Difference Between Corporation and Cooperatives

Corporation vs. Cooperatives

For a person without a business or economic background, it would be easy to mix and confuse the concepts of a corporation and a cooperative. Both are business establishments created for the purposes of profit and are classified as an entity of limited liability. However, there are more differences between these two concepts than there are similarities.

When it comes to ownership, a corporation is owned by its shareholders who appoint a board of directors to supervise the whole company or business. On the other hand, a cooperative is owned by its members, and it does not need a board to make decisions or enlist control over the entity.

A cooperative is a non-profit organization – all the profits are given back to members. It doesn’t require stocks or shares as evidence of ownership. On the other hand, a corporation can opt to issue stocks (private or public) in an open market or not. It can also be a profit or non-profit corporation. In terms of legal independence, a corporation is considered as a legal entity separate  from its owners.

A corporation is usually run by businesspeople, while a cooperative is operated by its members. A cooperative can be run as a consumer cooperative or worker cooperative. Another classification would include housing cooperative, agricultural cooperative, utility cooperative, credit unions, and cooperative banking. Meanwhile, a corporation can have a variety of types like a General Corporation, Close Corporation, LLC Corporation (or Limited Liability Company), and S Corporation. Another classification is being a private or public corporation.

Another point of difference between the two is their purpose. Most companies provide products or services to the general public and for public consumption, making their operation on a small to medium or large-scale basis, while a cooperative has a smaller scale with the intention of providing needs and services to its members.

There are also many key players in a corporation: the owners, the directors, and the officers who manage the corporation, the workers who provide the service or the products, and the customers. In a cooperative, there are only members who serve these aforementioned roles.

A cooperative usually also has no market competition when it comes to its products or services, while a corporation can be faced with a number of competitors in a free market that offers the same products and services. A corporation is a result of corporate law, while a cooperative represents the ideology of an economic democracy.

Summary:

1.A corporation has several key players: its shareholders that serve as it owners, the directors and officers who manage the whole corporation, its workers who serve the products or services, and the customers, its intended target market. On the other hand, a cooperative’s members take on the four roles stated in a corporate environment.
2.There are three types of corporations: general, close, S type, and LLC; on the other hand, a cooperative can be classified as a consumer or worker cooperative. Other classifications can be applied to both corporations and cooperatives
3.The purpose of a corporation is to produce goods and services to a market, whereas a cooperative provides for the needs and services of its members.
4. A corporation can be small, medium, or large in size and can cater to a national or international market. A cooperative is usually a small-scale entity since its target group is its members of a certain interest.
5.A cooperative is a non-profit entity, while a corporation can be an entity of various; it can be non-profit or profit; a stock or non-stock entity. A stock is usually a share in the company that often denotes ownership.

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