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 16: Generating value for members: the case of an Austrian co-operative bank

Dietmar Roessl and Isabella Hatak


In Europe, co-operative banks were originally founded to improve the access to financial resources-by means of receiving deposits from and making loans to member-customers-for economically disadvantaged groups. In the 19th century, these groups consisted mainly of farmers and craftsmen. Whereas co-operative banks in the traditions of the founding father Friedrich-Wilhelm Raiffeisen mainly focused on the agricultural sector, co-operative banks in the tradition of Hermann Schulze-Delitzsch rather concentrated their activities on craftsmen. However, changing economic and regulatory conditions are affecting the benefits associated with being a member of co-operative banks. Neo-institutional economists (Royer 1992; Cook 1995) have identified a number of challenges regarding the traditional co-operative structure. Resulting from vaguely defined property rights, structural issues lead to various problems that are inherent in the traditional business model of co-operatives. For example, dealing with free riders and equity sourcing have been identified as factors hampering the growth of the traditional co-operative model (Sykuta and Cook 2001). At the same time, increasing competition and regulatory changes with respect to consumer protection laws and other legislative developments make it difficult for cooperative banks to differentiate between member customers and non-member customers regarding the provision of clear-cut economic benefits like, for example, better access to loans, cost advantages, etc.

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