New Co-operative Development in China: An Institutional Approach

In China, under the transition from a central-planning to a socialist market economy, new cooperatives, as member-based organizations pursuing economic and social objectives, are evolving at fast pace. They have played an important role in rural local development in times of crises that have made most of the rural population of 700 million people the largest vulnerable group in Chinese society. The new co-operatives in China that are under review in this dissertation are known as shareholding co-operatives. Generally speaking, this shareholding co-operative system is regarded as a hybrid form of co-operation, combining orthodox co-operative principles with an alternative shareholding system. Shareholding co-operation based on land use and agricultural production are the two most common types. On the one hand, these new cooperatives resemble the recent organizational forms that have been defined as social enterprises emerging in the West, due to their features of multiple stakeholder ownership, their multi-purpose character and their community orientation. On the other hand, the shareholding co-operatives operate in a different way than the ones recognized by the International Co-operative Alliance (ICA), due to their investors profile in capital acquisition (i.e. potential dominance of members with large shares and allowing investment from outsiders) and governance systems (i.e. a flexible voting system rather than a prescriptive system of one member one vote). The departure point of most traditional theoretical reflections on the new co-operative development in China is its inconsistency with the internationally recognized ICA-type of co-operatives. But with regard to why and how these new co-operatives operate in a deviated way from the ideal, orthodox co-operative model, academic writings are unable to provide a consistent explanation. The absence of a sound explanation for the peculiar development of the Chinese co-operative model has made this research exploratory in nature. The general approach of this study is theory elaboration, formulated by grounded theory methodologists. This is operationalized through a multiple-case study design. Cases were identified by using a theoretical sampling during the fieldwork in three municipality-level locales in Zhejiang province between 2009 and 2011. Following a constructivist approach within the grounded theory methodology, this research uses an institutional approach as a theoretical focus. The objective of this current study is twofold. First, it aims at analyzing how new cooperatives in China emerged and evolved, and particularly, how the change in the organizational field may have engendered the emergence of formal, regulative institutions (i.e. the national co-operative law). Second, this study attempts to explore why and how new cooperatives behave the way they do, which tends to deviate from the ideal, conventional cooperative model. Through these explorations, the dissertation makes a heuristic attempt to understanding the Chinese state-society relationship from an alternative perspective. To these ends, the research first re-examined the discourse on civil society dynamics in China by analyzing it from the perspective of the new rural co-operative movement. It then looked at the new co-operative practice in rural China by providing its historical account and powerand- resources related analyses, by examining its capital formation and its decision-making mechanisms. Afterwards, the concept of social economy was proposed in the Chinese context. Based on the results of the exploratory research, a theoretical framework was conceptualized at the end of the dissertation. This framework revealed the underlying dynamics of phenomena that played out over time. The theoretical framework integrated theories located at three distinct levels of analysis. At the level of the external environment, it analyzed how shifts in the broad environments engender or transform the opportunities and constraints to create formal institutions. At the institutional level, it provided an analysis of the opportunities and constraints bounded by emergent, formal institutions and how those opportunities and constraints influence the ways actors behave. At the level of actors, it focused on the action arena in which actors behavior took place depending on exogenous variables found in local situations (i.e. situations indicating both informal and formal institutions), together with actors recognition of identities and preferences. Overall, the key findings of this exploratory research suggested that an institutional change process has taken place, either as a result of institutionalization, or because of the process of rule interpretation and adaptation. This theoretical framework explains the new co-operative development in China as a context and process-specific phenomenon. It can help to understand how new co-operatives behaved the way they did, and how they emerged, evolved, and operated in reality. It can be used by future scholars in organizational behavior and co-operative studies, to interpret how the reality is constructed. Furthermore, the underlying mechanism uncovered by this theoretical conceptualization reflects a constitutive approach, to understand the interplay between actions and institutions. Hence, it contributes to the literature bridging the intra-organizational and institutional levels of analysis. After elaborating the theoretical framework, I provided an overall reflection from conceptual, theoretical, methodological and policy perspectives. Conceptually, the examination of shareholding co-operatives as new hybrids clarified how they can transform from a traditional into an innovative form of social enterprises, and how they can fit into the Chinese context of rural society at the same time. Theoretically, this research, by developing multiple-lens explanations of the new co-operative practice, helped to enrich ones understanding of cooperative development from a context-and-history perspective. Methodologically, the present study contributed to ongoing discussions on general fieldwork methodology literature by sharing extensive empirical experience. Besides, it provided an example of risk minimizing strategies in the application of grounded theory. Finally, the research contributed to the policy debate on the shareholding co-operative system and its potential as a possible solution to the rural problems in China.

Publication year:2012

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