Difference Between Corporation and Cooperatives

Corporation vs Cooperatives

Businesses can take many forms and corporations and cooperatives are two examples of businesses only. Like corporations, cooperatives are also managed by people but the basic difference lies in the motive that brings people together in corporations and cooperatives. In the case of cooperatives, people come together for common good and the intent of profit is generally absent while in the case of corporations, profit is the only motive as such entities have to satisfy the shareholders who have invested in them. In the case of cooperatives, the share holders are the same people who are operating the cooperative and the real intention is to benefit everyone equally.

Cooperatives are analogous to socialism whereas corporations are analogous to capitalism. There is no harm in both coexisting as there are different features and pros and cons of both cooperatives as well as corporations. In principle, there would be hard to find people who would oppose formation of cooperatives. They are for the good of the community and there are examples all around the world of what collective strength can do for people who are toiling hard but not earning enough.

Corporations on the other hand are started by a few individuals with the sole intent of making money. In their venture, owners of the venture raise capital through the public that becomes a stakeholder in the corporation and it is the duty and responsibility of the owners of the business to maximize returns on investment of the shareholders.

In a broader sense, cooperatives are special types of corporations where operations are carried out for the collective good keeping profit generation as secondary whereas in corporations, raising profits is the sole concern. It is this search for profits that make people managing corporations turn to means and methods that may not be for the common good of the society. It does not mean that cooperatives cannot make bad decisions, but in their case, it is not for the greed of money but any other miscalculation that may backfire but is not detrimental to the society at large.

In modern times, many cooperatives have begun to look and work more like corporations and the thin dividing line between the two entities is very blurred as cooperatives are always impressed by corporations’ efficiency in generating profits and they try to emulate the working of corporations.