The collaborative economy and the cooperative model Jacques Debry

The collaborative economy

The collaborative economy Definition The collaborative economy connects users (individuals or organisations seeking goods or services) with providers (individuals or organisations offering their goods or services).  L. Jourdan, M. Leclerc, A. Millerand, Economie collaborative & Droit – Les clés pour comprendre, Editions FYP, 2016, p. 17. Business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals.   European Commission (EC): A European agenda for the collaborative economy, COM(2016) 356

The collaborative economy Economic mechanisms Crowdsourcing Two-sided Markets The Long Tail Matching Markets Reputation Markets Network Externalities and Standard Externalities => “The winner takes all”  

The collaborative economy Business models Advertising Payment per transactions Subscription Internal markets and derivatives Data selling   

The collaborative economy in its strictest sense In its strictest sense, the collaborative economy aims to create an alternative economic model with the following features: Decentralised and not-hierarchical network (peer-to-peer) Pooled resources (often underutilised) Tool: online platform Goal: to reap the benefits of sharing Sharing leads to collective environmental benefits Need for retaining control over the project

The collaborative economy in its strictest sense Definition “The term collaborative economy refers to a broad and varied group of practices and innovative models that use digital technologies to facilitate collaboration and exchange among a community of peers, and to maximize the use of underutilised resources. Collaborative economy models enable the aggregation of peer-to-peer exchanges performed among community members, and turn them into systemic processes of value generation driven by the community and benefiting the community.”  Cooperatives Europe, A Cooperative Vision for the Collaborative Economy – Shaping a people-centered and democratic collaborative economy, November 2017

The collaborative economy in its strictest sense If a collaborative economy project (in the strictest sense of the term) is to be successful and stay true to its core aims, it must put existing economic mechanisms to good use and adopt a social and solidarity-based business model (i.e. it must reject negative externalities): Fair pay and working conditions Consumer protection Environmental protection A collaborative economy project (in the strictest sense of the term) is a social and solidarity economy project. It must be governed in a way that aligns with its purpose at all times.

The cooperative model

The cooperative model The cooperative model aims to create an alternative economic model. ICA definition, 1995: Definition: an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise. Values: self-help, self-responsibility, democracy, equality, equity and solidarity. Ethical values: honesty, openness, social responsibility and altruism. Principles: Voluntary and Open Membership Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training and Information Cooperation among Cooperatives Concern for Community

the collaborative economy in the strictest sense Similarities between the collaborative economy in the strictest sense and the cooperative model

Collaborative economy (strictest sense) Cooperative model ICA definition ICA principles 1 and 2 Community of peers (peer-to-peer) where all parties are equals Relationship of trust with the community; contractual relationships known in law as intuitu personae Democratically controlled association of persons Voluntary, open membership intuitu personae Members cannot sell their share to a third party without the other members’ consent Members are free to resign

Collaborative economy (strictest sense) Cooperative model ICA definition ICA principle 3 Purpose: to meet needs by pooling resources Creation of commons Members form an enterprise to meet their common needs Collective ownership Reserves are pooled (indivisible)

Collaborative economy (strictest sense) Cooperative model ICA definition The project operates via an online peer-to-peer platform: the entrepreneurial tool that the project needs to achieve its aims The cooperative sets up an enterprise to serve its members

Collaborative economy (strictest sense) Cooperative model ICA definition ICA principle 3 Purpose: participants reap the benefits of sharing The aim is not to pay dividends to shareholders  Service, as opposed to profit, motive (cooperatives serve their members rather than investors) Limited dividends Pooled reserves In some cases, surpluses are allocated to members in proportion to their transactions with the cooperative

Collaborative economy (strictest sense) Cooperative model ICA definition ICA principle 4 Participants want to retain control of their project Autonomy and independence are vital to cooperative governance

Collaborative economy (in the strictest sense of the term) Cooperative model ICA principle 7 Participants pool resources, rather than producing and purchasing new goods, in order to protect the environment Concern for community includes concern for the environment and sustainable development

the collaborative economy (strictest sense) and the cooperative model Differences between the collaborative economy (strictest sense) and the cooperative model

Collaborative economy (strictest sense) Cooperative model Linkages between members and the community  Community of “prosumers”, “multistakeholder” model Ongoing trust-building Informal identity Informal involvement in governance Online-only relationships Typically global purpose Growth is incremental but can become exponential Community of like-minded members Trust from the outset through the act of membership Shared, documented values Structured involvement in governance Face-to-face contact Typically local purpose Gradual expansion

Collaborative economy (strictest sense) Cooperative model Collaboration methods  Decentralised, dispersed collaboration Sporadic connections as needs arise, ad hoc relationships No structured, stable working relationships Role of technological innovation It connects participants and allows for quick, decentralised actions Digital technology at the heart of the business model, constant innovation Centralised collaboration within the enterprise Structured connections between members in the same enterprise Stable, legally structured working relationships Technological innovation is just one part of the business model Technological innovation is deployed gradually

Conclusions

What the collaborative economy can learn from the cooperative model Collaborative economy projects can use the cooperative model to maintain an entrepreneurial culture that combines the values of performance and solidarity. Thanks to its governance model and self-regulating properties, the cooperative model can solve many of the problems encountered in the collaborative economy. In reality, the cooperative model can provide the structure – documented values and governance principles, and markers and codes of conduct – without which collaborative economy projects often fail.

What the cooperative movement can learn from the collaborative economy The collaborative economy is an opportunity for the cooperative movement to expand into every sector of the economy – something it must do as a matter of urgency since for-profit collaborative economy companies have gained a stronghold, or even a monopoly, in some sectors. The cooperative movement can look to the collaborative economy for regeneration – breaking down barriers, adopting the “multistakeholder” model, gaining flexibility and agility, horizontal vs. vertical structure, technological innovation and digital technologies, etc.

NEXT STEPS Initiatives needed at several levels: Run combined collaborative/cooperative projects Communicate about the similarities between the collaborative economy and the cooperative model in a meaningful way Build technical expertise to assist cooperative platform projects Set up financial structures to support these projects

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