New Co-operative Development in China: An Institutional Approach

In China, under the transition from a central-planning to a socialist market economy, new co-operatives, 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 my 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 co-operatives 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 and governance systems.

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. Following a constructivist approach within the grounded theory methodology, this research uses an institutional approach as a theoretical focus.

The objective of this study is twofold. First, it aims at analyzing how new co-operatives in China emerged and evolved, and particularly, how the change in the organizational field may have engendered the emergence of formal, regulative institutions. Second, this study attempts to explore why and how new co-operatives behave the way they do, which tends to deviate from the ideal, conventional co-operative 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 power-and-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.

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.

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 one’s understanding of co-operative 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.

Li ZhaoLi Zhao has recently received her Ph.D in political and social sciences from University of Leuven, Belgium. Previously she was a researcher in the HIVA-Research Institute for Work and Society, and Leuven Centre for Global Governance Studies in University of Leuven, and guest lecturer at the Living Stone Centre of Competence for Intercultural Entrepreneurship. In 2007, she graduated with an M.A. in Public Management from Tsinghua University in China. There, her three-years’ research on employment and economic development, as well as China’s rural-urban disparity, has led her to further research the role social enterprises and social economy organizations can play in building social inclusion and strengthening local communities. She has authored and co-authored numerous academic articles on the topic. Currently, she is co-editing an academic book with the purpose to expand the knowledge and understanding of recent co-operative innovations in China and the West.
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