Exploring the Opportunities and Challenges of Network Formation for Cooperatives in South Africa

Abstract

Since inception, modern cooperatives have been instrumental in uplifting the social and economic conditions of people. As an economic model that seeks to advance the collective interest of its members, the cooperative movement has come to be viewed as an invaluable tool for human and economic development. Over the years, a number of challenges (such as the lack of knowledge about the purpose and functions of cooperatives, information, marketing skills and financial resources) have precluded cooperatives in developing countries, like South Africa, from actualizing these esteemed ideals. In some countries, there has been a growing emphasis on network formation by cooperatives as a strategy to overcome some of these challenges. Consequently, the past two decades have witnessed an emerging body of literature on cooperative networks. The bulk of studies on networks have largely focused on how resources and capabilities influence inter-organizational linkages that facilitate access to resources embedded in a network. Such resources include information, financial resources, new technologies and a variety of social capital. This article reviews the literature on network formation by cooperatives and identifies the attendant challenges and benefits. The article also reflects on the lessons that South African cooperatives could learn from these experiences to facilitate the development of a vibrant cooperative sector.

Key words: Cooperatives, networks, economic development, social capital