Implementation of Cooperative Principles as an Organization Culture and an Effect on Financial Performance

Abstract

Cooperative as a business entity still has several problems according to realize cooperative objectives, that are member promotion and business efficiency, which measured by financial performance. In average showed that cooperative financial performance is lower than the standards set by the Ministry of Cooperatives and Small Medium Enterprises, allegedly of cooperative managers have not implemented yet cooperative principles as a cooperative culture in their managerial activities consistently. The purpose of this study is to examine the implementation of cooperative principles as an organization culture and the effect on cooperative financial performance either simultaneously or partially. This research is conducted on 56 cooperative samples in West Java using quantitative descriptive method, and use multiple regression analysis tools. The results of this research show that the implementation of the seven cooperative principles have not been fully implemented in cooperative samples yet. Principle of democratic management is the highest principle implemented by the cooperative, followed by surplus distribution, cooperative education, the giving of limited remuneration to the capital, independence, voluntary and open membership. Lastly, the cooperative principle that is rarely implemented is partnership among cooperatives. Cooperative principles as an organization culture on financial performance simultaneously have significant effect on the cooperative financial performance, but partially do not give any significant effect on the cooperatives financial performance. This study indicates that the financial performance of cooperative will be determined by the implementation of the whole of cooperative principles consistently.