What is a cooperative in a business context?

In a business context, a cooperative is fundamentally understood as a business owned and operated by its customers or members. This model promotes a collective approach to business where the individuals who utilize the goods or services also have a stake in the management and benefits of the enterprise.

The cooperative structure allows members to come together to meet their common economic, social, or cultural needs. By pooling resources, members can enjoy benefits such as lower prices, better services, and shared profits. This distinctive ownership model emphasizes democratic control, meaning that each member has an equal say in the operations of the cooperative, regardless of the amount of capital they contribute.

In contrast to other business structures, options that refer to nonprofit organizations, partnerships between businesses, and government-owned enterprises do not embody the core principle of cooperatives, which is member ownership and cooperative management for mutual benefit. Each of those alternatives lacks the focus on member control and economic participation that defines a cooperative.