Academic journal article The South East Asian Journal of Management

The Effect of Human Resources on Capital of Worker Cooperative

Academic journal article The South East Asian Journal of Management

The Effect of Human Resources on Capital of Worker Cooperative

Article excerpt

(ProQuest: ... denotes formulae omitted.)


The Asian economic crisis in 1998 had caused high unemployment rate in Indonesia. This condition calls for worker cooperatives which can provide their member with jobs, but none has developed properly. As a consequence, worker cooperatives have not been able to make a significant contribution in resolving the problem. This is true especially for worker cooperatives in the loading and unloading services, which was founded by loading and unloading labors in every Indonesian port. The cooperatives face severe capital constraints due to the weakening of loading and unloading activities and increasing demand for the utilization of mechanical loading and unloading equipment.

The low member participation and relatively poor capability of administrator in increasing necessary capital to improve the effectiveness of such capital on worker cooperatives in the loading and unloading services have implications on the underdevelopment of the cooperative business. The role of worker cooperatives in overcoming the problem is still a big question. In addition, investigating potential methods to improve worker cooperatives through the empowerment of their member, administrator and human resources manager is also necessary.

Therefore, this paper investigates the links between members, administrators and human resources managers of worker cooperatives in the loading and unloading services. This pa- per aims to answer the question of how do cooperative members, administrators, and human resource managers' influences capital of worker cooperatives in the loading and unloading services, both simultaneously and partially.

Literature Review

Cooperative, according to Eschenburg (1994), is the process of collective action of two or more economic actors deliberately restricted in order to achieve the same goal. In the International Cooperative Alliance's Statement on the Cooperative Identity (ICA, 1995), a cooperative is defined as: "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprise". As according to O'Sullivan and Sheffrin (2003), a cooperative is: "a business organization owned and operated by a group of individuals for their mutual benefit".

Worker Cooperative defined by Harper (2001) as a cooperative is set up to provide jobs, not services, to members. Members of a service cooperative own the cooperative and buy from or sell to it, while members of a worker cooperative own it and also work for it. Soedjono (2003) stated that a worker cooperative is a type of cooperative in which the members are owners, employees and supervisors/controllers of cooperative. This cooperative is managed in a democratic way: "one member, one vote".

In a worker cooperative, the administrator and manager are elected by every workerowner in which they are considered and treated as workers of the firm. In traditional form of worker cooperative, all shares are held by the workforce with no outside or consumer owners, and each member has one voting share. In practice, control by worker owners may be exercised through individual, collective, or majority ownership by the workforce, or the use of individual, collective or majority voting rights, which exercised on a one-member one-vote basis (Ridley-Duff, 2009).

As stated in the World Declaration on Worker Cooperatives approved by the International Co-operative Alliance, the basic characteristics of the worker cooperative shall be as follows (ICA, 2005):

1) They have the objective of creating and maintaining sustainable jobs, generating wealth, allowing workers' democratic selfmanagement, and promoting community and local development.

2) Free and voluntary membership.

3) Work shall be carried out by the member.

4) The worker-member' relation with their cooperative shall be considered as different to that of conventional wage-based labour and to that of autonomous individual work. …

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