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Cooperative answers to the current
economic crisis –
The MemberValue concept
Eric Meyer
University of Münster
Germany
Eric Meyer
1/17
Roots of the economic crisis
1
Decoupling of the financial system from real economic needs
2
Exploitation of information asymmetries
3
„Short-termism“
4
Misguided executive incentives (executive compensation)
5
Misguided and undifferentiated regulation, lacking or poor supervision
Member-based economic relations needed
Eric Meyer
2/11
MemberValue contribution
How can the MemberValue concept contribute
to the answers to the economic crisis?
1
Cooperative managers
2
Polititians
Regulators
Eric Meyer
3/11
Short term ShareholderValue
Customers
COMPANY
Maximizes Value WITH the customers
FOR the owners
Owners/Shareholders
Eric Meyer
4/11
Long-term MemberValue
Indirect
Member
Value
Direct
MemberValue
Sustainable
Member
Value
Property
Services/products
Investment
Maximizes Value WITH the owner/customer
FOR the owner/customers
Members
Eric Meyer
5/11
MemberValue components
Indirect
► Interest payments
Direct
Sustainable
► Supporting member in
their value creating
activities
► Long-term ability to
support members
(option value)
► Conditions
► Ability to innovate
► Benefits of owner
control
► Reimbursements
► Stocks
► Education
► Reserves
►…
► Marketing
►…
► Cooperative
Governance
(owner involment)
► Risk mitigation
►…
Eric Meyer
6/11
Implementation
Example of a cooperative bank
Services /Products
UMV_1 (+)
Adisory services
UMV_2 (+)
Framework
UMV_3 (+)
Communication
UMV_4 (+)
Membership
UMV_5 (+)
Dividends
MMV_1 (+)
Control
NMV_1 (+)
Real option
NMV_2 (+)
Sustainable
Investment
NMV_3 (+)
MemberValue
Interaction
NMV_4 (+)
Direct
MemberValue
H_1 (+)
Indirect
MemberValue
MemberValue
H_2 (+)
H_3 (+)
Source: Tschöpel (2011)
7/11
Eric Meyer
MemberValue implications
Direct MV
Indirect MV
Sustainable MV
Anchored in the real economy
Responsibility as an entrepreneur / providing equity
Option value of the cooperative, long-term vision
Eric Meyer
8/11
MemberValue implications
1
Decoupling of the financial
system from real economic
needs
MemberValue integrates customer and owner
interests
MemberValue provides real world anchoring
2
Exploitation of information
asymmetries
MemberValue strategies mitigate information
asymmetries by the cooperative governance
(trust, owner control …)
3
„Short-termism“
Sustainable MemberValue component provides
a long-term perspective
4
Misguided executive incentives
(executive compensation)
Close control of the board by the members
provide customer/member based incentives
5
Misguided and undifferentiated
regulation, lacking or poor
supervision
MemberValue strategies reduce regulation
needs
Eric Meyer
9/11
What do people want?
Representative IfG poll of people‘s knowledge about cooperatives and
their attitudes towards (selected) characteristics of cooperatives
Cooperatives have to act to
the benefit of their members
Cooperatives should be lead
economically.
Members are customers and
owners of the cooperative.
Members decide about the
cooperative
Cooperatives pursue longterm strategies
A large part of the profits will
be used in cooperative
One man, one vote
Cooperatives have a local
focus
0,0
20,0
40,0
60,0
80,0
100,0
 People‘s attitudes are close to cooperative characteristics and values
Question: Your attitude towards this characteristic? Answers „very good“ or „good“ in per cent
Rest: „indifferent“, „bad“, „very bad“
10/11
Eric Meyer
Lessons
Cooperative managers
Polititians / Regulators
Structuring the MemberValue is
fundamental for managing cooperatives
MemberValue strategies re-integrate
the financial and the real world
Every cooperative has ist own
MemberValue structure
MemberValue focus provides
sustainable long-term solution
MemberValue strategies improve the
resilience of the cooperative
Cooperatives should NOT be submitted
to the same regulation as shareholder
value companies
Eric Meyer
11/11