Co-operative : start-ups in Malta, their barriers and effectiveness : an assessment

Abstract

Purpose: The objective of this dissertation is to analyse the start-ups of Maltese co-operatives since the year 2000, their barriers and effectiveness. Design: Objectives were achieved through an examination of the statutes of the co-operatives established from January, 2000 to March, 2013; an analysis of the available financial statements of such co-operatives as at 2011 and semi-structured interviews with 10 experts and 18 co-operative representatives. Findings: The study found that there are two major reasons behind formation: either to benefit from the pooling of resources or to achieve an economic-social balance in order to survive. Furthermore, the major barriers encountered by co-operative start-ups relate to lack of finance and working capital, lack of adherence to co-operative principles associated with the Maltese Culture, and the complex registration process. Co-operative start-ups' effectiveness was closely related by respondents to the level of members' participation and the amount of start-up capital invested in fixed assets. Conclusion: The study concludes that the objectives set out in the statute do not really convey the actual reasons put forward by respondents regarding co-operative formation. The economic barriers faced by start-up co-operatives are attributable to the financial institutions' insecurities when lending funds to co-operatives followed by co-operatives' lack of knowledge regarding the financing sources available. The social/cultural barriers are mainly attributable to the non-adherence to most of the seven co-operative principles. Such barriers are restricting co-operatives from being economically and socially effective when starting up. Proposed measures emphasised the need for increased training and education by co-operative institutions. Value: It is hoped that this study enhances co-operative effectiveness through an increased awareness of the barriers and of the need for co-operative institutions to administer the appropriate feedback. Recommendations include more diversification into new sectors, amendments to the registration process, and stronger monitoring by the Co-operatives' Board.