What is it about?
Due to the cooperative's dual objectives of profitability and member benefits, commonly used financial measures may not adequately represent its performance. This study uses a combination of accounting and survey data to form a more comprehensive measure of cooperatives' performance. The relative importance of different performance metrics varies with the objectives of different types of cooperatives. Specifically, multipurpose cooperatives using cost of goods sold accounting behave more like investor owned firms in terms of financial performance than marketing cooperatives, which are predominately concerned with offering patron-members the best possible prices for their products and generally use a pooling approach to accounting.
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Why is it important?
Studies focusing on only financial measures may make inaccurate inferences about cooperatives' performance.
Perspectives
Given that the relevance of performance metrics varies by cooperative type, it is important to consider the objectives of particular cooperatives when evaluating performance. Most studies comparing financial performance of cooperatives and investor owned firms are, for similar reasons, fairly uninsightful.
Dr Jason RV Franken
Western Illinois University
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This page is a summary of: Informing Measurement of Cooperative Performance, October 2014, Springer Science + Business Media,
DOI: 10.1007/978-3-319-10184-2_11.
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