The two years of pandemic and lockdown have been a litmus test for the businesses to assess their resilience. While there have been massive job losses, collective enterprises like cooperatives have exhibited extraordinary resilience.

Amul, one of the most successful cooperative brands in the world, has recorded a turnover of ₹52,000 crore in the last financial year. Across the nations, collective enterprises like federation of SHGs have diversified their operations to cope with the lockdown and bounced back. The organisational form of collective enterprises is vital for their resilience.

The emergence of collective enterprises

Collective enterprises are value-driven, member controlled, and democratically governed enterprises. They have emerged when both the state and the market failed to meet the needs of the community. These are promoted as an ‘alternative’ to the existing systems of service delivery and often have a history of social movement behind them. Many SHG federations in India are promoted as a part of the women’s empowerment movement.

NGOs have taken lead in mobilising and organising women into a collective enterprise. This shared identity of being part of movement and differentiated from merely running an ordinary business builds strong social capital among the members and help in seeking collaboration in crisis.

Organisations with high social capital are often quick to adapting to changes. During the lockdown, many of these enterprises successfully changed their business operations and shifted to producing masks and sanitisers with active support from their members by leveraging their social capital.

The purpose of collective enterprise is to benefit its members. The members are the user of services specially in cases of cooperatives, and farmer producer organisations. Satisfying the members’ need is embedded in the functioning of collective enterprises. During the 2020 lockdown, the dairy cooperatives in Gujarat continued procuring milk from their members while there was a dip in demand for milk due the closure of commercial establishments like hotels etc.

The concern was to address the need of members by ensuring that their milk gets into the market. Because of its member-centricity, many of the enterprises continued their functioning during lockdown despite no market being functional. Many of the federations of SHGs have organised community kitchens to help migrants returning from cities. FPOs have provided relief services and sanitisers to farmers during this period.

Registrations of FPOs in Maharashtra have doubled in 2020 as compared to 2019, as farmers realised the convenience of working collectively when the market is not functional. FPOs have altered their marketing channel and connected to the customer directly instead of following the route via market.

Organisational actions related to managing everyday activities are driven by rationality. Organisations, guided by formal rationality, often adopt ‘best practices’ with a top-down approach.

In the case of collective enterprises, because of its member-driven approach, organisational actions are largely driven by social rationality. Social rationality implies that decisions are taken largely with purpose of building and maintaining relationships. It drives organisational action towards sustaining relationships with their target clientele.

This focus on relationship was clearly evident with many SHG federations took up work related to gender-justice to protect the women from the increasing instances of domestic violence during the lockdown. SHG federations established gender resources center to address the grievances; in Bihar, Odisha and Chhattisgarh, these federations have helped frontline health workers in delivery of neonatal and antenatal services. In many cases, SHG federations have offered catering services to public hospital during the lockdown.

Collective enterprises are firmly embedded in the local community. Members are geographically close to the collective enterprise and thus get closer to the decision-making process leading to solidarity. Because of their deep embeddedness within the local environment, they can anticipate the demand of local community better. It has the knowledge of stakeholders’ demand and understand new opportunities.

This embeddedness has helped many collectives to alternate their operations to address the immediate need of members. There are instances where cooperatives offered homestay services before the lockdown altered their services and started offering Covid-stay care services to seize the opportunity and ensure regular cash flows. The homecare cooperatives supported by SEWA Ahmedabad modified their services to offer care services during the pandemic as they witnessed a huge demand for such services during the second lockdown.

Agricultural cooperatives have arranged working capital to supply seeds to their members so that farming can continue without a break. The embeddedness of collectives in local economy helped them to design and delver additional services.

The writer is Faculty member, Institute of Rural Management Anand