Abstract:

"The National Cooperative Policy (NCP) 2011-2020 enabled co-operatives to actively participate with the public and private sectors towards sustained national development in Malaysia.  The policy attests the government’s recognition for the cooperative organizations’ role in national economic development.Cooperatives are expected to help generate economic growth; become competitive business entities; remain as effective self-help organizations and uphold sensitivity towards the environment. However, cooperatives like their business cousins in the public corporations have been plagued with governance issues (Shaw, 2007).  This has prompted studies to isolate the probable causes of their predicament.  The issue of corporate governance of cooperatives has begun to become mainstream in research and conventional wisdom dictates that governance procedures and processes that abound in the corporate world can prudently be applicable in the governance of cooperatives (Conforth, 2004).  In a cooperative the Board of Directors plays a pivotal role in safeguarding the collective interest of the members (Jussila, Goel, & Tuominen, 2012).  Board of Directors need to demonstrate adequate and effective monitoring of organizations they are helming.  This paper examines how existing concepts of corporate governance can be extended to help understand the governance of cooperatives.   Empirical research on non-profit boards suggests governance is a complex, inherently difficult and problematic activity.   Intrinsically shareholders of corporations simply want to maximize the value of their share values while goals from patronage can differ from member to member at a cooperative and may include maximizing returns, utilizing cooperative services, or finding a home for their production.  Our study focuses on the association of size of Board of Directors of cooperatives and the frequency of board meetings with performance.  Outcomes from the study indicated both the size of the board and the frequency of board meetings have no relationships with performance of cooperatives organizations in Malaysia.  The results suggest that the board of directors may no longer be effective in managing the cooperatives towards achieving their members’ objectives.  Various literatures supported this finding.  This result lends the conclusion that governance of cooperatives is in dire need of revision to increase its effectiveness and eventually rightly positioning cooperatives as a bona fide catalyst of national development."