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Hybrid Cooperatives

Challenges and Advantages

Loren Rodgers

National Center for Employee Ownership

January 30, 2008

The cooperative movement is made up of diverse types of organizations: worker

cooperatives, retail consumer cooperatives, credit unions, and housing cooperatives are

all vastly different from each other. Each type of cooperative has strikingly different

characteristics, strengths and weaknesses.

For example, one characteristic of consumer cooperatives in the United States in recent

years is success. They include highly visible retailers such as REI and a vibrant sector of

cooperative grocery stores. Cooperative groceries are generally outperforming the

grocery sector as a whole, and have both nurtured and benefited from trends

supporting natural foods. Some observers, however, suggest that consumer

cooperatives are not necessarily better employers than conventional grocery stores, and

there are examples of substantial labor-management conflict in cooperative groceries.

While most consumer-cooperative groceries are worker-friendly, nothing about their

structure ensures a voice for employees.

By contrast, the governance power of workers in worker cooperatives means that they

remain committed to the welfare of their employees. Unlike consumer cooperatives,

the worker cooperative sector in the United States has yet to thrive. Despite the

remarkable and enduring success of some prominent worker cooperatives, many have

failed to remain viable businesses in the long term and the sector as a whole is growing

slowly.

These contrasting problems present an obvious and intuitive solution: why not remedy

the problems of consumer cooperative by adding a component of worker ownership?

Why not address the challenges of worker cooperatives by recruiting consumers as

owners? This combination—the hybrid cooperative—has deep conceptual appeal,

bolstered by the public success of hybrid cooperatives such as Weaver Street Market in

Carrboro, North Carolina.

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The purpose of this paper is to explore the definition and appropriate uses of a hybrid

cooperative structure, making use of Weaver Street Market as a brief case study.

Definition

The Canadian Co-operative Association refers to "multi-stakeholder" cooperatives as

part of its description of the Canadian worker coop sector. In such multi-stakeholder

cooperatives, it says, "membership is made up of different classes of members such as

workers, consumers, producers, investors and/or other possible stakeholders."1

To formalize this description, I propose the following definition of a hybrid cooperative:

"an organization that follows the seven cooperative principles and that has more than

one class of members, each of which has distinct rules for membership, patronage, and

participation in governance."

Throughout this paper, I will use the terms "hybrid cooperative" and "multi-stakeholder

cooperative" interchangeably. I will use the phrase "single-class cooperative"