The Comparative Advantages of Member-owned Businesses

Abstract

This article provides a systematic descriptive and analytical framework for understanding the comparative advantages of member-owned businesses (MOBs) such as cooperatives, mutuals, and economic associations. First, it provides a short description of two main ownership types—consumer and producer—then it provides a taxonomy of all the main sub-types. An overview of the literature on comparative advantage follows. The three elements of ownership, control, and benefit are identified, and then advantages arising from these elements are identified and discussed with historical examples and empirical evidence derived mainly from the author's previous work. There is a brief discussion of the wider advantages to society in general from the presence of an MOB sector. A section on disadvantages identifies problems such as difficulty in raising capital, and governance failure due to lack of member participation. The final section considers the comparative nature of advantage, comparing MOBs with other ownership types, and making a distinction between comparative advantage and competitive advantage under particular market conditions.

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