Perhaps We Need a New Type of Business: Social Associations (S.A.)

ID-100228002Most businesses are governed by their owners or investors.  This seems fair, considering the owners and investors are putting their efforts, livelihood and money on the line, especially when first founding the business.  But having the business only governed by its owners and investors often leads to decisions that raise the profits for the investors, but are not as good for the customers, employees or the general public.

To counteract this, we have seen the rise of consumer cooperatives and credit unions, which are designed to give the consumers a say on how the business is run.  And we have also seen the rise of unions, employee-owned companies, and employee stock purchase plans to increase an employee’s say in how the company is run.

A business’s true stakeholders include founders/owners, investors, employees, customers and the general public.  Why not organize a business so that it is governed by all the stakeholders, not just one set of stakeholders?

Existing Types of Businesses

Here is a list of common organization types.  There are many other variations, but these are the most common.

  1. Corporations – controlled by investors / stockholders.
  2. Consumer Cooperatives – controlled by the customers.
  3. Employee-Owned Company – controlled by employees.
  4. Government-Owned Corporation – controlled by elected officials, and ultimately the public.
  5. Network / Independent Agents – Parent company usually governed by founders/investors, but most of the business is comprised by independent business owners.

What About a Hybrid?

What if we took the concepts of a cooperative, where members own the business, and opened it up to multiple stakeholders. not just one class?  This is something I call a Social Association, abbreviated as S.A.

This would allow all of the stakeholders to have a say on how the company should be run, with input from investors, employees, and customers.  With input from all, you are less likely to see one class abuse another class, and are also more likely to see a more lean company that understands the market, its customers and its employees.

What do you think?  Is it time for a new type of business organization?

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