Packs, Troops and Herds: Prosocial Cooperatives and Innovation in the New Normal

• Author: Pablo Muñoz,Dimo Dimov,Jonathan Kimmitt
• Date: 01 May 2020
• Published date: 01 May 2020
• DOI: http://doi.org/10.1111/joms.12542

© 2019 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.

Packs, Troops and Herds: Prosocial Cooperatives and

Innovation in the New Normal

Pablo Muñoza,b, Jonathan Kimmittc and Dimo Dimovd

aUniversity of Liverpool; bUniversidad del Desarrollo; cNewcastle University; dUniversity of Bath

ABSTRACT Prosocial organizations are emerging to tackle the effects of a New Nor mal. As they

navigate its fragile and liquid institutional membranes, they prioritize cooperative forms of

governance. These forms allow for collaboration and democratic decision-making necessary for

the development of innovative solutions in this new context. At the same time, the high coordi-

nation costs of cooperatives lead to significant market pressures. Therefore, understanding when

and under what conditions these new cooperatives innovate and strive is important as it provides

insight into whether and how these ventures can become a viable alternative in this changing

landscape. Using configurational analyses of organizational enablers leading to innovation in

40 entrepreneurial cooperatives, we identify three approaches: Attentive Pack, Eclectic Troop, and

Wandering Herd, showing that innovative outcomes can indeed emerge under traditional coopera-

tive features emphasizing collectivism. However, the pursuit of higher novelty requires a shift

to more individualistic, business-as-usual, approaches. The New Normal does indeed enhance

entrepreneurial activity, but of a different kind comprising novel sets of antecedents and out-

comes, which we show can easily become the new dominant form of venturing required in this

new context.

Keywords: Chile, cooperatives, entrepreneurship, fuzzy-set qualitative comparative analysis,

innovation, new normal

INTRODUCTION

Intensified discussions of the New Normal reflect radical changes in the business land-

scape and durable shifts in business behavior (El-Erian, 2010; Etzioni, 2011). The global

financial crisis of 2008 triggered institutional and political shifts arising from financial

insecurity and volatility, rising inequality, and general public malaise (Cohen, 2013).

This was accompanied by a sense of diminished state of wellbeing characterized by

Journal of Man agement Studi es 57:3 May 2020

doi:10. 1111/j oms .12 54 2

Address for reprints: Pablo Muñoz, Professor of Entrepreneurship, Management School, University of

Liverpool, Liverpool, UK (pmunoz@liverpool.ac.uk).

Packs, Troops and Herds 471

© 2019 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.

austerity, displacement, shallowness, laziness, and disconnection from the natural world

(Best, 2011). At the same time, venturing has developed a distinct prosocial edge, turning

concerns with the living conditions of society as a whole into a core business purpose

(Hollensbe et al., 2014; Muñoz et al., 2018). The question of whether the New Normal

represents a more fulfilling characterization of the good life (better social relationships,

cultural and spiritual pursuits) or an impoverished state of wellbeing is an open call to

the power of human innovation. The question that arises naturally is how traditional

business imperatives for long-term survival such as innovation, operate under such new

organizing logics.

In the context of this New Normal, cooperative organizational forms have re-emerged

amongst ventures seeking to resolve social or environmental problems, embodying new

sets of values and enabling new practices in the marketplace (Knupfer, 2013). These

organizational forms allow for collaboration and collective decision-making, therefore

enabling the articulation of democratic business models and the involvement of dif ferent

groups of community members in the development of innovative ventures (Ashforth

and Reingen, 2014; Boone and Özcan, 2014). At the same time, the historic problems of

cooperatives (i.e., economic disincentives, operational inefficiency, high coordination

costs, lack of scale economies, performance-monitoring problems, and underinvestment)

have reduced their ability to innovate and remain competitive. Yet such forms also show

distinct abilities that allow them to survive (Boone and Özcan, 2016). This occurrence

gives rise to two important and timely research questions related to their navigation

of the discontinuity marked by the New Normal: what organizational configurations enable

innovative outcomes in entrepreneurial cooperatives? And, what types of innovative approaches do

entrepreneurial cooperatives articulate as a result?

We conceptualize innovation as both a process and an outcome, broadly defined as the

‘production or adoption, assimilation, and exploitation of a value-added novelty in eco-

nomic and social spheres; renewal and enlargement of products, services, and markets;

development of new methods of production; and establishment of new management

systems’ (Crossan and Apaydin, 2010, p. 1155). Innovation among prosocial ventures

requires distinct leadership skills (Bacq et al., 2016); experience, understanding and nur-

turing of social problems (Kimmitt and Muñoz, 2018); and/or management of organi-

zational tensions (Battilana and Lee, 2014). Our theoretical development thus focuses on

how these factors interplay with the distinct nature of cooperatives as an organizational

form (Boone and Özcan, 2015). We posit that innovation aiming to sustain more than

economic goals engages leadership (cooperative leadership), managerial (cooperative organizing)

and business-process (cooperative processes) factors in a more holistic fashion.

Our empirical setting is the emerging economy of Chile. While being a relatively large

and fast-growing context for prosocial enterprises, which have flourished in response to

decades of intensive yet unequal growth, it has lagged behind in the formalization of

‘for-benefits’ structures typical of more developed economies (Nicholls and Teasdale,

2017). This creates a unique setting in which prosocial organizations respond to the New

Normal by adapting their business models and existing legal forms for a better fit with

their mission and business approach. This, in turn, represents a fascinating context for

understanding innovation among a new generation of cooperatives and where innova-

tion in cooperatives in this New Normal is central to their success and survival.

472 P. Muñoz et al.

© 2019 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.

We draw on a unique sample and data from 40 entrepreneurial cooperatives to con-

duct a configurational analysis of multi-level organizational conditions and associated

innovative outcomes (Tsoukas, 2017). Aiming to capture the drivers of innovation in a

more holistic sense, we leverage Fuzzy-Set Qualitative Comparative Analysis (fsQCA) to

map out the conditions under which entrepreneurial cooperatives in the New Normal

are likely to innovate and survive in the marketplace (Ragin, 2008).

Results show that innovative outcomes can indeed emerge under traditional coopera-

tive forms of organizing, which emphasize collectivism. Our results paint a complex pic-

ture of high innovation as resulting from organizational configurations that mark three

distinct, novel approaches among entrepreneurial cooperatives: Attentive Pack, Eclectic Troop,

and Wandering Herd. At the same time, the pursuit of more radical innovation requires a

shift to more individualistic, business-as-usual, approaches.

Our study makes several contributions that intersect the New Normal, innovation,

and cooperative literature. First, we contribute to theory on cooperatives by identify-

ing a number of pathways to innovation, involving different combinations of cooper-

ative workforce competency, agency, stewardship, innovation orientation, competitive

focus, and market diversification. This represents much needed empirical evidence for

how the governance models of cooperatives produces innovation (Boone and Özcan,

2016). By highlighting the conditions under which cooperatives operate as innovative

organizations, our work helps understand the restructuring of the economic order in its

micro-level complexities.

Second, we also contribute to the current understanding of the role of leadership and

capability renewal in organizational innovation. We show how the locus of support for

innovation shifts within cooperative forms and how old competitive forms can be reju-

venated to deal with radical change. This highlights the varied anatomy and importance

of innovation in navigating the New Normal landscape and offers innovation scholars

a holistic framework for understanding innovation in cooperatives. Lastly, we contribute

to policy by providing a cautionary note on the ‘professionalization’ of cooperatives and

demonstrating how traditional legal structures can remain relevant in the New Normal.

This is of particular importance in the context of prosocial cooperative emergence in

emerging economies and beyond.

THEORETICAL BACKGROUND

Cooperatives and the New Normal

The development of cooperatives extends across a long history, sectors and international

contexts. From an economic perspective, cooperatives have historically needed to con-

front several challenges facing market dynamics. They are subject to strong economic

disincentives (Aldrich and Stern, 1983) as the lack of hierarchy makes them operation-

ally inefficient (Williamson, 1985). Cooperatives tend to exhibit higher ownership coor-

dination costs (Boone and Özcan, 2016), in particular when membership preferences

are heterogeneous (Hansmann, 1996). Unlike traditional corporations, cooperatives

face greater difficulties to achieve economies of scale (Bonin et al., 1993), struggle with