The accumulation of financial and social capital as a means to achieve a sustained competitive advantage for consumer co-operatives
Tuominen, Terhi (2013-12-12)
Väitöskirja
Tuominen, Terhi
12.12.2013
Lappeenranta University of Technology
Acta Universitatis Lappeenrantaensis
Julkaisun pysyvä osoite on
https://urn.fi/URN:ISBN:978-952-265-510-3
https://urn.fi/URN:ISBN:978-952-265-510-3
Tiivistelmä
By so far, scholars have discussed how the characteristics of consumer co-operatives (cooperative
principles, values and the dual role of members as the users and owners) can
potentially give them a competitive advantage over investor-owned firms (IOFs). In addition,
concern for the community (as partly derived from locality and regionality) has been seen as a
potential source of success for consumer co-operatives. On the other hand, the geographicbound
purpose of consumer co-operation causes that consumer co-operative can be regarded
as a challenging company form to manage. This is because, according to the purpose of
consumer co-operation, co-operatives are obligated to 1) provide the owners with services and
goods that are needed and do so at more affordable prices than their competitors do and/or 2)
to operate in areas in which competitors do not want to operate (for example, because of the
low profitability in certain area of business or region). Thus, consumer co-operatives have to
operate very efficiently in order to execute this geographic-bound corporate purpose (e.g. they
cannot withdraw from the competition during the declining stages of business).
However, this efficiency cannot be achieved by any means; as the acceptance from the
important regional stakeholders is the basic operational precondition and lifeline in the long
run. Thereby, the central question for the survival and success of consumer co-operatives is;
how should the consumer co-operatives execute its corporate purpose so it can be the best
alternative to its members in the long run? This question has remained unanswered and lack
empirical evidence in the previous studies on the strategic management of consumer cooperation.
In more detail, scholars have not yet empirically investigated the question: How
can consumer co-operatives use financial and social capital to achieve a sustained
competitive advantage? It is this research gap that this doctoral dissertation aims to fulfil. This
doctoral dissertation aims to answer the above questions by combining and utilizing interview
data from S Group co-operatives and the central organizations in S Group´s network (overall,
33 interviews were gathered), archival material and 56 published media articles/reports. The
study is based on a qualitative case study approach that is aimed at theory development, not
theory verification (as the theory is considered as nascent in this field of study).
Firstly, the findings of this study indicate that consumer co-operatives accumulate financial
capital; 1) by making profit (to invest and grow) and 2) by utilizing a network-based
organizational structure (local supply chain economies). As a result of financial capital
accumulation, consumer co-operatives are able to achieve efficiency gains but also remain
local. In addition, a strong financial capital base increases consumer co-operatives´
independence, competitiveness and their ability to participate in regional development (which is in accordance with their geographically bound corporate purpose). Secondly, consumer cooperatives
accumulate social capital through informal networking (with important regional
stakeholders), corporate social responsibility (CSR) behaviour and CSR reporting, pursuing
common good, and interacting and identity sharing. As a result of social capital accumulation,
consumer co-operatives are able to obtain the resources for managing; 1) institutional
dependencies and 2) customer relations. By accumulating both social and financial capital
through the above presented actions, consumer co-operatives are able to achieve sustained
competitive advantage. Finally, this thesis provides useful ideas and new knowledge for cooperative
managers concerning why and how consumer co-operatives should accumulate
financial and social capital (to achieve sustained competitive advantage), while aligning with
their corporate purpose.
principles, values and the dual role of members as the users and owners) can
potentially give them a competitive advantage over investor-owned firms (IOFs). In addition,
concern for the community (as partly derived from locality and regionality) has been seen as a
potential source of success for consumer co-operatives. On the other hand, the geographicbound
purpose of consumer co-operation causes that consumer co-operative can be regarded
as a challenging company form to manage. This is because, according to the purpose of
consumer co-operation, co-operatives are obligated to 1) provide the owners with services and
goods that are needed and do so at more affordable prices than their competitors do and/or 2)
to operate in areas in which competitors do not want to operate (for example, because of the
low profitability in certain area of business or region). Thus, consumer co-operatives have to
operate very efficiently in order to execute this geographic-bound corporate purpose (e.g. they
cannot withdraw from the competition during the declining stages of business).
However, this efficiency cannot be achieved by any means; as the acceptance from the
important regional stakeholders is the basic operational precondition and lifeline in the long
run. Thereby, the central question for the survival and success of consumer co-operatives is;
how should the consumer co-operatives execute its corporate purpose so it can be the best
alternative to its members in the long run? This question has remained unanswered and lack
empirical evidence in the previous studies on the strategic management of consumer cooperation.
In more detail, scholars have not yet empirically investigated the question: How
can consumer co-operatives use financial and social capital to achieve a sustained
competitive advantage? It is this research gap that this doctoral dissertation aims to fulfil. This
doctoral dissertation aims to answer the above questions by combining and utilizing interview
data from S Group co-operatives and the central organizations in S Group´s network (overall,
33 interviews were gathered), archival material and 56 published media articles/reports. The
study is based on a qualitative case study approach that is aimed at theory development, not
theory verification (as the theory is considered as nascent in this field of study).
Firstly, the findings of this study indicate that consumer co-operatives accumulate financial
capital; 1) by making profit (to invest and grow) and 2) by utilizing a network-based
organizational structure (local supply chain economies). As a result of financial capital
accumulation, consumer co-operatives are able to achieve efficiency gains but also remain
local. In addition, a strong financial capital base increases consumer co-operatives´
independence, competitiveness and their ability to participate in regional development (which is in accordance with their geographically bound corporate purpose). Secondly, consumer cooperatives
accumulate social capital through informal networking (with important regional
stakeholders), corporate social responsibility (CSR) behaviour and CSR reporting, pursuing
common good, and interacting and identity sharing. As a result of social capital accumulation,
consumer co-operatives are able to obtain the resources for managing; 1) institutional
dependencies and 2) customer relations. By accumulating both social and financial capital
through the above presented actions, consumer co-operatives are able to achieve sustained
competitive advantage. Finally, this thesis provides useful ideas and new knowledge for cooperative
managers concerning why and how consumer co-operatives should accumulate
financial and social capital (to achieve sustained competitive advantage), while aligning with
their corporate purpose.
Kokoelmat
- Väitöskirjat [1037]