Ethical agency contracts as a basis for co-operative management and leadership

The paper argues for the concept of an ethical agency contract as a basis for leadership and management engagement and development in the co-operative context. The paper agrees with Sigismundo B. Neto (2012) that agency problems are complex given the governance structures of co-operatives. Neto does acknowledge the possibility of an ‘ethical agency’ and the paper develops this idea as a possible solution to the mounting record of commercial failure, demutualization and general inertia found in the contemporary co-operative sector. The paper argues this requires both a clear statement of co-operative purpose supporting a definition of co-operative management and leadership’s role to provide the content of an ethical contract. The co-operative business will not achieve its commercial potential without clear differentiation of its brand in terms of its membership of the Co-operative Movement and the social and economic critique of capitalism addressing the challenges of our times that this movement represents. Currently the complex agency challenges inherent in the co-operative governance model and the dependence on the mainstream business school model for co-operative management development are preventing co-operatives fulfilling their mission. This requires a management and leadership recruitment, selection and development programme that can transform the co-operative movements various silos and business models with a common purpose to provide a new political economy that combines business success with global sustainability and individual member economic sufficiency accessible to all the world’s peoples. The paper concludes that co-operative to co-operative networking and collaboration to support this overarching strategic goal cannot succeed without managers committed to a co-operative ethical agency contract grounded on a clear definition of the role of co-operative management and an equally clear behavioural specification of co-operative professional managers as leaders.