Influence of Cooperative Members’ Participation and Gender on Performance

Abstract

Though its origin can be traced to the private sector, corporate governance is applicable to cooperatives which are a form of corporation. Thus, cooperatives too face issues associated with governance. Moreover, agency theory argues that the board of directors plays a crucial role in protecting shareholders’ interests. Directors of cooperatives who act as agents to their members play a significant function linking managers’ actions to the interests of their members and customers. Good and effective governance help to enhance the financial performance and sustainability of the cooperatives. The success of a cooperative depends on the degree of participation of its members. This paper aims to examine the association between cooperative governance in terms of members’ participation and gender (male composition of the board), and cooperative performance. The study examined the annual reports from 2008 to 2012 of 34 cooperatives in Malaysia. It was found that male directors dominated the board of cooperatives in Malaysia. The relationship between male composition of the board and cooperative performance was insignificant. The mean of members’ participation (attendance of directors at board meetings) was found to be high but it did not have any significant association with cooperative performance. The scope of analysis in this study was limited by the data set available. Further research on the influence of governance on cooperative performance can be explored in the future by looking at other governance characteristics via interviews or/and with the use of questionnaire survey.