Advantages of cooperatives
Main advantages of cooperatives ie. small businesses formed by farmers or customers are:
- increase of competition
- cost reduction of procurement of goods or selling
- provide high quality services to specific group of interested people (which may be unprofitable to big business)
- provide various resources to members (credit, housing, etc.)
- cooperatives are owned and controlled by members
- profits of cooperative are transferred directly to members, members decide about fund transfers
- cooperatives with open membership provide important social service to the community
- decision are undertaken democratically
- often this type of business is supported by government
- middlemen are eliminated which leads to cost reduction, main goal of cooperative is good service not profit for a limited few people
- Valentinov, V. (2007). Why are cooperatives important in agriculture? An organizational economics perspective. Journal of institutional Economics, 3(1), 55-69.
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