Entrepreneurship, Second Edition

15.2. New Forms of Organizations

Classical entrepreneurship typically features a for-profit firm with a shareholder class who owns the assets of the firm and reap or reinvest the profits of its success, and a working class of wage earners, who, in exchange for their labor, receive a salary. The nonprofit organization created through the Tax Code in the United States was a new form of organization meant to serve social purposes through a revised economic arrangement. Just as nonprofit organizations represent a different form of economic organization, so do cooperatives, except that cooperatives, unlike nonprofit organizations, do allow the private retention of earnings—in this case, distributed to the owners of the cooperatives. Furthermore, in terms of adding social value, cooperatives have been shown to create social capital: "connections among individuals—social networks and the norms of reciprocity and trustworthiness that arise from them"^[] both within the cooperative and in the surrounding community in ways that increase the quality of life.^[] As Schumpeter has argued, introducing new forms of organization is an entrepreneurial act,^[] and to the extent that cooperatives integrate both economic and social value, as well as contributing to the creation of social capital, we would argue that adopting the cooperative as the organizational form for a venture is itself an act of social entrepreneurship.

What, exactly, is a cooperative? According to the International Cooperative ...