Unlocking the potential of platform cooperatives

Kushankur Dey/Avinash Kumar | Updated on: Mar 28, 2022
Cooperative growth

Cooperative growth | Photo Credit: VIJAYA BHASKAR CH

The cooperative model will benefit the vulnerable producers and consumers who are at the base of the pyramid

Digital disruption has significantly impacted economic activities ranging from from production, trading, distribution and consumption. The fast-changing conduct of businesses has shaped firms’ capabilities at the micro-level and contributed to industry effectiveness at the macro level.

The pace of digital adoption increased in the pandemic era, leading to significant value creation.

While digital disruption brings challenges and opportunities to redefine value proposition, the importance of solidarity in the sharing economy gives rise to platform cooperatives as "add-on" information technology-enabled services to the existing business of cooperatives.

We discuss platform cooperatives in the light of digital disruption and shed light on how they can help overcome the precariousness of Base of the Pyramid (BoP) producers and consumers. We conjecture that platform cooperatives bestowed with "solidarity" in the sharing economy will connect the BoP producers with the missing market and avert the likelihood of exploitation, adversities, and reduce the magnitude of vulnerabilities.

Platform co-operatives

Platform cooperatives are rooted in the seven doctrines of cooperatives laid by the International Co-operative Alliance, 1995), — (1) voluntary and open membership, (2) democratic member control, (3) member economic participation, (4) autonomy and independence, (5) education, training, and information, (6) cooperation among cooperatives, and (7) concern for the community.

Drawing from the seven principles, platform cooperatives seek to alter the technological heart of the sharing economy and put it to work under a communal ownership model, foster solidarity, and reframe efficiency and innovation for the economic or financial benefit of the many rather than a few capitalists (Scholz, 2016).

The tenets of platform cooperatives strike a balance between access economy, community based economy, and platform economy. These cooperatives catalyse a set of initiatives to intermediate decentralised transactions or exchanges. Blockchain-affiliated smart contract, for example, enables this kind of transaction and restore immutability, fault-tolerance, and data provenance through distributed ledger technology.

The emergence of platform cooperatives traces its roots to asset sharing. Fairbnb typifies a platform of worker cooperative in Italy. It aspires to extend its reach through a local node having an active presence in the tourism industry (Mannan and Pek, 2021).

The second typology is local and remote “gig work” — Cataki, an open-source, non-profit platform launched by the Pimp My Carroca in Brazil and PlatformX, a global freelancing platform, are prime examples.

The third is the online market. Open Food Network is a "digital common" platform connecting native producers and consumers through eco-friendly and resilient farming practices.

The fourth one is a suite of financial services — savings or remittances, credit, and payment. Sammunati Financial Services is an example of a financial and insurance services microfinance institution that emerged in the Global South. This NBFC closely works with agri-tech platform start-ups to cater to smallholders a suite of financial products and services.

The fifth is the aFarm Management Information System integrated platform cooperative. e Kutir rural management services exemplifies community of practice by developing farmer portfolio management tools, nurturing the micro-entrepreneurs, and intervening in related diversification.

The sixth typology can be software development offering cloud storage and scalable services through a web-based office suite, chatbot, project management software. Collective Tools is an example of a cooperative offering membership for users, software developers, and investors.

Strategic actions

Platform co-operative can be a game-changer to enable community, cultural, ecological, and economic resilience during or after the pandemic period.

However, aligning the value proposition with member participation is a key to fostering and sustaining platform co-operatives. The value creation and delivery should be distinct from a platform capitalist that intends to optimise the option value of “data.”

For example, multinationals in the agri-input industry use farm data to package analytics-based solutions and sell them at a premium to farmers. Partnering with competitors drives their data business from data holding, specialising, and strategising.

First, platform co-operatives should collaborate with cloud services and data analytics firms and redefine the value creation, value capture, and value proposition for local economies.

Second, these co-operatives should appreciate the digital privacy and data access rights and reuse the data or combine them with other assets for related diversification.

Third, they need to enjoy the economies of scale and scope leveraging their co-opted technology backbone for better database marketing and other business decisions in a community-based economy.

Fourth, the government should create an enabling environment in promoting a thriving network of platform co-operatives for the producers and consumers. However, membership and services added on the platform would decide the context-specific scaling and viability of such businesses.

Dey is Chairman of CFAM, IIM Lucknow and Kumar teaches marketing at IIM Jammu. Views expressed are personal.

Published on March 28, 2022
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