamics, sometimes avoiding or correcting market failure. A number of cooperatives can be formed in a market to address these concerns or to create local infrastructure in the absence of government and private investment (Heriot and Campbell 2006). In some markets, smaller co-operatives gradually merge or demutualise, leading to the survival of a single (and commonly large) co-operative that can be a very successful and resilient organisation, being what LeVay (1983) calls a "pacemaker" in the market. Although the price differential between the co-operative and its investor-owned competitors gradually falls, or may even become non-existent, the mere presence of the co-operative ensures the efficiency and competitiveness of the industry to the long-term benefit of the co-operative's members and non-members. In this chapter we examine the nature of pacemaker co-operatives, using two Australian co-operatives that play this role in their respective markets as examples. Murray Goulburn Co-operative Co Limited (MG) is the second-largest co-operative in Australia, with an annual turnover of 2.24 billion (Co-operatives Australia 2011) and is the only dairy co-operative remaining in the State of Victoria.
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