The community-owned enterprise model increases community participation in local planning and development. Types of COEs include cooperatives, credit unions, land trusts, and limited stock ownership enterprises.
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Problems and Purpose
Community-owned enterprises are run by those they directly benefit: the community. The COE model increases community participation and empowerment in local planning and development. COEs take various forms such as cooperatives, credit unions, land trusts, and limited stock ownership enterprises.[1]
COEs – especially in the energy and resource sector – are typically established to:
- Create a stable revenue source for the community
- Build community leadership, governance, entrepreneurism and expertise
- Spur rural economic development and economic diversification
- Reduce environmental impacts[2]
Origins and Development
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Participant Recruitment and Selection
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How it Works: Process, Interaction, and Decision-Making
Peredo and Chrisman described community-based enterprises (CBEs) as emerging from “a process in which the community acts entrepreneurially to create and operate a new enterprise embedded in its existing social structure.”[3] CBEs emerge when a community works collaboratively to “create or identify a market opportunity and organize themselves in order to respond to it.”[4] These ventures “are managed and governed to pursue the economic and social goals of a community in a manner that is meant to yield sustainable individual and group benefits over the short and long term.”[5] CBEs are positioned in a sector of the economy that is not dominated by a profit motive, often because there is little profit to be made, or by government. Some scholars refer to CBEs as being owned by the community while others indicate they can be owned by individuals or groups of people on behalf of the communities they serve.[6]
A successful example of community-owned enterprises can be found in Indonesia where rural villagers own and maintain electrical mini-grids.
Influence, Outcomes, and Effects
Community-owned enterprises are intrinsically social enterprises. While they have to make surpluses to sustain themselves, social needs, for example to serve the constituencies that gave rise to them (e.g., creating local employment or responding to some cultural need), are paramount.[7]
Analysis and Lessons Learned
According to Henry Mintzberg of the Canadian Community Economic Development Network, community enterprises average longer lives than privately-owned businesses. While businesses are usually started by individual entrepreneurs for personal gain, social enterprises usually arise in response to collective needs, often in identifiable communities. Because of a resulting “collective heritage”, they have a greater potential to offer a more sustainable model of economic development.[8]
See Also
IBEKA: Community Owned Electrical Mini-Grids in Indonesia
References
[1] J. Phillip Thompson, “Community-Owned Enterprise and Civic Participation,” MIT OpenCourseWare, 2005, https://ocw.mit.edu/courses/urban-studies-and-planning/11-954-community-owned-enterprise-and-civic-participation-spring-2005/index.htm.
[2] Dave Lovekin and Ryan Kilpatrick, “Community-Owned Renewables Fact Sheet | The Canadian CED Network,” The Canadian CED Network, 2010, https://www.ccednet-rcdec.ca/en/toolbox/community-owned-renewables-fact-sheet.
[3] Ana Maria Peredo and James J. Chrisman. "Toward a theory of community-based enterprise." Academy of management Review 31, no. 2 (2006): 310, http://bit.ly/2CYrWi2
[4] Peredo and Chrisman, Toward a theory of community-based enterprise, 315.
[5] Peredo and Chrisman, Toward a theory of community-based enterprise, 310.
[6] Lee A. Swanson, “The Entrepreneurial Environment” in Entrepreneurship and Innovation Toolkit (Online: University of Saskatchewan, 2017), https://openpress.usask.ca/entrepreneurshipandinnovationtoolkit/chapter/chapter-10-the-entrepreneurial-environment/.
[7] Henry Mintzbert, “Social Enterprises and the Social Economy: Ownership Matters,” The Canadian CED Network, October 1, 2015, https://ccednet-rcdec.ca/en/blog/2015/10/01/social-enterprises-and-social-economy-ownership-matters.
[8] Mintzbert, “Social Enterprises and the Social Economy.”
External Links
“Community-Ownership,” American Independent Business Alliance https://www.amiba.net/resources/community-ownership/
“How Community Ownership Can Stabilize America’s Neighborhoods,” NextCity https://nextcity.org/daily/entry/how-community-ownership-can-stabilize-americas-neighborhoods
Notes
Lead image: Community Power Cornwall, http://bit.ly/2D2ND0m