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Eric LamarqueProfessor at the Université de Bordeaux’s

Business School (IAE)Director of the Financial Institution

Management Chair

Publicly-traded and cooperative entities within the

same group

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Have we always asked the question correctly?Haven’t we gotten a bit ahead of ourselves?

Do cooperatives have to use the same strategies as corporations?People have lost sense of what a cooperative

is: cooperatives are formed so individuals can get more from the market or do better than they could on their own

Is it in a cooperative’s nature to go international? To merge? Is the “ bigger is better” mentality the only option? Do cooperatives have to play the classic competition game?

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Have we always asked the question correctly?Haven’t we gotten a bit ahead of ourselves?

Herd behaviour of certain leaders: if another cooperative gets external funding, why not me?

Arrogance of certain leaders: prove that they’re as good as other leaders

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How?

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How?However, we've envisioned all of the other

traditional routes, including IPOs, without considering how access to external funding, particularly the stock market, could impact governance.

Why did some cooperatives go to the effort of giving up their status to do this?

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ImpactsConfrontation between two radically different

cultures Some cooperatives have found themselves

with classic investors who hold a minority share of the capital in their publicly-traded entity. They often felt like their best interests and their opinions were not taken into account when it came to strategic decisions. The greater the float, the greater their attitude impacts the price. The question then becomes: what is the shareholder-cooperative’s attitude?

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ImpactsTensions between the central entity or

the publicly-traded subsidiary, heightened by the regional cooperatives’ sense that priority was being given to the markets and that they had strayed too far away from their membership

Since the financial crisis, we have witnessed regional entities take their revenge and regain the upper hand in terms of governance

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ImpactsNegative effects of creating a hybrid: member-

shareholdersThe overwhelming majority of members bought

shares – trust played a huge roleWhen prices dropped, the trust they had placed in

the operation was replaced by an equal amount of disappointment

It also became clear that there were few true member-cooperators at heart. A financial argument was made to sell members’ shares, like stocks, at a profit

The entire business argument for finding new members has had to be reviewed these past two years


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