1. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy Housing Co-operatives and Digital Democracy – Basic Aspects and Empirical Evidence Professor Markus Mändle and David Hummel, MSc. Nuertingen-Geislingen University (HfWU) European Real Estate Society 22 nd Annual Conference 24-27 June 2015 - Istanbul, Turkey 1

2. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 2 Agenda 1.Introduction 2.Basic Principles 3.Empirical Study 4.Summary and Conclusions

3. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 3 What is a Housing Co-operative? A private housing company owned by its members The co-op creates economic benefits for its members (good housing quality, well priced, security, democratic participation, dividend) Scale: small or medium sized firms About 1,900 housing co-ops with 2.8 m members and 2.16 m dwelling units in Germany (2012)

4. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 4 Democratic Participation Democratic control by members (ICA co-op principle) Co-op members have equal voting rights (one member – one vote) Forms of democratic member control - Direct democracy (prevailing in former times) - Representative democracy (prevailing today) Danger: Erosion of “co-operative identity”

5. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 5 Digital Democracy An amendment and extension of traditional democratic structures that rises efficiency, plurality, participation and transparency (Meißelbach 2009) Social media offer various forms of participation primarily via access-restricted portals (Heise 2014) E-Information E-ConsultationE-PetitionE-DiscourseE-Voting

6. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 6 There are chances, but also risks… Loss of legitimization and authority Technical security Incalculable cost increases Bias caused by minorities Wrong decisions due to time pressure (Eisel 2011)

7. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 7 Agenda 1.Introduction 2.Basic Principles 3.Empirical Study 4.Summary and Conclusions

8. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 8 Empirical Study Research issue: Collection of information on the status quo of digital democracy in housing co-operatives and the co-op manager‘s attitude and evaluation Methodology: Online questionnaire; Email distributed in summer 2014 via vbw (Association of Housing Corporations in Baden-Württemberg, Germany); handling time 5-10 minutes; anonymous evaluation  Almost a comprehensive survey

9. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 9 Empirical Study Structure of the questionnaire: 1. General information about the co-op 2. Status quo 3. Perspectives and chances 4. Conflicts and risks 5. General assessment / open question Response: 65 co-ops from a population of 176 co-ops responded (37 % rate of return)

10. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 10 Findings regarding … the status quo Is your co-op already involved in social media? Yes 1523.8 % No 4774.6 % Not specified 11.6 % Basis 63100 % If yes, what are the objectives of your activities? (Multiple answers possible) Property marketing 12 Public relations 11 Member communication 11 Human resources marketing2 Digital participation 3 Not specified 3 Basis 15 Note: Percentages rounded

11. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 11 Findings regarding … perspectives and chances Future relevance of information and transparency? High importance 2947.5 % 2134.4 % 58.2 % 23.3 % Low importance 46.6 % Not specified 00.0 % Basis 61100 % Future relevance of E-Consultation? High importance 711.5 % 813.1 % 1931.1 % 711.5 % Low importance 1931.1 % Not specified 11.7 % Basis 61100 % Note: Percentages rounded

12. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 12 Findings regarding … perspectives and chances Future relevance of E-Petition? High importance 69.7 % 1321.0 % 1727.4 % 1422.6 % Low importance 1016.1 % Not specified 23.2 % Basis 62100 % Future relevance of E-Discourse? High importance 11.7 % 35.0 % 1016.7 % 1220.0 % Low importance 3050.0 % Not specified 46.6 % Basis 60100 % Note: Percentages rounded

13. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 13 Findings regarding … perspectives and chances Future relevance of E-Voting? High importance 11.7 % 1 915.0 % 711.7 % Low importance 3761.6 % Not specified 58.3 % Basis 60100 % Note: Percentages rounded

14. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 14 Findings regarding … conflicts and risks Decision-making competency of the members regarding business processes in general? High competence 11.6 % 00.0 % 1016.4 % 1524.6 % Low competence 3455.8 % Not specified 11.6 % Basis 61100 % A strengthening of member participation delegitimizes existing governance structures I agree completely 58.1 % 1727.4 % 812.9 % 8 I disagree 1625.8 % Not specified 812.9 % Basis 62100 % Note: Percentages rounded

15. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 15 Findings regarding … conflicts and risks Danger of manipulation Highly problematic 2541.0 % 1016.4 % 1118.0 % 69.8 % Rarely problematic 58.2 % Not specified 46.6 % Basis 61100 % Anonymity Highly problematic 2845.2 % 1422.6 % 711.3 % 46.4 % Rarely problematic 46.4 % Not specified 58.1 % Basis 62100 % Time requirement Highly problematic 2134.4 % 1829.5 % 1016.4 % 23.3 % Rarely problematic 711.5 % Not specified 34.9 % Basis 61100 % Fast reaction time Highly problematic 1422.9 % 1727.9 % 1219.7 % 46.6 % Rarely problematic 813.1 % Not specified 69.8 % Basis 61100 % Note: Percentages rounded

16. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 16 Findings regarding … the general assessment All in all, do chances exceed risks? Yes 1525 % No 3050 % Not specified 1525 % Basis 60100 %

17. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 17 Agenda 1.Introduction 2.Basic Principles 3.Empirical Study 4.Summary and Conclusions

18. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 18 Summary and Conclusions Today, due to the needs of the market, representative democracy dominates member control. Consequently, an erosion of “co-operative identity” can be found in many cases. An approach to solve this problem could be the strengthening of direct democracy via social media. Digital democracy creates new forms and possibilities of member participation.

19. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 19 Summary and Conclusions However, only few housing co-operatives are involved in social media so far. And co-ops engaging in social media usually pursue other objectives than digital participation (e.g. marketing, public relations). Regarding the forms of digital participation, co-op managers favor information and transparency as a basis for non-digital decision-making. Obviously the manager’s skepticism rises as the forms of participation become more binding and authoritative (e.g. E-Vote).

20. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 20 Summary and Conclusions Most of the co-op managers doubt the member’s decision making competence regarding business processes. Consequently, they probably are skeptical regarding direct democracy per se. But the manager’s main problems with digital participation do not seem to be co-op specific. Main problems are rather seen in technological or data processing areas (e.g. the risk of manipulation, anonymity or organizational cost increases).

21. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 21 Summary and Conclusions All in all, without doubt, a skeptical perception of the co-op managers is prevailing today. But according to the eminent importance the managers see for information and transparency (and considering the large number of undecided votes in the general assessment) it can be suggested that the significance of social media and digital participation will rise considerably in the future. Most likely this will happen in a non binding form of participation.

22. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 22 Summary and Conclusions Latest this will be the case when a new generation of members with younger people’s needs and requirements appears. The result of this study is probably summarized best in the following answer of an interviewee given in the final open question regarding the general assessment: “Social media will be important for us only in several years, when all members use the Internet or are able to use it. It’s simply a question of time.”

23. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 23 References Eisel, Stephan: Internet und Demokratie, Freiburg im Breisgau 2011. Heise, Christian: Elektronische Beteiligungsformen, E-Demokratie.org, Beiträge zu elektronischer Demokratie und elektronischer Partizipation, http://www.e- demokratie.org/elektronische-beteiligungsformen/ (18.06.2015). Hummel, David: Social Media und Genossenschaftsdemokratie – Eine empirische Betrachtung aus Unternehmenssicht, Nürtingen-Geislingen 2014. Meißelbach, Christoph: Web 2.0 – Demokratie 3.0? Demokratische Potenziale des Internets, Baden-Baden 2009.

24. INSTITUTE FOR CO-OPERATIVE STUDIES Prof. Dr. Markus Mändle David Hummel, MSc. Housing Co-operatives and Digital Democracy 24 Contact Nuertingen-Geislingen University (HfWU) Institute for Co-operative Studies (IfK) Parkstr. 4 D-73312 Geislingen/Steige GERMANY Prof. Dr. Markus Mändle markus.maendle@hfwu.de David Hummel, MSc. davidhummelgp@aol.com