Project Materials

DEMOCRATIC LEADERSHIP STYLE IN COOPERATIVE AND ITS EFFECTS ON THE MANAGEMENT OF PRIMARY COOPERATIVE

Chapter one

INTRODUCTION

Background of the study

Cooperatives are an important organisational type globally, distinguished by democratic governance and member engagement in decision-making processes (Grunert, 2019). The cooperative movement has gained traction as an alternative to traditional business structures, particularly in agriculture, finance, and retail (Ostrom 2017).

Within the scope of cooperative management, leadership styles are critical in shaping organisational culture, performance, and member satisfaction (Hoque et al., 2020).

Democratic leadership is particularly important to cooperative firms because of its emphasis on shared decision-making and inclusivity (Steyaert & Bouwen, 2018).

Democratic leadership, often known as participative leadership, is actively engaging members or employees in decision-making (Sosik & Godshalk, 2017). This leadership style promotes open communication, collaboration, and employee empowerment (Zhang & Bartol, 2019).

Democratic leadership in cooperatives is consistent with the ideas of member control and democratic governance, which require that each member have an equal say in the organization’s activities.

The democratic leadership style is especially essential in cooperative management since it is consistent with the values and principles of cooperation (Birchall, 2021).

In primary cooperatives, where members are directly involved in the production, distribution, or consumption of goods and services, democratic leadership develops member ownership and commitment (Steyaert & Hjorth, 2019).

By incorporating members in decision-making processes, cooperative leaders can tap into their collective experience and expertise, resulting in better informed and successful decisions (Birchall & Simmons, 2018).

Furthermore, democratic leadership increases member satisfaction and loyalty by guaranteeing that their opinions are heard and valued (Mullerat, 2020).

Democratic leadership has a wide-ranging impact on primary cooperative management, influencing many areas of organisational functioning and performance. To begin, democratic leadership fosters a culture of transparency and accountability inside cooperatives by making decisions collaboratively and with members’ consent (Sosik & Megerian, 2019).

This transparency promotes confidence between leaders and members, minimising conflicts and increasing cooperation (Chaves & de Castro, 2018).

Second, democratic leadership improves organisational resilience and flexibility by fostering innovation and creativity among members (Birchall, 2017).

Since members feel empowered to offer their thoughts and perspectives, cooperatives can better respond to changing market dynamics and external obstacles (Saz-Carranza et al., 2021).

Furthermore, democratic leadership promotes a sense of ownership and belonging among members, resulting in increased engagement and motivation (Van Den Berg et al., 2020).

When people believe their thoughts and efforts are valued, they are more inclined to actively participate in cooperative activities and initiatives (Birchall & Ketilson, 2017).

This enhanced member engagement leads to improved performance and competitiveness in primary cooperatives (Icaza et al., 2022). Additionally, democratic leadership promotes knowledge sharing and learning within cooperatives by allowing members to openly discuss ideas and experiences (Mullerat, 2018).

This communal learning process allows cooperatives to continuously innovate, adapt, and enhance their operations (Zhu et al., 2017).

Despite its benefits, democratic leadership in cooperatives can present a number of obstacles. To ensure active member participation and engagement in decision-making processes, good communication and organisational frameworks are required (Van den Hove, 2021).

Cooperatives may fail to engage all members equitably, particularly in larger or more complicated organisations (O’Connor & Kotze, 2018).

Second, democratic leadership necessitates leaders giving up some control and authority, which can be challenging in hierarchical or authoritarian organisational cultures (Birchall & Hammond Ketilson, 2022).

Leaders may be concerned about losing control or encountering pushback from members accustomed to top-down decision-making (Van Bockhaven et al., 2019).

Furthermore, reaching an agreement among varied people with different interests and priorities can be difficult, resulting in delays or conflicts in decision-making (Schoonbeek, 2017). Cooperatives must invest in conflict resolution and consensus-building methods to effectively address these difficulties (Morvant-Roux & Doellgast, 2020).

Additionally, democratic leadership needs investment in member education and training to guarantee that members have the requisite knowledge and abilities to engage successfully in decision-making (De Moor et al., 2023).

This investment may stretch the resources of smaller or resource-constrained cooperatives, demanding external assistance or collaboration (Birchall & Hammond Ketilson, 2020).