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Entrepreneurs and Cooperative Values in the Info-Communication Age Imprimir E-mail

Revista Científica Visión de Futuro
Año 1 - N° 2 - Vol. 2
Julio a Diciembre de 2004
ISSN 1668 - 8708 versión en línea
ISSN 1669 - 7634 versión impresa

Dr. Alfonso VARGAS SÁNCHEZ
Universidad de Huelva
Facultad de Ciencias Empresariales
Plaza de la Merced, 11
21002-Huelva (España)
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ABSTRACT

Social economy forms of organization, with cooperatives as their main exponent, are playing an increasingly active and prominent part in today's society, in which the development of entrepreneurial ability has become one of the priorities of employment policies, so much so that the creation of firms has even been described as eighth art.
The businessman is currently identified with the entrepreneur, and in cases where the latter is a corporate body it finds in cooperatives a formula with a very particular profile that chimes in with certain ruling values of our society.  No firm can be detached from the feelings, wishes and hopes of the society of which it forms part, on the contrary it needs to interiorise those values and align its behavior with them if it is to provide its "stakeholders" with exactly what they are looking for.  This is a specific strength of the culture of cooperativism, which is steeped in democracy, solidarity etc. without conflicting with the business management efficiency that makes its survival and development possible.

KEYWORDS:  cooperativism, firm, entrepreneur, info-communication technologies.

THE INDIVIDUAL IN THE INFORMATION ERA

The future of society, the economy and firms is fraught with paradoxes and apparently conflicting forces that we need to be able to reconcile.  Paradox permeates every aspect of life.  As it is not something we can eliminate, we have to manage it and doing so is one of the crucial challenges we have to face from day to day.  Hegel's dialectic helps us to understand such situations by postulating a clear confrontation between the two positions of thesis and antithesis with a view to developing a synthesis that presents a new solution rather than a mere compromise.

Thus paradoxically, in a world like today's in which machines are dominating nearly everything and will in any case ultimately dominate everything, we find that the real difference between some firms and others, between those operating as leaders and those playing the part of followers, between the best and the mediocre, between those which are admired and those which remain shrouded in the anonymity of indifference, lies in people, their aptitudes and attitudes, their training (knowledge and skills) and behavior, their talents and values, i.e. intangible factors that are difficult to imitate.  Technological development is also leading to an exponential increase in the difference in productivity between the best and the mediocre.  This leaves firms with no option but to try to recruit what the French call the "crème de la crème".  The results of a survey by the magazine Fortune in 1997(1) concerning the world's most admired firms made it clear that the ability to attract, motivate and retain talented people is the best predictor of excellence (the variable that most closely correlates with success), hence the central role attributable to individual expertise.

A world in which, mainly due to the development of information and communication technologies (and the resulting silent revolution), information now flows at an unprecedented speed, a world in which the accessibility and availability of information means that our previous problem of lack of information is often superseded by that of selecting the information that is really relevant, is leading to an extraordinarily challenging new situation in that whereas it had until now been claimed that power was exercised by those in possession of information (information was power), the new reality is that power is coming to be held by the depositories of ideas, governance by information being replaced by governance by ideas.  To quote Peter Drucker, "decisions have to be taken not by authority but by knowledge" (Negocios, 28-10-97, 38).

Now that expertise is global and hence increasingly intense, and customer(2) power has increased, firms need ever greater injections of creativity to generate the innovation capacity that will enable them not so much to satisfy as to surprise, enthuse and excite customers.  This again means that ideas are more than ever necessary for firms to survive and develop.

All this leads us to identify knowledge and its management (its creation, use and transmission) as a critical factor in the management of organizations.  This is why the human factor has become a fundamental aspect of modern business administration, since people are the sole depository and the only source of the ideas and creativity that make innovation and continuing improvement possible.  We need to remember that creativity is the ability to generate ideas, whereas innovation is the ability to put them into practice.

Three quotations will provide adequate support for this point of departure:

· "The new source of wealth is concentrated intelligence, the ability to acquire and apply knowledge and know-how.  Singapore, which calls itself the intelligent island, recognizes … that traditional sources of wealth and comparative advantages in terms of land, raw materials, money and technology can all be acquired if only one has people with the intelligence and know-how for applying them" (Handy, 1994).

· "If I can take your product and make it more cheaply, if natural resources can be bought at reasonable prices from all over the world, if we can provide capital and it is possible to copy technology, your only remaining asset is trained people" (Thurow, 1996).

· "The solution to any problem of human organization involves human aspects that depend on specific circumstances and go beyond the bounds of methods and techniques.  In an organization with good leadership and proper motivation of participants, any technique can operate properly, since the people concerned will overcome its defects.  In an organization where these conditions are not fulfilled it is unlikely that any technique, however good, will have any long term success.  Those involved will see to it that it does not work …" (Rosanas Martí, 1999).

 

THE IMPACT OF BUSINESS ON SOCIETY

Let us consider some manifestations of this phenomenon:

· The last decade has seen a very marked trend in business strategy to what is known as "downsizing", i.e. the slimming down or lightening of corporate structures, with a view to gaining cost competitiveness (by reducing costs and converting fixed costs to variable) and achieving the agility and flexibility that a dynamic environment calls for.  In many cases this process has taken the form of "externalization" (subcontracting or outsourcing) of certain activities previously undertaken by the firm itself, and this has led to the creation of new auxiliary firms participated in (or even controlled by) workers who have lost their jobs as a result of the "diet" that has been applied to trim their former firms' excess weight, and have therefore found it necessary to adopt a new role as businessmen.  In many such cases, as in the most traumatic ones arising from crisis expedients, social economy formulae (cooperatives, employment associations) have been widely used to as vehicles for these worker ventures.

·  We have to a considerable extent reverted to "small is beautiful", despite the paradox of this also being a time of great corporate concentration processes aimed at achieving the critical mass needed to compete properly on worldwide markets.  The balance that needs to be achieved is combining the possible advantages of scale available to large organizations with the agility and flexibility of structure of small ones(3).  In any case, attention has turned to local development and small and medium sized enterprises as potential sources of economic growth and social well-being capable of competing successfully if they can find and become strong in their particular market niche.

· The development of the human race's ability to innovate has clearly accelerated enormously in the last few decades.  This innovation is undoubtedly leading to new business opportunities and the consequent creation of new enterprises to exploit them, enterprises whose most valuable resource is not financial but the intellectual capital of its promoters.

· The image and role of the businessman in today's society have undergone positive change in the direction of his true profile as a creator of employment and wealth and an essential element for social progress.  All the agencies involved in the encouragement of economic activity, including the universities, are putting considerable effort into stimulating the spirit of enterprise and the starting up of new business projects, particularly among young people, by encouraging individual or collective self-employment as the  most effective way of dealing with unemployment.

· This  spirit of enterprise is also being adopted by firms needing creative people to generate new ideas and drive the new projects needed for firms to develop in a context in which innovation is a key element:  enter the "intrapreneur".

· Business concepts and management techniques are also spreading and being applied increasingly in areas such as public administration and non-commercial private entities, in which principles of efficacy, efficiency, cost effectiveness , total quality etc. are beginning to be common currency.  Even at household level it has become necessary to know how to manage and make the most of slim resources in the same way as firms.

 

"HUMANISATION" IN FIRMS

We are thus on the way to a type of firm whose outstanding feature is the primacy of knowledge (know-how, intellectual capital) as a basic production factor, leading society to realize that people are the most valuable resource in the value creation process, and hence the best potential investment with a view to progressing and winning the future.  To quote again from Peter Drucker (1993),  "knowledge is replacing capital as the basic resource of economics"(4).  On the same theme, "if Drucker is right and knowledge is the most important capital of tomorrow's firms, then an ownership model that denies a feeling of ownership to those who provide and apply their knowledge but does afford such a feeling to a group of absent persons does not seem a suitable recipe for achieving maximum levels of business creativity" (Clarke & Monkhouse, 1994, 11).  There is in fact an increasingly widespread practice whereby firms take the initiative along the lines of rewarding their employees with holdings in their corporate capital so that they thus acquire the dual status of worker and shareholder, the firm thereby hoping to enhance their loyalty and increase their degree of commitment to the firm.

The table below shows the way American firms, in the heartland of capitalism, are increasingly using ESPOs (Employee Stock Ownership Plans), i.e. plans whereby employees accede to ownership of shares in the company.

 

 

 

(*) Value of Plan Assets: $400 billion.
Source:  www.nceo.org/library/eo_stat.html

 This "humanizing" trend is also reflected in senior levels of business organizations now preferring to talk about leaders (leadership) rather than managers (control) and about collaborators or associates rather than subordinates; decentralization, participation and "flat" structures are making headway at the expense of centralization, autocracy and "tall" structures, as are organic structures at the expense of bureaucracies.  As Tersine, Harvey and Buckley (1997) put it, the focus has moved on from technology to people, from specialists to multifunctional workers, from individual work to teamwork and from an organizational framework in which the manager takes the decisions to one in which workers take their own decisions.

There is a similar humanizing trend in the way those in charge of firms are giving priority to the management of people and how to align their behavior with the firm's objectives, i.e. the human component of business management and its "soft" or cultural aspects.

 

THE COOPERATIVE AND THE COLLECTIVE (DEMOCRATIC) ENTREPRENEUR

Having reached this point and being full of this "humanizing spirit" with which today's business management concepts are imbued, it is perhaps time to recall, as indicated by Morales Gutiérrez (1996, 254), that the cooperative is the human enterprise, the "person enterprise par excellence, a form of enterprise based on the fundamental value of the primacy of people over all  other production factors".  To parody the happy classic slogan of Spanish savings banks referring to "the human face of money", cooperatives may be described as the "most human face of capitalism" (Vargas Sánchez, 1999, 227).

It thus seems as if conventional capitalist firms' practice is moving closer to that of cooperatives(5) at a time when there is every indication that cooperative principles are subject to greater flexibility that is softening the distinctive profile of cooperatives.  We thus have two models coexisting in the market economy that seem to be undergoing mutual enrichment to adapt them better to their environment, what might be termed a certain convergence without loss of the identity of either.

There has nevertheless been a great deal of debate about the presumed inherently marginal and weak position of cooperatives, which contrasts inter alia with:

· The fundamental part they play (along with other social economy institutions) in creating employment, both quantitatively and qualitatively.

· The universal nature of cooperativism and its outstanding presence in numerous economic activities, with business realities that prove, by their success, that cooperatives are not bound to be inefficient.

There is enough evidence to identify the following as the main causes of failure of cooperatives:

· Little commitment by members.
· Unprofessional management.
· Misinterpretation of the principles of cooperation.

Accordingly, if these three main weaknesses are rectified, there is no prior obstacle to cooperatives being excellent enterprises(6), particularly bearing in mind that they do at the same time have a number of potential strengths, as follows:

· The cooperative as a participation enterprise.

The specific characteristics of a cooperative include member participation in the three types of flow that take place in an enterprise:

- Information/decision flows, by participating democratically (one member = one vote) in the corporate machinery (participation in management(7)).

- Physical flows in which the member is involved as supplier and/or consumer.

- Financial flows whereby the member contributes capital and shares surpluses in a manner related to the member's participation in the production and/or distribution process (physical flows), i.e. pro rata to the cooperativized activity(8).

Therefore, if participation in a cooperative forms part of its actual definition as an enterprise and if participation is broadly regarded as one of the keys to corporate excellence, surely the cooperative enjoys from this point of view a good starting position for achieving high levels of competitiveness.

Conventional capitalist firms have realized that they need to enhance participation at all levels as a means of continuing improvement, raising quality standards and stimulating creativity and hence innovation, …(9), in short, a means of achieving satisfaction for employees, for customers and, finally, for shareholders, a satisfaction which is in fact inherent in the nature of a cooperative.

 Dual status as member/supplier and/or member/consumer

In organizations in which suppliers and/or consumers are simultaneously members, there are surely certain initial conditions that encourage such enterprises to be quality-oriented.  We should note that this involvement (proximity) of suppliers and consumers, which already exists automatically in a cooperative, is being keenly sought after by conventional capitalist firms.

Moreover, if such an orientation to quality (to customers and satisfying them), which also defines excellence, requires a further step from the individual's participation to his commitment to the enterprise, and this requires (Aranzadi, 1998, 91) being able to take decisions, be informed about the performance of the business and share profits, surely the special characteristics of cooperatives place them in an ideal position to adopt these concepts of modern business management.  These are surely the postulates of a cooperative.  If the purpose is to generate in the people who form part of the organization a strong sense of belonging so that they see the enterprise as to some extent their own, what better way of feeling part of something than actually being part of it?  The cooperative is thus a formula that encourages deep involvement in or commitment to the enterprise.

 Orientation to people and the values of cooperativism

Taking it that orientation to people and the existence of a clear set of shared values within the organization are other defining features of excellent enterprises, a cooperative embodies (or should embody) both of these characteristics, for the following reasons:

Firstly, because it is a markedly personalized form of company in which the human factor has primacy over the capital factor.  We should also note the criteria that govern member participation, and the principle of education and training.

- Secondly, because one of the particular features of cooperativism is that it has universal values and principles that define it and guide members' behavior both individually and collectively.  Cooperative values and principles clearly form a culture, a particular way of thinking and acting.

 Democratic status of the leaders

In a situation in which the leader model aspired to(10) is not the traditional one carrying on its shoulders the whole weight of the enterprise but one that is capable of creating an environment favorable to each member of the organization bearing their share of the load (Williams & Cothred, 1997)(11), the democratic status of the leaders of cooperatives in their capacity as servants of the organization places the cooperative in a better position than any other enterprise (Aranzadi, 1998, 94) to assume this new leadership role.

To sum up, while cooperativism has been strengthening its corporate character by applying management techniques imported from conventional capitalist firms, the latter have been modifying certain aspects of their behavior towards adopting a style of management with particular features very close to the special postulates of cooperativism, a fact which may afford cooperatives some competitive advantages.  All that would be required is that cooperatives, cooperativists and their leaders put fully into practice the values and principles that define a cooperative.

 

THE COOPERATIVE AS A BALANCED FORMULA

Achieving the kind of balance needed in organizations, both internally and externally, is one of the main responsibilities of their managers.

According to Munuera Alemán & Rodríguez Escudero (1998, 59) "corporate success associated with satisfying only one of the groups participating in the enterprise(12) may cause its ultimate failure.  An enterprise needs to adopt a multiple perspective that reconciles the divergences and conflicts of interest arising from the differing objectives of the participating groups.  Satisfying each and all of them within at least a zone of tolerance or band of profit is a necessary condition for achieving the firm's long term survival".

In the case of a cooperative, this sort of balance between the groups participating in it (internal and external) may be easier to achieve, owing to the peculiarities of a cooperative.  One reason is the dual (sometimes triple) status of member/consumer/supplier (of work, raw material etc.).  Another is that the identity of cooperativism is in line with values that are strongly rooted in today's society(13)  such as democracy, equality, fairness, solidarity etc.  This is extremely important in that no enterprise can be detached from the feelings, desires and hopes of the society of which it forms part.  Products bought and sold on the market embody not only their tangible aspects but also an increasingly important intangible dimension in terms of the values that accompany them, and cooperatives add to their goods and services a number of values that are shared by society today.

A feeling of balance in the area of control is increasingly necessary for being able to run an organization in a very complex and turbulent environment.  Where we are and where we wish to get to, what we are and what we wish to be, what we believe in, are the values and principles by which we are ruled.  Every enterprise needs a life force to carry it forward towards the desired future or, to quote Gary Hamel(14), it needs a soul.  This is what others call a culture, which comes to be an internal force impelling those who share it, without their realizing it, to do things in a particular manner, thus individualizing the organization through the behavior of its people.

Cooperatives have a soul, although they are sometimes not aware of it or do not value it.  There may be tacit awareness (they don't know it's there) that needs to be made explicit so that it can be shared, adopted and interiorized by all the members of the organization(15), who will then begin to act in line with it.  For this reason (Aranzadi, 1998, 90), well elaborated principles approved by the International Cooperative Alliance (ICA) are not enough, what is needed that these principles and the values underlying them be lived in the cooperative and an important part of achieving this is to have a written declaration of the enterprise's mission, which needs drafting and approving by everyone if it is to be shared and applied.

I reproduce below a small part of a speech on 22 November 1997 by María Angeles de la Plata, chairman of Sierra Nevada S.C.A.(16), on behalf of the winners of the ninth set of Andalucía Cooperativism Rainbow Awards, who expresses brilliantly this "soul":

"Twenty years ago I had a dream about a dark and divided world in which 20% of people were enjoying and squandering 80% of the wealth and the other 80% had to survive on the remaining 20%.  I saw a dark and violent world resolving conflicts by wars.  A world in which capital was monopolizing the wealth produced, while the workers received poor wages when they were lucky enough to have work.  I saw Andalucía backward with thousands of its people living elsewhere in Spain and in other countries where they were despised and called names.

Still in the dream, although I was overcome with distress, I began to see some glimmers of light.  They were small and scattered but, there were many of them and they kept becoming brighter.  I drew near to some of them and found that they came from small fires fuelled by solidarity, fairness, self-help, democracy, equality, honesty, social vocation.  Someone in the dream told me they were cooperatives. 

The small lights from those fires could not banish all the prevailing darkness but it was like in a dark auditorium when cigarette lighters are lit, people see each other, recognize each other, feel close, feel human.  That's what was happening around each of these small fires.

In the dream I saw many small fires disappearing … Others stayed alight with a poor and wavering flame, hardly giving any heat … But many others persisted and their flames gradually grew and produced more heat, and even set others alight.  I found that they shared characteristics of continuing effort, common feeling, abnegation, transparency, responsibility and honesty.  And I saw that they were applying techniques that many believed in and they were all complying with:  there was no discrimination when it came to sharing the fire; they were democratically managed organizations in which the functions of each organ were respected; the members contributed on a fair basis the capital of their cooperatives and left the surpluses in; they were autonomous and independent organizations; they devoted time and money to education and training, they took an interest in the problems and development of their environment.

All these characteristics, they told me, were simply cooperative values and principles.

Discovering this "secret" filled me with joy.  Workers of both sexes had been able to articulate management techniques which combined with effort and fellow feeling to make enterprises run not only profitably as capital enterprises but also meet needs, help their members to grow as people and contribute to generating solidarity.  The world would never again be entirely dark.  The flames of cooperation were there".

Peter Senge (1992) sums the matter up as follows: "organizations devoted not only to success but also to the well-being and growth of their employees".

 

INFORMATION AND COMMUNICATION TECHNOLOGIES AND PARTICIPATION 
  

   ENTERPRISES

A cooperative is said to be definable as a participation enterprise, but the exercise of such participation has been hindered or inhibited when the members are so numerous and/or scattered as to make personal contact between management and other members impossible.  Size has therefore tended to hinder full cooperation even if today's economic dynamic encourages strategies of growth and stimulates corporate concentration processes(17).

Yet the development of information and communication technologies is contributing decisively to overcoming this barrier by making communication in a geographically atomized organization with people working at a variety of remote locations just as possible as if they were nearby.  According to Andreu, Ricart & Valor (1996, 22), "today's technologies make it possible to contemplate the whole organization as if it is on single level, since it is now possible to make information available to each individual in the degree of detail, aggregation or elaboration needed for making decisions".

Taking the example of a small cooperative of teleworkers or a cooperative group with a large number of members scattered across Spain or Europe, is it possible to use these technologies to achieve participation by members?  The answer can only be in the affirmative, since technologies such as "intranet" and video conferencing would solve the problem of real-time interactive communication, overcoming the barriers of distance and large number of members.  The technologies mentioned facilitate exchange of information, communication and hence participation; they solve the problems of remoteness and size, making direct political democracy possible.

Digitalization  is one of the most powerful agents for change in today's society, with impressive (and revolutionary) effects on everything around us and determining our usual way of going about things, since everything is now digitalized (or very soon will be).  These technologies available to enterprises facilitate participation by their members and the provision of information needed for taking decisions.  Neither size nor geographical dispersion are a problem, these barriers are destroyed by today's information and communication technologies.  This factor will therefore encourage corporate formulae based specifically on people and their participation, as in cooperatives (both de jure and de facto cooperatives).

 

FINAL CONSIDERATIONS

To conclude, just two paragraphs on aspects fundamental to the development of cooperativism:

A) Leadership.  Leaders are needed who are able to integrate the culture of cooperativism with the most appropriate strategies for competing successfully on the market, but leadership not in the traditional and exclusive sense of order and control, power and dependency.  What is needed is leaders who will serve the rest (not vice versa), leaders who create in their people, and convey, full confidence in themselves(18), leaders in the sense of facilitators of the work done by their collaborators, whom it converts into its true protagonists and hence also into leaders(19), as a way of enabling each person to release and contribute the best of himself; leaders therefore who unite, who foster teamwork, with the ability to bring people together around a corporate project; leaders capable of creating, harmonizing and conveying the strategy and culture of the organization.

B) Intercooperation.  Cooperation between cooperatives is a principle often forgotten(20) but never has it been as important as now.  There is a primary need for stronger cooperatives in order to be able to compete successfully on the domestic market and abroad, for which purpose intercooperation is an almost compulsory means not only horizontally, i.e. between enterprises engaging in the same activity, but also vertically, e.g. between agricultural, consumer and credit cooperatives.

In short, as Prof. Andrés Santiago Suárez said in his speech accepting an honorary doctorate from the University of Seville on 28 May 1997, "the economic and social progress of a people depends more on their ability to organize common activities of social or collective value than on mere individual effort, however self-denying and substantial it may be, if applied anarchically without the assistance of ad hoc organizations".  This is the lesson the cooperative sector needs to learn, that of organizing itself at both corporate and intercooperative level.  Much of its future depends on doing so.


REFERENCES

1 - 27 October 1997, p. 52.
2-  Customers are better informed and more able to compare, have more alternatives to choose from and are more demanding and less loyal.
3- An interesting idea in this respect is that formulated by Archier and Seriey on "enterprise of groups" and "groups of enterprises".
4- Quoted in Clarke & Monkhouse, 1994, p. 67.
5- The attempt by conventional capitalist firms to improve their efficiency by allowing their workers to participate in management and share in their capital and profits is already inherent in cooperativism.
6- See:
Rodrigo Moya, B., 1993,  Excelencia y calidad en la sociedad cooperativa.  Doctoral thesis.  UNED.
Rodrigo Moya, B., 1995,  Empresas excelentes de la Economía Social.  Ciriec-España, no. 19, pp. 43-107.
7- In a conventional capitalist firm, shareholder participation in management is governed by a capitalist criterion in that it is pro rata to the capital contributed (one share = one vote).
8- In a conventional capitalist firm, shareholder participation in financial flows is independent of his participation in physical flows, which is normally nil.  In contrast,  membership of a cooperative and the consequent right and obligation to participate in the information/decision flows and financial flows are acquired precisely by participating in its production and/or distribution process.
9- See:  González de Santamaría, J.A., 1995, Objetivos de la empresa en el modelo TQM, Calidad, May, pp.15-19.
10- In normal stable situations, not at times of crisis.
11- Quoted by Grand, R.M.  Contemporary Strategy Analysis.  Concepts, Techniques, Applications. Oxford:  Blackwell Publishers, 1998, p.441.
12- Such as the shareholders in a conventional capitalist firm.
13- There is even a principle, a seventh one, of desirability for the community.
14- "Come on, all you strategists and corporate leaders who desire to create value, get a soul!".  Geoffrey Colvin,  The Changing Art of Becoming Unbeatable.  Fortune, 24-11-97, p. 140.
15- What Ikujiro Nonaka calls "externalization", meaning the mode of converting tacit to explicit knowledge by articulating and systematizing it within the organization.
16- An Associated Work Cooperative based in Grenada engaged in the cleaning of public premises and buildings.
17- It is nevertheless a problem of organizational structure.  There is therefore a general need for organizational models which as far as possible reconcile participation and the critical mass needed for competing efficiently on the market.
18- Remember the Pygmalion effect.
19- The concept of shared leadership, of self-leaders.
20- Not mentioned, for example, in the speech made on behalf of the winners of the Cooperativism Rainbow Award, part of which is reproduced above, although it does refer to all the other principles of cooperativism.

 

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