What is a key characteristic of a cooperative business model?

A cooperative business model is fundamentally defined by its ownership and control structure. It is owned and governed by its members, who typically share a common interest, such as farmers in a rural community or consumers in a local market. This characteristic ensures that decisions are made democratically, with each member having an equal say, regardless of the amount of capital they contributed. This participatory approach is designed to benefit the members rather than external shareholders or a single individual, aligning the cooperative’s goals with the interests of its members.

In contrast, options that indicate ownership by shareholders, a single entrepreneur, or a focus on profit maximization alone do not reflect the cooperative model. These alternatives emphasize profit-driven motives or centralized control, which run counter to the cooperative principle of mutual benefit and shared decision-making among members. This fundamental aspect of membership ownership and democratic governance is what makes the cooperative business model unique and crucial to its purpose in serving its members’ needs.