Furbish or perish: Italian social cooperatives at a crossroads

Abstract

Although the public debate tends to privilege investor-owned organisations, alternative forms of organisation are mushrooming at the borders of the capitalist economy. In this work, we contribute to the debate on alternative economies by analysing a specific form of worker-owned organisations which originated in Italy in the 1970s and was recognised by Italian legislation in the 1990s: the social cooperative. By drawing on data gathered over 3 years of participant observation, this article explores the tensions and contradictions generated by the rapid growth of an Italian social cooperative focused on waste recovery and its preparation for reuse. We show how social cooperatives might be able to reconcile their commercial success with their founding principles of equality and democratic management. This article contributes to the debate on the ‘regeneration thesis’ by providing new insights into the factors and drivers that force social cooperatives to scale up and to engage in competition with mainstream competitors, the internal conflicts and solutions that emerge in this process and the external alliances that social cooperatives can leverage to prosper and flourish.

Introduction

Almost a century has passed since neoclassical economists introduced the concept of utility maximisation to explain how market forces shape firms. However, it is only recently that the concern about the impact of business on society and the environment has come into prominence, providing a rationale for firms to put ethics and responsibility into action and develop alternatives to capitalist accumulation and profit maximisation as a way of pursuing social justice and inclusiveness. Despite significant insights regarding corporate social responsibility in mainstream capitalistic organisations, little attention has been paid to the emergence of organisations that pursue alternative modes of value allocation based on non-capitalist practices (Short et al., 2009). This may be due to the difficulties in radically challenging the economic reproduction of both producers and consumer practices with unexplored alternatives which, at first sight, look unfeasible (Contu, 2008).

This article explores a specific form of institutionalised economic practice which emerged in Italy in the 1990s as an alternative to the classical capitalist firm: the social cooperative (SC). Unlike most classical cooperatives, the SC model is strongly characterised by a number of ‘non-capitalist’ practices such as unconditional reciprocity, networking with non-capitalist entities, de-commodification of welfare and the reinsertion of disabled or marginalised people among others (Thomas, 2004). Although the evolution of SCs suggests that such enterprises can emerge and prosper at the borders of capitalistic economies (Boone and Özcan, 2014; Cheney et al., 2014), the possibility for these organisations to scale up without compromising their founding values is still a matter of debate (Storey et al., 2014; Varman and Chakrabarti, 2004).

The purpose of this article is twofold. First, we intend to provide new evidence that supports the idea that SCs can flourish at the borders of the capitalist system by providing meaningful and sustainable jobs through the inclusion of disadvantaged groups. Second, our research aspires to show that SCs, under certain circumstances, can scale up, engage with ‘business-as-usual’ competitors and remain faithful to their values of social inclusion. This research contributes to the extant literature on the so-called ‘regeneration thesis’ of SCs in two ways. First, our results challenge the assumption that SCs can either remain marginal or betray their values by scaling up. Second, our research provides new insights into: (1) the factors and drivers that force SCs to engage in competition with mainstream competitors, (2) the internal conflicts and solutions that emerge in this process and (3) the external alliances that SCs can leverage to prosper and grow.

Framing SCs as alternative economies

The critique of capitalist modes of production and their implications for the whole of social relations have a long history. Academic criticisms spring from a number of fronts highlighting the incapacity of capitalist economies to generate wealth without creating inequality (Hirsch, 1977; Piketty, 2014), the financial instability that periodically hampers employment and erodes the civil rights of salaried workers (Gibson-Graham, 2006a; Parker et al., 2014), the apparent impossibility of combining economic growth with environmental conservation (Daly, 2005; Fournier, 2008; Latouche, 2009) and the threat that markets pose to communities (Marglin, 2008). These arguments have been echoed by social movements such as the ‘No-Global’ movements in Seattle, the ‘Occupy!’ movements in the United States and the ‘Indignados’ in Spain, just to mention a few. Pope Francis’ attack on the ideology of the ‘economic trickle down’ as a solution to inequality and environmental degradation (Francis, 2015) underlines the pervasiveness of the call for a pluralism of approaches in the realm of economics vis-à-vis the monism of the neoclassic approach, which is considered as a concealed ideology with inconsistent empirical evidence in the real word (Fullbrook, 2008).

The critique of the capitalist modes of production and consumption focuses on a number of aspects. First, some scholars analyse and criticise the commodification of exchange in capitalist economies. The monetisation of economic transactions through the market has a particular emphasis, which comes at the expense of non-marketable forms of transaction, for example, household care, gifts, unconditional reciprocity, social obligation and self-production (Illich, 1981; Parker et al., 2014; Polanyi, 2001). As a consequence, unpaid labour is relegated to the role of ‘reproductive’ work to support ‘real production’ (Gibson-Graham, 2006b) and reproduce gender domination and inequality (Federici, 2013). A second aspect is the centrality of capital accumulation in the ‘Money-Capital-Money’ cycle, which (1) favours the disconnection of production from consumption – goods are consumed miles away from their production sites and consumers have no possibility of influencing the production process, and (2) favours the dominant position of the discourse of capitalist forms of organisation – investor-owned for-profit firms operating in monetised economies (Gibson-Graham, 2006a). Finally, the way capitalocentrism neglects economies based on non-monetary transactions is evident in the use of the gross domestic product (GDP) as the main macro-economic performance indicator (Fioramonti, 2013; Fournier, 2008).

Despite the tendency of hegemonic capitalocentrism to consider diverse ‘languages of economy’ as ‘non-credible alternatives to what exists’ (Santos, 2004), a vibrant and colourful diversity of alternative economies survives. Classical forms of cooperativism are now complemented by radical solutions in agricultural production, e.g. agroecology and permaculture (Smaje, 2013); housing, e.g. co-housing initiatives (Chatterton, 2013); consumption, e.g. production/consumption cooperatives and ethical purchasing groups (Brunori et al., 2012); community initiatives, e.g. transition towns (Aiken, 2012) and ecovillages (Xue, 2014); energy, e.g. community-based decentralised production (Hargreaves et al., 2013); and industrial production, e.g. open source movement, fablabs and maker communities (Hák et al., 2016; Smith et al., 2013). Not only do those countervailing voices question the way goods and services are produced and distributed, but they also challenge the power structures that underpin labour management practices within organisations (Spicer and Bohm, 2007). According to Gibson-Graham (2006b), alternative economies start from the need to re-politicise the economy and lead to a very diverse combination of transactions, labour arrangements and organisational settings. In this framework, cooperatives – as alternative capitalist organisations – operate within the borders of the market economy without aiming at capital accumulation by private individuals. The ways they complement their activity with diverse modes of supply and delivery (e.g. alternative currencies, local trading systems, fair-trade schemas and also informal market networks) reflect the creative potential that offers a concrete alternative to capitalism.

SCs as practices of alternative economies in Italy

Despite the mushrooming of alternative forms of organisation, the public debate is still focused on investor-owned organisations (Parker et al., 2014). We, thus, aim to contribute to the debate on ‘economic diversity’ by analysing a specific form of worker-owned organisations which originated and developed in Italy in the 1970s and were recognised by Italian legislation in the 1990s: the SC. The environment in which SCs operate and flourish can provide important insights into new forms of ownership, funding, decision-making, leadership and communication alternative to the classic capitalist forms (Gibson-Graham, 2003; Heras-Saizarbitoria, 2014). The theoretical foundation of SCs can be located in the approach of the ‘civil economy’ which has had a long and important tradition in Italy since the 17th century (Bruni and Zamagni, 2007). As opposed to capitalist economics, civil economy frames economic transactions essentially in terms of reciprocity and solidarity. In this view, the institution of the market is either morally neutral or morally corrupt (e.g. the medieval reputation of merchants, see Polanyi, 2001). A functioning economy is value-driven and context-based in order to pursue the satisfaction of ‘reciprocal needs’ and to guarantee the ‘reciprocal obligation to assist’ (Bruni and Zamagni, 2007). These principles are embedded in the modern idea of SCs, whose legitimacy thus comes from the centrality of social and environmental values in their mission. SCs originated in Italy in 1991 with the introduction of Law 381 ¹ which regulates the activities of volunteer organisations engaged in an improved deployment of human resources and the integration of disadvantaged citizens into society (minors, the disabled, drug addicts, the elderly, former prison inmates, the mentally handicapped and immigrants) (Thomas, 2004). Furthermore, it must be noted that Italy, especially the central-northern region, has a long tradition of industrial clusters based on family businesses strongly connected in networks of mutual assistance. This very specific environment certainly favoured the institutionalisation of alternative forms such as the SCs (Menzani and Zamagni, 2010).

The development of SCs can be classified into two categories (Borzaga, 1996): type A covers caring activities such as the management of health and social care, and educational and social services; type B focuses on training activities, for example, the introduction of marginalised people or disadvantaged people with physical or mental disabilities who are unable to access the employment opportunities offered by the ‘normal’ labour market. According to Poledrini (2014), in recent years, SCs have been able to substantially increase the productivity of ‘disabled workers’ to reach levels that are comparable to those of conventional businesses. According to the same author, the success of SCs lies in the capacity to leverage on the surrounding social context to create a mutual benefit within a network of reciprocity enacted by social agents like volunteers, civil society organisations and public and private institutions. Two basic elements distinguish SCs from other alternative capitalist forms (Poledrini, 2014: 466): (1) the social purpose of SCs is to satisfy the community’s general interest in human welfare and social integration, and (2) SCs adopt a multi-stakeholder governance which includes employees, volunteer workers and also sponsors and beneficiaries. Since their origin, SCs have been growing in number and importance (Costa et al., 2012), and their range of activities has expanded to include other fields such as environmental conservation and sustainability (Osti, 2012).

Degeneration and the ‘growth dilemma’

Considering the transformation of welfare systems in Europe towards a less state-centred model, SCs are deemed to present great potential for delivering social services without compromising the spirit of universality and the equity of welfare provisions (Defourny and Nyssens, 2008; Sepulveda, 2015). According to Defourny and Nyssens (2010 [2008]), various forms of third-sector organisations (such as SCs, charities or social enterprises) could not only reduce public expenditure, which has drastically shrunk due to the fiscal crisis, but also better serve people’s needs, thanks to their strong links to the territory in which they operate. SCs have also proved to be surprisingly resilient to the economic crisis and the restructuring of public welfare expenditure that, at least in part, is supposed to fund their activities. Costa and Carini (2016), for example, found that, despite the global financial meltdown, Italian SCs – especially in the north of the country – increased their overall turnover and total assets between 2008 and 2011. Borzaga and Fazzi (2014) documented how Italian SCs have not only provided efficient welfare and health services, but they have also warned about the risk of SCs in becoming ‘suppliers of professionalised services with what is by now a very loose relationship with civil society’ (Borzaga and Fazzi, 2014: 240). This ‘professionalisation’ of SCs, which has also been observed by other scholars, hugely varies among regions and socio-cultural contexts (Kerlin, 2010). In any case, SCs can have a relevant impact on welfare provision and job creation only if they are able to diffuse rapidly or scale up. The scaling up of SC operations would certainly imply a higher organisational complexity that might require indispensable managerial practices and professional skills and methods of business management to operate in an increasingly competitive setting (Borzaga and Fazzi, 2014; Mancino and Thomas, 2005). A crucial challenge for SCs, hence, is the need to manage the transition to a more complex operating scale without compromising their constitutive social vocations, their role as the social connectors of diverse stakeholders and their local legitimacy (Cheney, 2002; Travaglini, 2012).

The SCs’ literature frequently focuses on the contradiction between expansion and remaining loyal to the founding ethical values during this expansion, which is a dilemma that can occur several times during the life cycle of the organisation. As pointed out by Borzaga and Fazzi (2014), unlike capitalist companies, SCs can be poisoned by growth and ‘professionalisation’. SCs usually grow under the impulse of enthusiastic leaders, typically trained within the organisation, who are willing to maximise the social impact of the cooperative. When SCs start to grow and when internal or external contingencies force the organisation to change, they usually find themselves at a crossroads with (at least) three possible alternative paths. One possibility is to deliberately decide to stop growing by limiting their activity at a local level. In this case, SCs simply refuse to compete within the paradigm of market economy and opt for a protected niche. This can happen for a number of reasons: for example, there are not enough internal capabilities to scale up, growth can jeopardise internal democracy and many cooperatives think that a greater social impact can be achieved better at a small scale. A second option is to accept the pursuance of profits within the paradigm of market economy with the risk of degenerating into a business-as-usual cooperative. This may happen under an uninspired leadership that conforms to capitalistic values and imaginary (Borzaga and Galera, 2016). In the cooperative literature, this second path is also known as the ‘degeneration thesis’ (Storey et al., 2014). This ‘degeneration’ might lead to an expansion of the cooperative, but it often represents a compromise between the cooperative’s original ethical values and the sirens of capitalism (Flecha and Ngai, 2014).

A third path consists of controlled growth that conciliates the social mandate of the cooperative with the pressure to generate profit. This possibility is also known as ‘regeneration thesis’. Storey et al. (2014) explored how the senior managers of the John Lewis Partnership and Eroski succeeded in growing by remaining loyal to the founding principles of their organisations. As shown in the case of John Lewis, this reconciliation does not exclude tensions and conflicts between the commercial and social missions within the organisation (Paranque and Willmott, 2014). The ‘democratic member control’, ‘member economic participation’ and ‘autonomy and independence’ are continuously renegotiated to achieve a dynamic equilibrium. On the same lines, Storey et al. (2014) argue that the key to success is the ability to maintain a dynamic and prone equilibrium between the over-enthusiasm of the market and the defensive sallies from the cooperative fundamentalists. The outcome of this continuous negotiation is usually a more hierarchical structure of the cooperative designed to boost efficiency and speed up decision-making (Storey et al., 2014). Nevertheless, Varman and Chakrabarti (2004) suggest that cooperatives can be more efficient without compromising their internal democratic organisation. Personal commitments and enthusiasm, in this view, would contribute to the well-functioning of the organisation. In the rest of the article, we contribute to the ‘regeneration thesis’ by shedding light on the difficulties of ‘reinventing democracy’ within SCs vis-à-vis the necessity to tackle the external (e.g. increasing competition and privatisation of services) and internal challenges (e.g. conflicts between worker-member owners and temporary workers) that hamper the cooperative’s stability.

The case study: Cooperativa Insieme

Research settings

Despite flourishing in Italy, the SC model is threatened by a renewed neoliberal expansion that forces it into a space of political and economic confrontation with capitalist organisations. The space in which SCs have been operating over the last two decades has opened up to external competition. Only a few SCs have demonstrated the ability to survive and scale up through improving their productivity/efficiency without compromising on internal democracy. Cooperativa Insieme is a notable case study of an SC that boasts nearly 40 years of experience in the social inclusion of disadvantaged people in the field of waste recovery and its preparation for reuse (the second-hand market). With more than 120 members, a strong reputation among other SCs and within the network of profit and non-profit associations in the field of reuse in Italy (Rete ONU) and participation in European projects on resource efficiency (e.g. Life PRISCA), ² Cooperativa Insieme provides an interesting, unusual and particularly revealing set of circumstances whose significance goes far beyond the local level. Cooperativa Insieme is currently active in a number of commercial initiatives that range from the design and management of municipal recycling centres to second-hand commerce. At the same time, the cooperative remains a rigorously democratic organisation, where equality and empowerment are the prominent values.

Cooperativa Insieme was set up in Vicenza, Italy, in 1979 by a small group of volunteers from a local foster home who shared the same commitment to helping disadvantaged and marginalised people through dignified employment. Since 1979, Cooperativa Insieme has created jobs for more than 800 people who suffered from social exclusion, intellectual disabilities and mental or physical conditions. Apart from the fiscally positive implications (SCs enjoy very favourable tax conditions), the decision to opt for a non-profit legal status was due to the importance of ethical values such as solidarity, equality and mutual cooperation. The focus on waste recovery/recycling and preparation for reuse reflected a commitment to environmental conservation and sustainability.

Unlike other SCs with similar backgrounds, Cooperativa Insieme stands out thanks to the continuous development of a pervasive ecosystem of local stakeholders who support its activities. In 1983, Cooperativa Insieme set up a legal service that assists prisoners with their rehabilitation and re-integration into society. In 1995, Cooperativa Insieme created an association, called the Open Families Network, which provides shelter for deprived people, followed in 1997 by Tangram, an association that provides professional training for disadvantaged minors. In 1999, Cooperativa Insieme set up an association to bring them together with the Open Families Network and Tangram, two organisations based exclusively on voluntary work. The resulting association also encompasses physical infrastructures such as recycling centres and shops selling second-hand articles, which are not only the backbone of the value chain of the waste to second-hand business but also provide a physical interface with local citizens. These infrastructures also promote other initiatives ranging from a cafeteria that sells organic and local food to cultural events. In 2005, the cooperative opened a new head office, which paved the way for a decade of expansion. Today, the cooperative manages the biggest waste reuse/recycling centre in the area and has a notable share of the local second-hand market.

Methods and data

The data collection was conducted by the authors during 3 years (from 2013 to 2016) of research collaboration with the cooperative’s members. In this period, the authors were allowed to directly observe the production and organisational processes of the cooperative, conduct auditing activities and engage in the performance review system. Emails and phone calls between the authors and the personnel of the cooperative involved in the research ensured information flowed on an almost daily basis. More than 300 pages of documents (e.g. internal reserved and public documents, newspaper articles and website links) were accessed and analysed in order to grasp the internal procedures for value creation and appropriation. These activities allowed the authors to get a thorough understanding of the inner nature of the cooperative. Furthermore, two rounds of interviews were audio-recorded and verbatim transcribed by the authors in October 2014 (13 in-field interviews with workers occupying key positions through the production and organisational processes, giving a total length of 3 hours 30 minutes) and in December 2015 (7 telephone interviews with funding senior members, totalling 8 hours). The first round focused on the perceived impact on the organisation of the recent implementation of a new business model to commercialise second-hand products. Once a common vocabulary and a first-level understanding of the internal dynamics had been established, the second round focused on the recent expansion of the cooperative activities. The turnover of the cooperative, indeed, increased from €1.82m in 2006 to €2.72m in 2015, with a peak of €2.88m in 2014. The number of employees rose from 68 in 2006 to 94 in 2015, with a peak of 105 in 2012.

The data collected were subsequently analysed following a ‘qualitative grounded theory’ approach (Gioia et al., 2012). The analysis followed two main stages: the creation of a data structure and a discussion on the relationships which exist between the theoretical dimensions that emerged from such a structure. In order to create the data structure, we started with an initial open data coding, maintaining the integrity of first-order (informant-centric) terms. As suggested by Miles and Huberman (2003), we performed an initial open-coding informed by the original research question: How did the cooperative scale up and still remain faithful to their values of social inclusion?

At a later stage, we grouped the categories that emerged from the data until we reached a number of codes that did not overlap with each other (typically between 20 and 30). After this first step, we performed a second-order analysis based on the question, Is there some deeper structure in the first-order array? In this phase, we asked whether the first-order codes suggested concepts that might help us describe and explain the narrative of the interviewees. This step provided us with a list of second-order (theory-centric) themes that were finally assembled into a number (typically three or four) of overarching theoretical dimensions. In the following section, we continue to describe the three main theoretical dimensions that emerge from the data set: (1) market-drivers of organisational change, (2) identity evolution and visionary pathways and (3) internal organisation responses.

Findings

The analysis and interpretation of the data collected suggest a dynamic scenario in which the core values, organisational routines and internal stability are challenged by a number of external factors: new waste management regulations and public tender requirements, the increased import of low-cost goods and greater competition in recycling markets. These external elements mainly consist of market-driven challenges due to institutional changes, which affect the surrounding environment of the cooperative. In order to survive and grow in this changing environment, the cooperative has implemented a number of internal changes. This evolution is mediated by two major factors: the identity of the organisation based on principles such as inclusiveness, equality and empowerment of the workers, and the connection with the local community of stakeholders, who support and legitimate the actions of the cooperative. The process is detailed in the rest of this section.

Market-drivers of organisational change

The first external factor that drives organisational change in the cooperative is the recent increase in commercial competition after 10 years of undisputed expansion enabled by the construction of the headquarters in 2005. As one member of the board of directors reported:

“After ten years of monopoly in the field of second-hand goods, competition was a shock for us”. (Member of the board of directors, audio interview)

For years Cooperativa Insieme was the only business in the area to provide cheap second-hand furniture and goods. By recognising the social value embedded in the cooperative’s products, loyal customers guaranteed the survival of the organisation. More recently, other actors have entered the second-hand market. Vintage stores have traditionally been the only competitors in the second-hand market. This scenario radically changed after 2012–2013. Besides the increasing presence of low-cost imported goods shops, for example, three Chinese import mega-stores were opened in the city in 2015, a serious threat has come from second-hand franchises, which are springing up in the area. The model is simple: with a few thousand euros, it is possible to open a small shop (or an e-commerce webpage) that sells all sorts of second-hand products. The products are usually offered by private individuals, who are paid only when the goods are sold. Unlike Cooperativa Insieme, which collects (from municipal waste collection centres or ‘recycling centres’), restyles and owns the goods, fulfilling strict regulations on waste management, second-hand franchises do not treat (and refurbish) waste; thus, they have very few operational costs and virtually no labour costs. As a result, these new actors have a more flexible cost structure, which, in times of crisis, represents a serious threat for the cooperative market share. One member reported that:

“People tend to dispose of goods regardless of the fact that they still have a market value. Our professionalism in preparation for reuse and refurbishing adds additional value whenever possible to these items, which lowers the impact on the waste management system and creates respectful job opportunities. […] Low cost second-hand franchises are paid just to facilitate the selling of those goods that already have some market potential. This has an impact on both the items we are able to collect and our customer demand.” (Member of the cooperative, audio interview)

Furthermore, there is also considerable competition in waste recovery and recycling. In the past decade, public tenders for municipal waste recycling have become appealing for an increasing number of local and national private companies with higher technical capabilities and greater financial capacity. The stability of the historical partnership between Cooperativa Insieme and the waste management company owned by the local municipality has thus become more uncertain in the last two tenders. This is mainly due to two reasons: first, European policies on waste management are increasingly asking the companies that collect municipal waste to be accountable for the end-of-life of materials, and, second, public procurement in municipal waste management tends to award a contract to the most economically advantageous tender and, thus, to favour the selection of a company for the management of the entire waste management system under efficiency criteria. In addition, the model of ‘recycling centres’ developed by the cooperative in the late 1990s is becoming popular in Italy, and therefore, the number of competitors that can offer adequate experience to secure public tenders in the field of waste management is increasing. This poses a crucial challenge for the cooperative, which – since its inception – has relied on semi-professional and unskilled labour. In the words of one of its members:

“Public tenders pay much more attention to financial aspects than to operations. Similarly, the environmental and social impact is nearly completely disregarded.” (Member of the cooperative, audio interview)

As a consequence:

“The market requires efficiency, optimisation, high level planning and strategy. Today we need to optimise organisational and production costs, something that did not happen in the past.” (Member of the cooperative, audio interview)

In other words, the entry into the waste management business of efficiency-maximising competitors with higher professional skills represents a threat for the cooperative. These challenges profoundly affect two aspects of the cooperative: the way production is planned and organised, and internal decision-making. Traditionally, the focus of the cooperative has been on the inclusion of disadvantaged subjects into a number of productive activities which in turn generate a portion of the income necessary to keep the organisation running. This mission, combined with the founders’ rigorous principles of equality and empowerment, has favoured a horizontal/democratic approach to management (all the members are equally important and represented, regardless of the tasks they accomplish) over hierarchical rigid structures (where different levels of authority come with non-reciprocal chains of command and control). The organisational structure thus consists of only two elementary building blocks: workflow-based teams, in which the members pursue the same operational objective under the supervision of a senior member (e.g. the collection, repairing and selling of bicycles, garments, furniture and antiques), and the ‘cabina di regia’ (literally the ‘cockpit’). The ‘cabina di regia’, which is the only control board entitled to make critical decisions and monitor the achievement of strategic objectives, meets regularly and its meetings are open to all the members. Senior members, thus, do not hierarchically coordinate or ‘command’ the new members but act as tutors to help them realise their potential, which is also measured in terms of social impact. In doing this, they are committed to link creativity and problem-solving by stimulating and facilitating the dialogue in the ‘cabina di regia’ and in daily informal circumstances. Not only do all the members have equal weight in voting for strategies and key decisions (e.g. those related to the expansion which occurred in 2015) and enjoy total salary equality, but they also have the same opportunities to contribute to their definition. The primacy of ideas on hierarchies emerges from both periodic formal meetings and daily informal discussions aimed at solving information asymmetries. These discussions, which typically arise spontaneously at team level, are socialised with the rest of the cooperative also through conviviality, which is an organisational tool that is preserved, for example, by making the cafeteria and the bar lively spaces with a chill-out atmosphere. Even the length of the discussion on critical decisions is not imposed because ‘the development of a common sense of time-efficacy is itself one of the goals of the organisational life’, as reported by one senior manager. As a consequence, social inclusion was considered since the founding of the cooperative as a key manifestation of efficiency, efficiency being conceived as the ability to avoid wasting social value, and participation of strategic planning, being strategies conceived as a plan of action designed to achieve social value. In other words, the economic dimension has always been functional to the social mission of the cooperative. Moreover, subsidies – which are usually aimed at improving financial performance instead of social performance – have never been considered a priority in comparison with the other cultural initiatives promoted by Cooperativa Insieme. As one member of the board of directors reported:

“Our goal is to rely only on the value that we create with our work, which is respectful and valuable.” (Member of the board of directors, audio interview)

This increasingly competitive market imposes a new perspective on the organisational routines that govern the cooperative. This also includes the consolidation of non-core skills and competencies. An example is the creation of a health and safety and environment (HSE) unit, which has increased the expertise of the cooperative in dealing with environmental regulations. The unit has become a point of excellence in Cooperativa Insieme, as shown by the increasing number of support requests received from companies that are struggling to comply with complex sectoral regulations. At the same time, this process has resulted in a change in the attitude of the members towards the commercial operations of the cooperative. In the interviewees’ words:

“Our sales points provide fresh cash. If we want to become less dependent on public tenders we need to change our attitudes towards the clients.” (Founding member of the cooperative, audio interview).

“We became sellers!” (Member of the cooperative, audio interview)

From the interviews, it emerges that today the cooperative faces unprecedented challenges due to new competitors that push them to increase production efficiency and optimise costs. To address these challenges, the cooperative has been forced to acquire entrepreneurial skills, for example, managing stock variances in the warehouse, dealing with business-as-usual suppliers and clients and managing more complex accounting systems. These elements have been mostly neglected and often even opposed in the past by the original members, who feared that this sort of ‘professionalisation’ of the cooperative would have undermined its foundational values of solidarity and social inclusion. According to the interviewees, the generational change (a new generation of younger members more inclined to acquire new skills) and the pressure from the new competitors overcame this initial inertia. Nevertheless, as many interviewees have stressed several times, the importance of community inclusion in decision-making processes prevails over economic performance, which is conceived as a means and not as the goal of the organisational efficiency.

Cultural identity and visionary pathways

The new challenges presented above have led the cooperative to several internal conflicts both in the past (as reported in the interviews) and in recent times (as observed during the implementation of the new waste management practices). Two major elements, linked to the building of the cooperative’s identity, emerged from the interviewees as mediating factors in the evolution of the cooperative. The first is the original core mission of the cooperative which is enacted daily by its members by promoting inclusiveness and equality. The members share the idea that the cooperative is a collective enterprise in which each person has the same value and weight – ‘an orchestra without a director’ as one of the interviewees told us. In other words, each member is responsible for the well-being of the cooperative and, at the same time, is – at least in principle – able to shape the fate of the organisation. This implies parity in salaries among all the members and the right to be informed of all the critical decisions, as well as the possibility of influencing the direction of the activities conducted within the cooperative. Interestingly, these principles are also the preconditions for joining the cooperative. In the words of one of the interviewees:

“We all shared the same values before joining the organisation. Even technical workers joined the cooperative because they share our social and environmental principles.” (Member of the cooperative, audio interview)

These members’ enduring values also influence the activities that the cooperative is engaged in. The recycling centres and the second-hand business are both driven by an anti-consumerism sentiment, a profound environmentalism, and the desire to see labour as an activity that creates social goods rather than profit.

The second element that has characterised the cooperative since its early beginning is the ecosystem of stakeholders in which it is embedded and on which it draws its social legitimacy. In the words of one of the founders:

“When people buy our products, they know that this is not just the Cooperativa Insieme … they know they’re supporting a network of social actors who benefit our community greatly such as Cooperativa Tangram, Network Open Families and many other local initiatives.” (Founding Member of the cooperative, audio interview)

“In a sense, the commercial activity of the cooperative gives visibility to our non-commercial activities.” (Founding Member of the cooperative, audio interview)

The cooperative could not exist without the network of personal and institutional contacts that legitimise its activities on a local level. Apart from the formal and informal links between the cooperative and its twins Tangram and the informal network of Open Family, the organisation is open to monitoring and support from the local community. Consumers, unlike donors, are perceived as active multipliers of a cultural change. An emblematic example of this is the process that led to the construction of the cooperative’s present head office which is a workshop, a warehouse and a shop selling the cooperative’s products. For about 25 years (1979–2005), the cooperative rented a warehouse in the outskirts of Vicenza. At that time, the warehouse was used to receive materials to be recovered but was not adequate to support an efficient flow of items between the laboratory and the shops. Thus, when the landlord decided to triple the rent, the members unanimously agreed to start from scratch and build new premises to increase their presence in the local community. Soon after, a committee that involved local civic society groups was established. The committee was composed, among others, of the members of the cooperative, a magistrate, an architect, Banca Etica ³ and a dozen representatives from local environmental and social organisations. The committee was in charge of the fundraising for the new head office and for coordinating a participatory body to plan and carry out the construction of the new space. For months, the cooperative was the focus of public debate in Vicenza, and several local actors contributed to the creation of a new space in which the organisation and its members could flourish. After a decade (between 2013 and 2015), the increased production volumes made it necessary to build another warehouse conveniently equipped with modern shelving units and traceability devices. The success of the cooperative in the recycling business attracted the interest of the Italian national research council that supported the new expansion through the Italian Ministry of the Environment. In both cases (a new head office in 2005 and a new warehouse in 2015), external forces of change resulted in an increased capability of the cooperative to produce impact.

Internal organisational response

The external challenges described above led to changes that, especially in the past decade, affected at least three aspects of the organisation. The first aspect regards the financial viability of the cooperative. In order to deal with competition, in 2005 the members came to the conclusion that marketing their products effectively could not be relegated to a secondary activity. Since the cash flow generated by the cooperative shops was crucial for their survival and independence from external subsidies, sales had to be regarded – then more than ever – as a fundamental pillar of the organisation.

In this regard, the construction of the new head office, which was finished in 2005, was a turning point which was rivalled in importance only by the inauguration of an additional modern warehouse and additional shops in 2015 and 2016. To reflect this (at that time) new focus on marketing, the shop floor was reorganised to attract new clients and the look and feel of the products was drastically improved. In order to differentiate their products from their direct competitors, such as second-hand franchising markets, the cooperative started drawing on the social value attached to their products. The new building allowed clients to get in touch directly with the members of the cooperative involved in production. Moreover, the marketing strategy explicitly started leveraging the ways the products are collected, recycled and renovated, giving the clients an overall idea of the social benefit attached to the products they buy. The main value proposition is that not only do the clients buy an appealing second-hand product, but they also contribute to the well-being of the local community by recycling and supporting the integration of disadvantaged young people in productive activities. As a consequence, as reported by the internal market analysts, the client profile has been slowly changing over the past decade. The traditional clientele of small retailers and often unemployed young people has been replaced by middle-class clients. In the words of one of the interviewees:

“We try to continuously improve our work. This means that when we are at the recycling centres, we cannot just focus our attention on a few pieces with high market potential. Nowadays, an increasing number of people are aware of the need for more responsible consumption.” (Member of the cooperative, audio interview)

The second aspect is the inclusion in the organisation of technical roles to improve the production efficiency. According to the interviewees, right from the start, there was a demand for skilled professionals. The necessity, however, was increasing with the scaling up of the cooperative which occurred between 2005 and 2015 and, thus, the need to manage an increasing number of complex processes (e.g. recycling centres, disposal and reuse of waste, information and communications technology (ICT) and financial accounting). The demand for skilled individuals, however, does not ideally match the process of recruiting and renewal of the cooperative’s members. As mentioned above, joining the Cooperativa Insieme means having a vocation, a specific worldview that implies the acceptance of ethical values such as salary parity among the members, horizontal participation and individual responsibility towards colleagues. These factors make the recruitment of certain specific categories of professional (e.g. financial experts or expert electricians) problematic as they might be interested in the cooperative’s activities but might not necessarily share its values. To overcome these shortcomings, in 2005 all the members of the cooperative decided to create a new profile – a salaried employee who is not a member of the cooperative. Thanks to this decision, today some employees with proven expertise operate within the cooperative even though they do not embrace all its values and norms and, thus, are not full members.

The third aspect concerns the internal organisation of the cooperative, which, according to the interviewees, is also the most problematic. The pressure to be more efficient, to scale up and to be competitive, conflicts with the founding principles of the cooperative, the members’ active participation and their empowerment. For decades, the cooperative has functioned according to a pure mechanism of participation based on collective decisions and unanimous consensus. Every Monday the members gather in a general assembly and debate the state of the cooperative and the plans for the rest of the week. These windows of participation were paid as working hours. In order to optimise the cooperative’s activities, more recently (since the further scale up in 2015) a board of directors was established by co-opting senior internal members. The board is in charge of deliberating the daily activities of the cooperative without going through the assembly of members; however, board members are expected to preserve the original values. In fact, all the members have access to the information about the decisions taken by the board and, above all, the control on their persistence within the cooperative. To this end, the board reporting on its activities to the assembly still takes place every Monday, but the participants no longer receive compensation. These changes, which in many ways appear to undermine some of the original values of the cooperative, are tolerated by many and opposed by a few. As some of the interviewees told us:

“Inevitably, we have become like a firm now, but it is now more difficult to maintain the participation of all the members.” (Founding member of the cooperative, audio interview)

“We need to take decisions quickly, and this sidelines worker involvement.” (Member of the cooperative, audio interview)

For some of the interviewees, this is a weakness vis-à-vis the external challenges that threaten the stability of the cooperative. For others, this is the sign of a vibrant and dynamic organisation that is able to reinvent itself for the survival of its founding principles. Despite the on-going lively debate about scaling up versus participation and efficiency versus the pursuit of social values among the organisations’ members, there is no doubt that the commercial success and the prosperity of the cooperative, together with the strict preservation of its original identity and values, make Cooperativa Insieme an interesting step towards an alternative economic model.

Discussion

In this article, we have aimed at better understanding under which conditions SCs can regenerate by scaling up their activities while preserving their foundational values. We have focused on the story of Cooperativa Insieme, an organisation that has struggled for 37 years to create a radical democratic alternative within its organisational routines. We suggest that the organisation solved the ‘growth dilemma’ by scaling up their activities but, at the same time, remained loyal to its founding principles without compromising on internal democracy. In this section, we elaborate on these findings to discuss their implications for the ‘Regeneration Thesis’ literature. We suggest that two main factors were fundamental in preventing the cooperative’s ‘degeneration’ into a more market-driven organisation: the process of identity building and the role of the social network of stakeholders that supports the cooperative.

Theorising the role of the cooperative identity in preserving its foundational values

Our findings make visible the role of the cooperative’s identity and the sense of belonging that shapes all the organisation’s initiatives. We observed that the process of identity building that characterised Cooperativa Insieme’s journey since its foundation has a crucial role in its ‘regeneration’. This confirms what Borzaga and Galera (2016) suggest, that SCs which are supported by a social movement that shares strong ideals and a common identity have more chances of survival and scaling up. We suggest that the process of identity building in Cooperativa Insieme is based on two mechanisms.

The first consists of building up the cooperative identity around its commercial activity. Our analysis shows that the organisation was able to embed and transfer its identity in their economic activity to gain a competitive advantage vis-à-vis their new competitors. According to the interviewees, for instance, one of the key elements in the commercial success of the cooperative has been the reframing of their cash-generating activities from a ‘necessary evil’ to an unexploited opportunity. This change, which also implied an ideological shift for the cooperative’s members, has been managed by creating a strong identity around the cooperative’s outcomes – their second-hand products, their cultural initiatives and their recycling work. This ‘identity’ counterbalances the pressure to compete on the grounds of efficiency and optimisation by adding critical competitive advantages to the cooperative’s products in comparison with their profit-seeker competitors. Furthermore, this added value is not aligned to the capitalist logic of profit maximisation but rather represents an intangible (non-commodified) social good (Gerber and Gerber, 2017); by buying the cooperative’s products, clients also implicitly (but often overtly) support their non-commercial activities. In this way, through the consumption of the cooperative’s products, the clients feel they are part of a bigger network of stakeholders whose objectives are aligned with the cooperative social and environmental goals, for example, the provision of meaningful jobs for disadvantaged groups or the recycling of urban waste. The logic behind the effective extension of the concept of value from the monetary dimension of a product to the more complex social desirability of an ecosystem resides in the mutual recognition and responsibility among actors. For example, the de-commodification of goods via the influence of organisational and ecosystem identities is evident in the evolving perception (and identity) that the members have of the consumers. Unlike the past, today the commercial activities (e.g. sales, client relations and marketing) are not perceived as an undesirable necessity but as a means to trigger a broader social change. Similarly, consumers feel they are becoming more actively involved in the ecosystem through an increasing number of physical interfaces (e.g. recycling centres, shops, the bar and the initiatives that Tangram and the Open Families Network organise in the city). This has happened with a radical shift in the attitudes of the cooperative’s members towards ‘social marketing’ – not only do we recycle, reuse and employ disadvantaged people, we are also good at producing economic values out of our activities.

The second mechanism of identity building is based on the reinforcement of the principles of internal democracy and equality. The principle of equality in Cooperativa Insieme comes with a number of organisational implications. The first is salary parity, which reflects the supremacy shared by the members of ethical values over personal benefit. As noted in other contexts, this equality is much more than just symbolism; it is a precondition for joining the organisation, which applies to everyone, including experienced members or disadvantaged people (Paranque and Willmott, 2016). Second, equality implies a shared leadership, which is evident in the horizontality of the organisation. This has led over the years to the implementation of a model that reflects the metaphor of the ‘orchestra without a director’, where every member contributes according to their personal talents and skills and tries to remain in harmony with the others. The rhetoric of the ‘orchestra without a director’ was a central theme of the cooperative’s identity that is hugely used to promoting and legitimising their activities vis-à-vis their business-as-usual competitors. This narrative has, though, evolved over time. More recently, the increasing complexity of the organisation’s activities, which requires a significant amount of ‘peer-listening’, has led to the introduction of a board composed of experienced members. This innovation, despite some reluctance from the board members themselves in accepting the role, has led to the evolution of the ‘orchestra without a director’ model towards an ‘organised orchestra without a director’. The result is a reduction in decision-making time with little impact on the inclusiveness and empowerment in all the phases of the cooperative’s life. Returning to the metaphor of the orchestra, the board is not asked to define the arrangements, but just to control the volume of the different contributions to favour self-tuning and harmony. This, of course, to some extent violates the assumption that all the contributions are equally relevant, but still leaves all the members with the possibility of taking an active part in the composition. Despite these internal adjustments, our findings show that the cooperative members are still strongly motivated by the fact that they are working for an inclusive and democratic organisation. This is a fundamental characteristic of the organisation’s identity.

In conclusion, the case study suggests that SCs built around a strong social (and local) identity can create value by leveraging on non-commoditised markets. This implies that the regeneration (and the survival) of an SC necessarily requires mechanisms to reinforce, protect and evolve the organisation’s identity to remain anchored to its foundational values. However, external factors can always threaten such a process. The pressure of capitalist markets can create tensions (Paranque and Willmott, 2014) and threaten the stability of the ecosystems that support SCs, whose resistance is not limitless (Narvaiza et al. 2017). Furthermore, as has been noted on several occasions, capitalist organisations can find ways of benefitting by appropriating the social discourse and identity of organisations such as Cooperativa Insieme (Marques and Mintzberg, 2015). Further research is required to better understand how SCs can protect, evolve or even distort their identity due to the pressure of external factors.

Theorising the role of stakeholders’ social networks in the flourishing of SCs

So far, the literature on SCs has documented that they can often survive in segregation from mainstream capitalistic economies (Parker et al., 2014). What is more, the mobilisation of citizens committed to institutional change can allow the emergence of SCs even in hostile ideological, economic and political contexts (Borzaga and Galera, 2016). According to Grillo (2015), the conditions enabling the emergence of such a bottom-up process includes the existence of a critical mass of committed people, such as volunteers, civil society groups or individual citizens, who play a key role in the creation and survival of SCs. Our analysis confirms the importance of the network of stakeholders that not only supports the emergence of SCs but also assures their survival. This latter point has important implications for the regeneration theory. The emergence of a stakeholders’ ecosystem (e.g. municipalities, local banks, professional organisations and social organisations) enables – via a process of social legitimation (Johnson et al., 2006) – a number of compensation mechanisms that range from institutional support (e.g. voluntary members of the advisory committee in fundraising initiatives) to consumer behaviour (e.g. preference for ‘Cooperativa Insieme’ branded products and services). Furthermore, as already observed by Borzaga and Galera (2016), a networking ability resulting in effective lobbying activity was fundamental to the survival and expansion of the cooperative (e.g. see the story of the acquisition of the new warehouse and the construction of a new head office). These factors proved to be crucial in the regeneration of Cooperativa Insieme.

The stakeholders’ network also played a crucial role in increasing the resilience of the cooperative to external threats such as the increase in rent for the head office, the competition from second-hand franchising and the competition from the waste management industry. The case study shows that the cooperative reacted by drawing on the surrounding ecosystem as a social laboratory, which is continuously in search of visionary solutions. For example, from its origins, the sale of second-hand goods was just a means for including disadvantaged and marginalised people. More recently, it has become a point of connection with citizens and is designed to impact a wider scale (e.g. reduction in environmental and economic failures in waste management). At the same time, the threat posed by new regulations in public tenders that favour capitalist over SCs has worried some of the members. Yet the same threat stimulates other members (or their surrounding stakeholders and supporters) to explore innovative solutions without compromising their founding principles. The result is a continuous search for visionary solutions within the organisation in the surrounding stakeholders’ ecosystem and beyond (networks with culturally proximate cooperatives can counterbalance the entrance of new competitors into the original ecosystem). Thus, the cooperative, in the eyes of its members and the stakeholders that support it, is a symbolic social laboratory in which new ideas, hopes and futures are debated and put into practice. The internal cohesion and the external permeability of this social laboratory feed the motivation of the members to transform their vision into practical actions even at such an advanced stage of growth. This external permeability, we argue, has been revealed to be fundamental in the regeneration of the cooperative.

Conclusion

Alternative economies are not a marginal phenomenon, but a vibrant laboratory of experimentation. Our case study provides insights on how to turn ideals into action in the long run when a SC starts growing and becomes a visible presence in the market. This is, thus, a contrasting perspective to the ‘degeneration thesis’ which assumes that non-capitalist organisations tend to compromise on their founding principles when they scale up. Cooperativa Insieme is a rare case of an organisation that has remained loyal to the principles of equality and internal democracy. The case study highlights that alternative economies should (and can) continuously adapt to the external pressure exerted by the capitalist mainstream. This adaptation, in the case study, led to a change in the way the commercial activities (and their implications for the organisation) were perceived. This change was possible thanks to a process of trial and error at all the interfaces with stakeholders.

We believe our work supports the ‘regeneration thesis’ – that non-capitalist (or post-capitalist) organisations can ‘survive’ their success and expansion. Cooperativa Insieme’s model of an ‘organised orchestra without a director’ offers an alternative aimed at preserving equal rights, inclusiveness and empowerment within the organisation. Unlike ‘decaf resistance’, the interpretation of alternative organisations as social laboratories that survive, thanks to the creation of tangible impact on their ecosystems, restores the dominance of the collective ego over the personal ego. How identity, a sense of belonging and commitment are interrelated is still far from clear, but empirical evidence shows that the alignment between ideals and ethics in action can lead to surprisingly positive results in terms of cohesion and empowerment.

The case study highlights not only the practicability but also the sustainability of an organisational model which moves equality from being merely symbolic to being something material and which decouples responsibility from power. Although such a model might not be acceptable for everybody, and thus cultural attitudes might limit its dissemination, the social laboratory approach seems an effective way of reconciling internal (the cooperative growth) and external impacts (the social impact on the community) and gaining consensus. Unfortunately, sectoral policies still consider these experiences as oddities within a capitalistic framework and this can pose a significant threat to their existence. The Cooperativa Insieme case study, however, shows that these threats can also stimulate the creation of models that present a viable alternative to the mainstream capitalist organisation. Policymakers might be persuaded by these arguments to reconsider their approach towards SCs. Nevertheless, it is worth recognising that the results of this study draw on extensive observations and a comprehensive data collection and analysis that refer to a specific socio-economic context. Confirmation of similar findings in other contexts would certainly help to strengthen the external validity of this exploratory study. Moreover, for the sake of synthesis, the case study does not treat the power dynamics within the cooperative and its gender dimension in depth. If SCs are a viable alternative to capitalist enterprises, would they be also able to reframe gender relations in the workspace? (e.g. see Federici, 2013) This very relevant question deserves to be addressed by future research.

Finally, the results highlight that the founding principles of SCs can survive the organisational models that govern such organisations. Competition forces a rapid evolution of this sector, thus, it is hard – perhaps impossible – to predict the long-term evolution of Cooperativa Insieme. Future observations will help in the understanding of the long-term sustainability of a model that today appears visionary and promising.