Social cooperatives in peripheral areas – conditions and obstacles to successful activity

Abstract

Due to their special system of relations and interests arising from the nature of their organization, social cooperatives can play a decisive role in local economic development, byproviding alternative solutions to traditional development tools and local government instruments through the mobilisation of endogenous resources. This paper summarizes the experiences of our empirical research on social cooperatives in the peripheral rural areas of Baranya county in Hungary.

Our study reveals areas where external intervention can significantly contribute to the sustainable operation of social cooperatives and increase their efficiency. Such areas include the development of an appropriate regulatory environment, the operation of a regional (county level) support system in case of missing local functions, the creation of conditions necessary for the recognition and coverage of market gaps, cooperation and networking in sales and processing. At the local level, proper resource management, efficient and innovative cooperation, a willingness to cooperate regionally, and last but not least, leadership competencies and skills are needed to make social cooperatives key players in local economic development. Our findings reveal that the most compelling problems of social cooperatives are: the lack of capital for development, sales difficulties, the production of adequate quantity and quality as well as vulnerability towards external support.