Research Handbook on Sustainable Co-operative Enterprise
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Research Handbook on Sustainable Co-operative Enterprise

Case Studies of Organisational Resilience in the Co-operative Business Model

Edited by Tim Mazzarol, Sophie Reboud, Elena Mamouni Limnios and Delwyn Clark

Co-operatives are found in all industry sectors and almost all countries around the world. However, despite their significant economic and social contributions, the academic literature has largely ignored these important businesses. This book is a detailed examination of the co-operative enterprise business model and the factors that help to enhance its sustainability and resilience, as well as those forces that lead to its destruction.
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Chapter 9: Pacemaker co-operatives across primary industries: what drives organisational resilience?

Elena Mamouni Limnios, Tim Mazzarol and Geoffrey N. Soutar


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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