Cooperatives and Social Capital : A Theoretically-Grounded Approach

Social capital is widely regarded as a collective resource with positive effects on the economic performance of cooperatives. This conclusion is based on the implicit assumption that social interactions between cooperative members would inexorably lead to the development of networks, norms and trust. This paper challenges the validity of this assumption. Conceptualizing social capital as a resource of the individual, it is argued that the interactions between cooperative members may lead to the establishment of a variety of complex social ties, some of which can negatively affect the economic performance of the organization. To illustrate this argument, the paper presents an exploratory case study of a small, manufacturing worker cooperative. Drawing on ethnographic techniques, the study identifies four organizational dynamics which are presumably affected by social capital: (1) the rule of surplus distribution; (2) the style of leadership; (3) the mechanisms of control; and (4) the criteria for recruiting and evaluating new members.