Collective Action through Cooperatives: The Role of

Leadership in Crafting and Preserving

Cooperative Identity
By Veena Nabar

Discussion of Leadership, its role in building, nurturing and sustaining cooperatives finds
inescapable mention in the literature on cooperatives. Cooperatives attach importance to
“institutional” values, adherence to which distinguishes them from Investor Owned Firms (IOF)
and gives them a distinct identity. It is in the maintenance of these values and not just the
“enterprise” values that leadership emerges as a critical factor in the success of cooperatives.

Since unlike IOF, most cooperatives pass on the difference between total revenue and total cost to
their members, it is difficult to measure the contribution of leaders to cooperative success in terms
of entrepreneurial indicators in the same manner as in the case of IOF. Likewise, welfare arising
out of nurturing institutional values is also difficult to measure. Nevertheless, with surrogates
such as estimation of dividends declared, bonus prices and other welfare activities, it is possible
to work out, however imperfectly, the contribution of leadership in successful cooperatives.

The underlying values of the cooperative format, and its “institutional” aspects require skilful
management that naturally makes the leadership factor important. The present paper seeks to
examine this, namely, the role played by leadership in crafting and preserving cooperative
identity. Section I of the paper looks at various theories analyzing factors responsible for
cooperative success, and their treatment of leadership as a factor. It then attempts to summarize
dominant critiques of these theories as available in the literature. Section II focuses on the
literature regarding qualities of leadership in general and cooperative leadership in particular. In
Section III, the question of cooperative identity and the role expected of leaders in preserving
cooperative identity is discussed. Section 1V presents some case studies of successful
cooperatives, examining the role of leadership in their success. Section V would look briefly at
the transformation roles that new generation leaders will be required to play, while maintaining
the underlying values of the cooperative format.

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 I
Theories of Cooperative Success and Who or
What is Responsible

The various schools of thought analyzing factors responsible for cooperative success have dealt
with the leadership factor in different ways, veering between two extreme viewpoints. At one end
is the “leadership school”, which accords to leadership, a central role in the success of
cooperative organizations. At the other, is what we might call the “institutional school”, which
identifies successful cooperative drive in the presence of a basic design , which produces factors
of “salience” favourable to this drive. According to it “once a good blue print is ready, the rise of
good leadership itself would be a product of design; stable alliances too will forge themselves as
credible opportunities for a beneficial organization become evident”1.

In between these two, we have the so-called “Cooperative Principles School” and the “Domain-
Context School”. The former deals with creating cooperatives which follow as far as possible the
principles laid down by the International Cooperative Alliance (ICA). The Domain-Context
School is based on the hypothesis that whether or not a cooperative succeeds “depends primarily
on the contextual socio-economic and political conditions, rather than what cooperative leaders
and managers do. Indeed, it suggests implicitly that the attitude and the behaviour of the actors,
members, managers, leaders etc. – are also governed by the peculiar features of the domain within
which the cooperative is embedded”2. Thus the success of sugar and dairy cooperatives in
Maharashtra and Gujarat is attributed to three sets of factors: “the peculiar characteristics of the
middle-peasant communities that dominated the regional political economies – the Patidars in
Gujarat and the Marathas in Maharashtra; the economic necessity created by capital-intensive
processing technologies in the sugar and dairy cooperatives of western India for stable alliances
to form of members across economic classes; and, finally, the outstanding leadership that got
attracted to the cooperative movement by the power, prestige and patronage that leadership roles
offered”3. These factors are said to explain the successful cooperatives in certain regions of the
country and their absence elsewhere, why cooperatives have not done so well there.

The validity of all these schools has been questioned in recent writings4 as “learning only from
successes”. The Leadership school according to them draws its inferences solely from case
studies of successful cooperatives, most of which have an outstanding leader behind them. The

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analyses, however, inevitably leads to the “sterile conclusion” that in order to stimulate success of
a certain type, the unique leadership inputs that went into this success have inevitably to be
simulated. Even if these attributes can be identified, in the absence of a plausible method for
instilling these attributes in potential leaders, success in replicating leaders would not be
achieved. This then implies a vacuum in which cooperative cannot be expected to grow and
thrive. The Cooperative Principles school is conceptually simplistic, in as much as it assumes that
the cooperative principles are principles of good business and hence adherence to the principles is
necessary and sufficient for good business results as well, a conclusion which cannot be logically
supported or taken seriously as an inevitable sequential result. The fact that these principles have
been evolving and changing overtime strengthens the argument against their universality, as it
demonstrates that the principles are more an end rather than means. As far as the Domain-Context
school is concerned, it not only ignores but also fails to explain why cooperative undertakings
have failed in favourable conditions and succeeded in unfavourable conditions.

The institutional school builds on the above critique, seeking to explain the differential
performance of cooperatives given the same external environment. It postulates that while the
political economy may provide enabling or disabling conditions, it is the right “design” of the
cooperative organization, which determines its success and if flawed, its failure. The theory is
based on a complex model, where performance is determined by 5 components, in turn, affected
by at set of mediating variables,
♦ Governance structure
♦ Critical Linkages with federal cooperatives
♦ Patronage System, which refers to both patronage potential and centrality potential.
♦ The micro environment
♦ The Operating System
The mediating variables are:
♦ Context related factors: local socio-political conditions, the local economy,
leadership, etc.
♦ Design variables: structure, bylaws, norms and rules, etc.
♦ Critical linkages with the federal organization
♦ Macro policy environment: legal framework, economic policy and political
environment.

According to its author, “it would be incorrect to suggest that the success of organizations in high
performance classes are a result of outstanding leadership and management. It would be more

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appropriate to say that somehow these organizations manage to get the kind of leadership and
managerial talent they need to succeed”. The resulting impression is that a successful cooperative
sets up with an ideal design principle and then accidentally gets the right kind of leadership. The
problem with this perspective is not only that the crucial question of “who designs is short-
circuited” but also there is no theoretical framework for explaining why a definitely structure
position in the agency–structure debate has been taken up.

While shifting the emphasis from intractable external and exogenous factors such as comparative
social structure to endogenous factors such as design, the “design” proponents however fail to
explain how the suitable design is to be arrived at, for such a design is not unique, nor uniform
over time and space. Were it to be so, then all milk cooperatives conceived on the Anand pattern
should have invariably achieved the same levels of success5. The theory is also almost facile in
ignoring the reality of `design’ being not, in any way, independent of external environment.
These external factors cannot be ignored in developing the design, which would in turn aim at
moulding the environment. This is precisely where the role of a cooperative leader lies.

It was pointed out earlier that the difference between cooperatives and IOF lies in the fact that
besides promoting enterprise values such as profitability, expansion, diversification, organization
and human resource development, which all IOF basically do, cooperatives tend to attach
importance to institutional values such as member prosperity, member growth, member
participation, self regulation and leadership development. It is adherence to these values that
gives them a distinct identity. Cooperative success then is adjudged on the basis of success of this
distinct combination of enterprise and institutional values and it is in the management of both sets
of functional parameters that the cooperative leadership has a role to play.

While the different schools propound different theories about the determinants of cooperative
success, in the ultimate analysis, it can be safely said that even where cooperatives are
functioning well due to good “design”, it is by itself not a sufficient condition. It is well known
that cooperatives like all other organizations suffer from the problem of an apathetic majority and
committed minority and it is the initiative and resources of exceptional individuals, which plays a
crucial role In guiding cooperatives to success.

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 II
Leadership in Cooperatives and Otherwise

Leading implies a common direction or path, shared or compatible goals, to achieve which the
role of the person who leads involves several activities. These are coordination, control, directing,
guiding, mobilizing, counseling etc. and have a temporal dimension. Leadership by implication
is in relation to groups, which are affected differently, by different stimuli, in different situations.
Accordingly, leadership roles and perhaps leaders themselves can change with different
situations.

Factors influencing leadership can be many, apart from those that can be classed as personal traits
and qualities, namely, “the current developmental status of the leader, his consciousness, his
value priorities, and his skills; the current developmental status of the followers, their
consciousness, value priorities, and their skills; the characteristics of the organization (group),
such as its purpose, its structure; the nature of the task to be performed; and the environment
(situation) of both the leader and the followers with structures and climate reinforcing certain
values6.

A substantial body of literature exists on leadership categories, traits, qualities and styles and
different categories of leadership have been identified at different times.

Leadership styles in themselves can vary. Blanchard and Hersey7 have shown that leadership
styles tend to vary and it is the situation, which determines the style of leadership in terms of
directive and/or supportive behaviour. Their study has further shown that no single style of
leadership can be said to be unfailingly successful, and much would depend on the situational
factors. Further, a single leader may vary his style to encounter different situations and different
groups within the ambit of his organization, in this case the cooperative.

Various leadership qualities have been listed in literature, and while many of them are by and
large common to all organizations, cooperative leadership differs from others owing to some
special features characterizing cooperatives as formal organizations.

Members of a cooperative are common and equal owners and any residual surplus accordingly
belongs to them, to be accordingly appropriated by them in accordance with, and proportional to,
their use of the cooperative’s services. If markets were perfect, returns to all factors would be the
same, notwithstanding the form of organization. However, in a market imperfect world, the

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cooperative would be a way, for those most exposed to such marketing imperfections to insulate
themselves from the exploitative nature of contracts, which they would inevitably be subjected to.

Major differences between cooperatives and IOF lie in their purpose, decision making process,
management selection, structure and returns on equity. While the objective of cooperatives is to
maximize member incomes, the IOF seeks to maximize returns to its unequal shareholders. The
decision making process of the cooperative is primarily democratic and based on the principle of
one-member one-vote, whereas in IOF, each share commands a vote. The selection of the
Management Committee or a Board of Cooperative is via the election route from amongst its
members, whereas the Directors of an IOF could be from outside. Those who own, use and
control cooperatives are the same people viz., members, whereas these activities may be disparate
in IOF. Returns to owners’ equity in cooperatives are proportional to use by member owners,
whereas in IOF returns are on the basis of investment in the concern8.

The management aspect of a cooperative is made more complex by the fact that in addition to the
enterprise related factors and the external environment, the institutional factor, which is primary
to the cooperative, has to remain in focus. The management effectiveness of a cooperative,
therefore, depends on management of these three components: institution, enterprise and
environment. The management of cooperative vests at different levels in the members (General
Body), professional managers and elected Boards, the latter often converging on the focal point of
leadership. These constitute the main centres of responsibility and therefore of power in a
cooperative. Theoretically, the leadership role played by these three power centres can vary at
different times, in practice however it is the Chairman of a cooperative acting through the Chief
Executive who most often leads and therefore wields power.

In an IOF, the goal of maximizing return on shares tends to make shareholders behave in an
identical manner, even though they may come from different backgrounds and have diverse
interests. In a cooperative, which is a democratic alliance, although the members may belong to
homogenous backgrounds, they are likely to differ in respect of their views on the objectives of
the cooperative and the manner of achieving them. It is precisely the egalitarian nature of the
cooperative form of organization, based as it is on the principle of one member one vote, which
throws up the need for leadership in these circumstances. A leader in such a situation has to be
more than among “equals” to be able to lead. This is a critical factor for it is here that success
depends on leader’s role in balancing diverse viewpoints and focus on common goals, weaving

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together different strands into a common fabric, providing the critical link between demand and
supply side of action plans..

III

Cooperative Identity, Values and Principles

A value system is an “enduring organization of beliefs concerning preferable modes of conduct or

end-state of existence along a continuum of relative importance”9. Values serve as criteria for
selection in action and “when fully conceptualized become criteria for judgement, preference and
choice10”

Cooperatives have been historically variously defined, but the definition given by ICA
Manchester Congress (1995), however, now has universal acceptance. Its Statement on
Cooperative Identity includes a formal definition, explains the core values and also brings out the
essence and tradition of cooperatives enshrined in the principles of cooperatives.

Cooperatives have been defined as autonomous associations of persons united voluntarily to meet
their common economic, social, cultural needs and aspirations through a jointly owned and
democratically-controlled enterprise. The values which underlie the cooperative’s existence and
shape its identity have also been defined and constitute: “values of self-help, self-responsibility,
democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative
members believe in the ethical values of honesty, openness, social responsibility, and caring for
others”.

All these ideas are reflected in the Principles, which act as a guiding force to cooperatives and
cooperators in conducting their business and are well known: open and voluntary membership;
democratic member control; member economic participation; autonomy and independence;
education, training and information; cooperation among cooperatives and concern for
community. While the first of the three principles relates to the internal working of a cooperative,
the remaining principles are basically related to its interface with the external world.

The statement is not without its critics11. The major issues raised are the definition itself, where
the inclusion of words such as “common cultural needs” and common economic, “social and

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cultural aspirations” is questioned inasmuch as to find homogenous groups with these qualities
would render the task of cooperative formation a tall order, if not, well nigh impossible. The
moral over-tones, and “holier-than-thou flavour” of the declared values, has been unfavourably
commented upon. The term “self-responsibility” is also not clear and is later explained to mean
“mutual responsibility” which helps. The removal of the specific inclusion of “accountability of
appointed persons” in addition to elected persons in the Principles has also been questioned.
Similarly, the practice of “voting in proportion to patronage of or interest in a non-primary
cooperative” by primary cooperatives, who are its members, has been termed a non-democratic
feature. This is also found to contradict the third principle, which states that members
“democratically” control the capital of their cooperative. The use of collective capital set aside by
the members for “other activities”, the fact that it is non-distributable to its members even at the
time of dissolution of the cooperative also are found to need re-thinking, as also the need to
include the acceptance of deficit management on terms similar to surplus management. The “verb
form” of the Statement has also been criticized, since it misleads and lulls readers into a false
sense of security and well-being, which may not be, and often is not, the case.

The critics are however, clear and specific about faith in the overall intent of the Statement and
committed to the basic tenets implicit therein and the need to carry these forward. All this having
been said, it is generally accepted that the role of a cooperative leader then is to help carry
forward the cooperative values and ensure that cooperatives act basically in line with the stated
principles, for it is these principles which define however imperfectly, the term Cooperative
identity.

The role of the cooperative leader thus is not only to ensure that the economic goals of the
cooperative are met, but that they are met keeping in view the underlying values and the principle
which form its very basis.

The first set of values, which a cooperative leader must promote and protect, is to ensure that
cooperatives are truly open and voluntary. No one who needs the services of the cooperatives
and is willing to accept the responsibility of membership should be denied membership on the
basis of religion, caste, gender, political affiliation or any artificial and arbitrary distinctions.
Equity as far as possible should be limited to genuine users and government as far as possible be
kept out.

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The second principle of democratic governance enunciates the rights and responsibility of
members of a cooperative to govern its affairs through leaders they elect. This invests the leader
with the responsibility of defending this right of self-governance and to fight any attempt to defer,
delay or manipulate elections. Leaders must ensure that the members and the elected leaders have
the right to hire and to fire, chief executives, that the members have timely access to information
needed to take decisions wisely – including an accurate, honest, and timely audit.

The third principle is that of member economic participation. The leader has to ensure that the
cooperative members treat the organization as their own and utilize its services in as full a manner
as possible. The cooperative must not be allowed to degenerate into an organization that fulfills a
residual or partisan function. Since members are likely to be rational in their economic decisions,
this would imply ensuring that the costs of non-cooperation in terms of economic participation or
selective participation would be greater than the cost of cooperation. As also that benefits of non-
cooperation would be less than those of cooperatives.

The fourth principle of autonomy and independence would involve ensuring that the cooperative
is not under pressure from any quarter to act in a manner contrary to its members’ interests and
that it is free to take its own decisions in respect of matters affecting its well being. Even where
cooperatives enter into agreements with other organizations including governments, or raise
capital from external sources, they do so on terms that ensure democratic control by their
members and maintain their cooperative autonomy. This is particularly relevant in many
countries where cooperatives are used as tools by governments for their own agenda.

The fifth principle focuses on the need to educate the general public about the nature and benefits
of cooperation. This is particularly important in the present day contexts where privatization and
the market are being emphasized to the exclusion of cooperatives. Cooperatives must be seen to
be a form of private enterprise in their own right.

The sixth principle of cooperation with other cooperatives is necessary to the extent that it serves
members’ interest, not just in terms of immediate, narrow, financial gain, but also in terms of
long-term strategic interests. The newly added seventh principle, of concern for community, casts
upon the leader the responsibility of seeing that member interests are not promoted to the
detriment of the environment or larger community and that they should seek ways by which they
can where possible, contribute to environmental protection and promotion.

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 Potential sources of conflict in cooperatives12 arise from:
Diverse social, economic, religious, political etc. background of members
Difference in perceptions towards fulfilling cooperative objectives
External influences interfering with the functioning of cooperatives

For working across these various sources of dissensions and conflicts, and ensuring that the
cooperative goes ahead with meeting its objectives, the key to cooperative success lies in the
evolution and implementation of an appropriate set of action plans, consistent with the available
resources and technology, leading to long term viability. The action plans have a demand and
supply side and constant adjustments to ensure equilibrium between the two are required. This is
where the leadership role becomes crucial.

At least three levels of collective action have been identified13 Firstly, apart from the given
features of the region and the plan of selected activities, the attributes of the leaders are crucial
during the preliminary stage of conception of the cooperative. Success at this stage by competent
and spontaneous local leadership alone has been shown to go a long way to bring success in the
future. Secondly, to convert the demand into supply, second level collective action is necessary
among major players on the inside (members, input suppliers, employees and higher tier bodies)
to evolve appropriate bilateral, contextual relations with respect to each activity: and the third
level collective of action is the development of relationship between the cooperative and the
outside environment. The role of leadership is called for at the second and third level particularly
to obviate the problem of “free riders” arising in the course of evolving suitable rules.

Since parameters governing both internal and external factors are continuously changing, action
plans have also to be temporally modified and evolved. Hence the need for a leader/group of
leaders who would have both a stake and skill enough to produce the right “design”.

Very often political leaders as well as cooperative leaders can perform the role during the initial
conditions, but there is the risk that the role of the former may go beyond being a temporary one
or that it may even end up in “rent” seeking. The smaller and more homogenous the group, the
greater the chances of success. However, given the members’ qualities, the effectiveness will
further be heightened depending on the quality of leadership.

Selection and management of the core activity is a critical factor in the success and sustainability
of a cooperative since this would constitute its major business. It is only with a successful core

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business that supplementary activities through integration, vertically or laterally, can be taken up
in a meaningful manner, as also the provision of welfare services to members.

IV
Contribution of Leaders in Cooperative Success

There are several success stories of cooperatives where a combination of factors has contributed
to the success. However, the leadership factor has been almost invariably present in most such
cases, and particularly in those in which there has been outstanding success.

Twenty cooperative societies in Gujarat, a relatively congenial area for cooperative development
and West Bengal, a not so favourable area, were studied in terms of various factors affecting
cooperative success, particularly direct and indirect role of leadership14. The various leadership
characteristics found to have worked include:

existence of internal “interest-cum-entrepreneurial group”;

access to members;
capability for envisioning cooperative activities compatible to members’ resources and
endowments;
back-up knowledge and grasp over application of modern technology;
vision and capacity to conceptualize paternalistic/welfare activities for strengthening
member loyalty and rope in potential members;
ability and willingness to groom future leadership;
evolution and institutionalization of a governance structure so as to
minimize opportunistic behaviour on the part of each of the following internal
stakeholders:
Various categories of members (including nominal members),
Non-members,
Employees (including professionals),
Board,
Higher-tier bodies,
Outside suppliers of inputs/services,
tap the following economies:
economies of scale/bargaining power,

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 economies of scope,
economies of value addition,
achieve autonomy/independence in functioning of the cooperative vis-à-vis the
outside environment, and
be able to generate allies for lobbying in the interest of safeguarding and promoting
its interests.

In addition, activity characteristics, contextual features, member profiles affecting the demand
side of the cooperative’s collective action process, internal organizational design and the supply
side were also studied. Seven out of the twenty cooperatives were found to have a high overall
cooperative performance rating. In many of these cases, there are deficiencies with regard to the
characteristics other than the leadership characteristics, but all these cases have strong direct
leadership and internal organizational design, which have helped them, overcome these
limitations.

Three other cases have been briefly highlighted here, that of the well-known Warana Cooperative
in Maharashtra, the Sridharpur Primary Cooperative in West Bengal and a comparative study of
three cooperative spinning mills in Maharashtra, Karnataka and Andhra Pradesh.

1. Rural Transformation : A Cooperative Success Story

The role played by the visionary leader Tatya Saheb Kore in founding and building up the
Warana Complex is well known. Almost on all counts of leadership listed and studied above, this
cooperative leader would score highly.

The vast Warana cooperative complex, which grew out of Warananagar Sugar Cooperative in
Maharashtra, is an outstanding example of leadership in developing cooperative organization. It
has expanded its frontiers from purely economic objectives of member needs to the creation of a
force for changing the very quality of life in the whole area and has had a multiplier effect on
development of both farm and non-farm activities in the region, which was a barren, hilly, dacoit-
infested tract four decades ago. Severe depression in 1951 had literally ruined the farmers who
had to resort to burn their sugarcane than sell `jaggery' at throwaway prices. Mr. Kore and a few
like-minded colleagues undertook the task of convincing the farmers of 80 villages about having
a sugar factory and of raising share capital on their own. In many cases they raised it by selling

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existing assets, even women members disposing off their jewellery. After 2 years of ceaseless
efforts, the Society was registered. It was conceived as not only a manufacturing and profit-
making unit for cane growers, but as a nucleus for all round development of the area. The
complex today has a membership of more than 20,000, most of them small and marginal farmers
and also agricultural labor. In financial terms, their stakes have been high and increasing.

The factory is an example of what a cooperative can achieve when properly run and how it can
transcend itself to become an integral region-wide institution. The complex today generates
goods and services worth more than Rs 10 billion. In addition to the sugar cooperative, the
complex has over 25 cooperatives; a poultry cooperative; a milk cooperative; a large consumers
cooperative; several smaller cooperatives which manufacture industrial products such as plastic
bags, caps and bottles for other cooperatives in the region and several MNCs in the private sector;
a paper cooperative to utilise the waste from sugar mill; a distillery; and an electricity generation
unit to utilise waste of paper mill and distillery, among others. A woman's cooperative with an
annual turnover of Rs 1 billion is also functioning. More recently, the Warana complex has set
up a 100% export oriented unit to process fruits like banana, guava, papaya and mangos, and
produce pulp and puree. The various cooperatives largely employ members and their family, thus
generating vast employment opportunities in the area.

Welfare measures include quarters for workers at nominal rents, a well equipped hospital where
treatment is provided at nominal charges, a workers cooperative which runs many essential
services such as flour mill, gas supply, bakery. Hire purchase schemes for workers, credit
facilities, a welfare fund to be utilised for emergencies, illnesses, and educational expenses are
some of the welfare activities. The Society also runs several schools and colleges, including an
engineering & medical college, for education of local people. It also has a vocational training
centre where individuals are trained to become carpenters, fitters and electricians. The Society
has a centre for training children in music and its Children's Orchestra has won several awards.

A separate Agricultural Development Department provides the following services: soil testing
laboratory; advice on fertilizer dosage and reclamation of land; provision of seedlings from
government Sugarcane Research Centre and University Farms; fleet of bulldozers, tractors,
boring machines, sprayers and dusters supplied to farmers at non-profiteering rate; a hire-
purchase scheme for farmers for trucks and tractor trailers; pilot projects for sugarcane and other
crops; an experimental seed farm of 25 acre which supplies seeds of important crops, sugarcane
and fruit plants to cultivators; a hot water treatment plant for sugarcane seedlings and extension

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services through posting one Agriculture Assistant per village in all 80 villages. Experts
regularly upgrade their knowledge through training and lectures.

In addition to State irrigation weirs, the society undertook construction of 3 additional storage
weirs to overcome its water shortage problems, investing Rs 3 million from its own funds.
Constructed in a record time of 9 months, this has been commended as a unique engineering feat.
Interest burden was borne by the farmers on an acreage basis. The cooperative also provides
finance, technical know-how and managerial help for implementing lift irrigation schemes. A
separate irrigation department has been created to maintain and run these schemes.
More recently, the Warana Complex has initiated a project with help from National Informatics
Centre to utilize IT to increase the efficiency/productivity of the existing cooperative enterprises
by setting up a state-of-the-art computer communication network and latest database technology.
The project covers all the 80 villages.

Finally, the Warana Bazaar, a cooperative departmental store has an annual turnover of Rs 310
million, an inventory of 40,000 items, 29 retail outlets in and around Warana with computerized
inventory systems with a bar-code based item code.

Ownership and Governance systems in place are also in the best of cooperative traditions.
Member share in total capital employed is high, as also member deposits. The Board is elected
regularly and works through functional sub-committees. Most technical staff is highly qualified
and professional and members of the Board are provided regular training and exposure to various
activities of the complex. Members are also kept involved in the decision making which is so
essential in a cooperative.

Tatya Saheb Kore had all the attributes of a good leader15. When his endeavor initially failed, he
went from door to door to refund the money raised. As a result, he had no problems in
approaching producers, time and again in hours of need. His fund collection drive where a sum
of more than Rs.3.00 lakhs was collected in record time is an illuminating example. His
identification of the best professional people to look after various departments is an example of
his understanding of the need for professional and technical knowledge in the enterprise.
Although himself a rebel, he respected the sentiments of his farmer members. Tatya Saheb Kore
arranged his brothers wedding in an unconventional manner on an inauspicious day, donating the
money that might have been used for celebrations to an orphanage, a school and public library.
However, the same person while inaugurating various cooperative ventures did not hesitate to

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perform religious rituals as desired by most members. Despite persistent demands of his friends,
Y.B. Chavan among them, to join politics, he stayed away from a political career, devoting
himself to serving the community as a cooperative leader.

The governance systems in Warana have followed in spirit and practice the strong democratic
norms of the cooperative philosophy. The various departments and cooperative organizations
which have grown under the umbrella Sugar Cooperative were all allowed to function
autonomously and each with its own leader. The growth of innumerable lateral and vertical
cooperative organizations was Tatya Saheb’s strategy to ensure that the area developed in all
respects and could provide quality living and employment to the residents of the area. His vision
can be seen in the numerous welfare activities that are being provided in the complex.

2. Sridharpur Cooperative Bank16

Mr. Hanseshwar Banerjee, who provided the initial leadership, founded Sridharpur Cooperative
Bank, a primary multipurpose credit society in 1918. Like most of the primary societies of the
time, it began modestly with only 10 members with unlimited liability. There was no initial
provision for raising share capital, only an admission fee. However, the by-laws were changed in
1920 to include the requirement for every member to purchase at least one share worth Rs 30 to
be paid in 10 annual instalments. After a few years of dependence on funds from the District
Cooperative Bank for its activity, the directors tried to encourage local savings so that the society
could earn a better margin. To develop the habit of savings, home saving boxes were distributed
to the members and the amounts saved collected weekly. Interest paid on such deposits was 5%
and on loans and advances 10%. Overtime, increased confidence of the members led to an
increase in membership and 6 branches of the Society were opened in nearby villages.

The society extended its business portfolio through novel ways. To help landless labourers and
marginal cultivators, who would previously borrow paddy from private traders at high interest
rates, the society introduced “Dharmgola” scheme under which a member is required to purchase
a share equivalent to 120 kgs. of paddy to be paid over three years. Landless members were
allowed to pay the same amount in six years. During the cultivation season, a member gets 240
kgs of paddy as a loan at 15% interest. Loans were issued against utensils at 8% interest rate. In
1943, after the Bengal Famine, the Board of the society started a consumer store which today has
6 branches in nearby villages. The society expanded its business to supply oil cakes, fertilizers,

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and pesticides and provide irrigation through 21 deep tube wells to enable members to grow a
summer paddy crop.

A unique activity of the society is to help small and marginal farmers cultivate their land through
hired labour during crisis periods, particularly after several consecutive droughts. 50% of the
profit thus obtained, is retained by the society as loan repayment and 50% given to the members
preventing forced land sale. Only non-willful defaulters are helped under the scheme. The society
markets paddy and potato on behalf of its members to whom it give special advances against
paddy, they sell to the society. On selling the produce a proportion of profits made is ploughed
back to the producers in proportion to the value of their transactions with the society. The society
set up a cold storage for storing its member’s potato and repaid the loan amount on time. To
benefit its landless members, the society purchased a 14-acre tank for pisciculture, as well as has
arranged a lift irrigation system for providing irrigation to its members.

The society runs a primary school, a village post office and a village library. It provides
scholarship, books to meritorious students of local schools, free or subsidized rice or wheat flour
during periods of distress, a charitable homeopathic dispensary and a polio centre etc.
The innovative attitude of the Board can be seen from its implementation of its cold store. The
construction of the cold storage itself involved certain decisions, which were quite contrary to the
accepted technological practices of the time. After study, the Directors of the society went in for a
bunker coil system in place of a diffuser coil system, as they felt the latter was more economical
in terms of power consumption. The huge funds involved had resulted in suspicion and
propaganda by a powerful section of private traders. To overcome this, the society formed a
committee of as many as 80 people to supervise construction and to remove any possible source
of fear and suspicion about possible areas of corruption.

The governance structure of the society has some special features. It ensures that the board has
around 50% of younger members from whom the Secretary is invariably selected, while the
Chairman is usually an older member. This ensures continuity in management and a transfer of
knowledge and steady supply of leadership. The society’s by-laws do not allow any person to be
elected for more than three consecutive years, thus preventing the management from becoming a
one-man show. The Board holds the meeting every Sunday for checking accounts and providing
an avenue for grievances of members. It takes suggestions from past Chairmen and ex-Secretaries
from time to time in making any important decision. The society has through the foresight of its
leaders, created a bad debt fund which has been used from time to time for writing off debts.

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Timely recovery of loans through incentives has been an another example of imaginative
leadership. After the Bengal Famine a rebate fund was created and a rebate of 25% on interest
was announced if the entire loan was paid off.

While a farsighted leader started the Sridharpur Society, it has been different in its leadership
pattern and development from the Warana model. The design of the governance structure right
from the start, ensured a steady supply of leadership, of a multiple skill type, a combination of
age embodying experience and youth with its promise, risk taking abilities and new ideas. The
Society provides a good example of excellent governance by a collective, which though in a
dynamic mode, does not underplay the importance of vintage wisdom and unfailingly takes into
account the views of its past leaders, in an institutionalized manner. Over time, the activities of
the Society have been moulded in accordance with the needs of its members and it has provided
welfare measures for the community at large.

3. Cooperative Spinning Mills

A comparative study of three cooperative spinning mills in the states of Andhra Pradesh,
Karnataka and Maharashtra offers interesting insights17. Age factor, size and technology in all
three cases were identical but the development of the three mills was totally divergent. The
presence of good leadership in the Maharashtra case was found to be the major factor in ensuring
success of the cooperative, both in enterprise and institutional aspects. The Karnataka was a
failure both as a cooperative and as an enterprise, despite having elected boards in position for
long periods. The Andhra Pradesh case was found to be relatively successful in enterprise related
factors but failed on the institutional side. The study identified focal point leadership as the
single most important factor in the success of a cooperative.

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 V
Towards New Generation Leadership in Cooperatives

The increasing trend towards globalization of the country’s economy has resulted in all
enterprises, cooperatives included, being exposed to international competition and its pressures.
To face emerging challenges, cooperatives and their leaders would need to take a fresh look at
themselves, their processes, tasks and also various issues, at a fundamental level.

The role of cooperative leaders has to accordingly change in line with the new paradigms and
demand for new enterpreneurial initiatives and also innovative involvement of members. A
mindset change is one of the daunting tasks. Here small teams for spear-heading change may be
useful. Building in continual innovation is necessary: questions, not answers leading to creative
searches, use of innovative management tools, dumping of obsolete activities, involving members
in change, suggestions through stake holders groups, net-working for strategic advantage, forging
wider alliances and networks with other cooperatives and so on would be the new methods.

The importance of professional management in modern day enterprise cannot be over-

emphasized. It is important to get and retain good managers for taking care of the enterprise
aspects of a cooperative. But the leadership has to keep itself updated about various activities and
be totally clued up on all aspects of the enterprise, for which there has to be willingness to go
through appropriate training.

New forms of cooperative management, joint ventures with private concerns, cooperative
contract farming, and cooperative producer companies are some of the newer formats which have
also to be given some thought. It is important that the underlying values and principles of
cooperatives are not lost sight of in the process, but equally it is important to recognize that the
new environment needs new ways of looking at things and making new choices, which should not
be dismissed off hand.

The importance of updated information in the new regime has to be recognised. IT based
reporting and net-working should be a priority for all cooperatives, although, in the short run this
may be seen by many, particularly where the levels of business do not presently warrant such
investments, as a non-productive and hence avoidable expenditure. On the other hand, these tools
should not be seen as status symbols but as essential business requirements, leading eventually to

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quantifiable tangible and intangible gains. As complexities of data and operations increase, these
tools are indispensable for building in and capitalizing on efficiencies of time and cost.

Listing the various requirements of cooperative enterprises and their leaders, which would enable
them to find their place and survive and grow in an increasingly complex environment, is outside
the scope of this paper. The important thing is to recognize the need to change and to be
equipped for dealing with the challenges likely to be thrown up in future.

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References:

1
Tushaar Shah et al (1992). Seeking Salience: Governance and Management in Indian Village
Cooperatives, IRMA
2
Tushaar Shah (1995). Making Farmers Cooperatives Work.
3
B.S. Baviskar and D.W. Atwood (1992). The Political Economy of Cooperation in Rural India in Report
for International Development Research Centre, Ottawa.
4
Tushaar Shah (1995). op.cit.
5
Samar K. Datta and Sanjeev Kapoor (1995). Collective Action, Leadership and Success in Agricultural
Cooperatives.
6
C. Gibb (1968) cited in Sakarama (1996). Pattern of Values of Rural Cooperative Leaders in India in R.
Rajagopalan (ed.), Rediscovering Cooperation, IRMA
7
Ken Blanchard and Paul Hersey: cited in Leadership Training Manual for Women Cooperative Leaders,
ILO.
8
Samar K. Datta (2004). State of the Indian Farmer:Cooperatives in Agriculture.
9
M. Rokeach (1973). The Nature of Human Values cited in Sakarama. op.cit.
10
Milton (1979) cited in Sakarama. op.cit.
11
Cooperative Development Foundation (1999). Cooperative Values-A Critique in Preparing Cooperatives
for the 21st Century, VAMNICOM.
12
Samar K. Datta and Sanjeev Kapoor. op.cit
13
Datta and Kapoor. op.cit
14
Datta and Kapoor. op.cit
15
Based on Datta and Kapoor. op.cit.
16
Based on Datta and Kapoor. op.cit
17
Veena Nabar (1992). Focusing upon Management and State Action.in the Making of Cooperative
Enterprises-A Study of Three Units. Paper presented in International Symposium on Cooperatives, IRMA,
(mimeographed).

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