Cooperatives vs Corporations: Difference and Comparison

Cooperatives and Corporations are two terms that might sound very similar, but in reality, these are very different from each other.

The two words are indeed very much related to each other but have significant features that make them far alike. It is important to know each term correctly in order to use them in a correct manner.

Key Takeaways

1. Cooperatives are owned and operated by their members, who share profits and decision-making, while corporations are owned by shareholders who elect a board of directors to make decisions.
2. Cooperatives prioritize the needs and interests of their members, while corporations focus on maximizing shareholder value and profits.
3. Cooperatives have a social or community-based mission, whereas corporations prioritize financial growth and expansion.

Cooperatives vs Corporation

The difference between Cooperatives and Corporations is that Cooperatives are a group of people who come together to form an association having similar interests, goals, and needs. On the other hand, a Corporation is regarded as a body that is legalized by the law and under which a number of people work.

The term Cooperatives is used to indicate an association or group of people who come together to work in coordination with each other.

These people mostly have similar interests, aims, and requirements, which lead them to cooperate and work with each other for kinds of benefits like personal, financial, or social.

The term Corporations is used to describe a legal body that is made under rules and regulations which are authorized by the law.

It is a lot different from Cooperatives and is maintained by a group of officials who are called the Board of Directors and take care of important decisions and situations. 

Comparison Table

Parameters of Comparison	Cooperatives	Corporation
About	It is regarded as a group of people who cooperate and work with each other for benefit.	It is a legal body that is completely separate from its workers.
Formation	It is formed by a few or many people who guarantee to work together and have common goals and needs.	It is formed in regards to legal laws and rules.
Ownership	It is owned by the members of the cooperative body.	It is owned by stockholders.
Money raising	It is the investments of each member that help in raising money.	It is done by investing in stocks and shares.
Management	It is run by either elected members or every member in a democratic manner.	It is run by an elected board of directors.

What is Cooperatives?

Cooperatives, as the word already suggests, are a group of people its similar ideas, beliefs, and needs who come together to work in coordination with each other while cooperating.

It is considered a highly nonprofit organization that is founded by members who are willing to work together for mutual benefits, personal benefits, financial support, or any other such reasons.

Any profit that is earned is divided equally among the members of the group, and in case they do not earn a profit, they opt for acquiring benefits or other services. 

Aqua productive is completely owned by its included members, and therefore they all share the ownership equally.

There are many types of cooperatives like volunteer cooperative, retailers cooperative, new generation cooperative, consumers cooperative, utility cooperative, social cooperative, housing cooperative, an agricultural cooperative, and many more.

There is a specific structure and cooperative principles under which a cooperative works.

The seven principles are democratic member control, autonomy and independence, voluntary and open membership, education training and information, concern for community, economic participation by members, and in the end – cooperation among cooperatives.

Any funds and money that is raised under cooperative are solely investments of the members, and if it is a solution that needs to take place, the final approval will be by members after equal voting.

What is Corporation?

A corporation is a body that is formed by following the state laws and articles of incorporation. It is regarded as a legal authority that is completely separate from the owners.

The ownership of a corporation is not in the hands of its members, employees, or customers but with stockholders. It has its liabilities and rights and is completely up to the corporation whether they want to work for a profit or not.

The corporation is divided into two broad types, which are a professional corporation and subchapter s corporation.

All the management work is handled by another body created within the corporation or sometimes outside of it and is called the board of directors.

It is not well flexible and is more of a structured body that needs to work according to the corporation’s charter.

In order to raise money, a corporation sells stocks and other financial instruments. If there happens to be a fault or a problem, the entire liability depends on the cooperation itself, and nothing is on the stockholders.

Also, if the corporation needs a resolution, that has to be the government approval as well as stockholder approval.

Main Differences Between Cooperatives and Corporation

1. A Cooperative is a group of people who come together to work in coordination for benefit, whereas a Corporation is a legal body that is completely separate from the workers.
2. Cooperatives are formed by a number of people having common goals and need by putting their opinions, whereas a corporation is formed under legal rules and regulations. 
3. Cooperatives are owned by their members, whereas the ownership of a Corporation is held by stockholders.
4. The money raised in cooperatives is an investment of its constituting members. On the other hand, a Cooperation raises money with the help of stocks and shares.
5. A cooperative is managed by its members either directly by democracy or by electing some members. On the other hand, a Cooperation is managed by a legal and official body known as the Board of Directors.

References

1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-8292.2012.00467.x
2. https://www.sciencedirect.com/science/article/pii/S2213297X16300039

Last Updated : 16 July, 2023