CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter presents a review of research literature both local and foreign studies that aided
the researchers to have a background of references providing them with substantial information
used in the study.

Research Literatures

This section provides the different studies found from different dissertation relevant to

the present study.

J.D. Masicat, MBA (2014) with the study entitled “ Batangas Heavy Fabrication Yard

Multi- Purpose Cooperative: Basis for Business Operation” aimed to determine the proposed

business initiatives to enhance the operation of Batangas Heavy Fabrication Yard Multi-

Purpose Cooperative for the long survival and growth. The researcher used the descriptive

correlation design in the study to obtain information concerning the current status of the BHFY-

MPC cooperative; to describe what to exists with respect t the variables or conditions in a

situation. .The finding of the study states that the BHFY Multi-purpose cooperative performs well

in terms of its management, marketing, finances, facilities and technology and delivery of

services. Also, there are problems seldom encountered in the operation of the cooperative but

the cooperative never encountered problems like overinvestment, ineffective leadership of

management team and board of directors, inadequate source of fund, income of cooperative

affected by negative issues and mismanagement of funds by the officers. Also, the type of

membership influences the members’ assessment on the type of delivery of services; moreover,

age contributes to the assessment of the business operation in terms of management and

delivery of services. Furthermore, a proposed measure was formulated to enhance the business

operation of the cooperative.

 The study of Cristina .R Bundoc (2016) of Univaersity of Northern Philippines, Vigan

City on her study entitled “The Management Practices of Multipurpose Cooperatives in the First

District of Ilocos Sur “ determined the management practices of multi-purpose cooperatives in

the First District of Ilocos Sur, Region 1. A combination of descriptive, comparative and

correlational research designs were used in the study. Results revealed that majority of the

officers and employees of the multi-purpose cooperatives belong to the middle-aged group; the

multi-purpose cooperatives are dominated by female and married personnel who possess good

educational qualifications. The level of management practices of the multi-purpose cooperatives

as perceived by their officers follows a pattern wherein planning, organizing, directing and

controlling were Very High. The employees of multipurpose cooperatives perceived a High level

of management practices along planning, organizing, directing and controlling.

The study recommends a systematic development of action programs aimed at reaching

agreed business objectives through directing and continuously responding to the challenges of

the times. The multi-purpose cooperatives should intensify their communication process by

adopting information technology approaches and adopting a system of incentives that could

further strengthen the commitment and participation of the administrators, staff and members in

the operation of the cooperatives. Furthermore, the multi-purpose cooperatives should

strengthen their monitoring, evaluation and reporting system through the strict implementation of

the Generally Accepted Accounting Procedures (GAAP) and conduct periodic performance

evaluation of officers and employees and exercise promptness in submitting reports to the

Cooperative Development Authority.

Cooperative Development Authority in the Philippines last August 20, 2019 had recently

celebrated the centennial of cooperatives. The celebration highlighted the progress

cooperatives had achieved in the last 100 years and the direction it shall go through in the next

millennium. The paper presents, in brief the portion of the progress of cooperatives, in particular
a) the role cooperatives play in the Philippine socio- economic system, b) the contribution of

cooperatives in achieving sustainable development goals and c) the partnership between the

government and the cooperative stakeholders in the promotion of cooperatives. The role and

importance of cooperatives in promoting equity, social justice and economic development is

well-articulated in the Philippine Constitution of 1987, and in the enabling laws on cooperatives

such as Cooperative Code (RA 6938 as amended by RA 9520) and the Charter of CDA (RA

6939). The transformation of micro and small cooperatives into medium and large cooperatives

is the biggest hope to create significant contribution of cooperatives in promoting a just society

and in building a nation with a broad economic base. The cooperatives are envisioned to

contribute in the achievement of SDGs in the areas of eradication of poverty and hunger, quality

education, decent work and economic growth, reduced inequities, responsive production and

consumption, climate action; peace, justice and strong institution; and gender equality.

A study entitled “ Hayuma Multi-Purpose Cooperative: A Case Study of Mutual-Help

Management System and Its Impact on the Community” by Ria Dg Ladisla last 2015 described

the Mutual-Help Management System (MHMS) Hayuma Multi-Purpose Cooperative (HMPC)

and its impact on the community. Specifically, it looked into the components of MHMS and its

management processes, analyzed how the MHMS contributes to the operations and financial

performance of the cooperative, and determined its impact to the community. The case study

design using methodological triangulation (quantitative and qualitative approaches) was

adopted in this study. The components of the MHMS are sharing of human resources, available

market, financial management, supervision, accountability and commitment, seed fund for TA-

REAP, avenue for community outreach, and aid to ease unemployment problems in community,

among others. MHMS was found to have a positive effect on the quantity of projects/services

generated and a negative effect on the prompt delivery of services. The program provided
additional source of income, served its target market, and gave financial aid to the TA-REAP.

Interventions, such as the development of strategic and training plans, were recommended.

Jasper Grashuis released an article last 2018 entitled “An exploratory of Cooperative

Survival: Strategic Adaptation to External Development” this study uses evidence collected from

case studies and print media publications, this paper contributes to the literature with a

qualitative study of farmer cooperatives which spurred survival and longevity by means of

strategic adaptation in response to four current developments in the external environment:

industry consolidation, consumer segmentation, price volatility, and policy change. The

qualitative study concludes farmer cooperatives in general respond to such developments by

means of organizational growth. Common strategies are vertical integration, geographic

expansion, and portfolio diversification. While survival and longevity are promoted in theory,

strategic adaptation also often facilitates the pursuit of investor-oriented as opposed to user-

oriented objectives. In some scenarios, member ownership and control may become

burdensome to the business and prompt conversion to another structure if further adaptation to

internal and external developments is unsuccessful. More research is therefore needed to

explore the dynamic and variable impact of strategy on cooperative survival. Finally, in response

to developments in trade policy, farmer cooperatives used various strategies to facilitate rent

protection on the domestic market and rent extraction on the international market, such as

geographical expansion (Fonterra) and vertical integration (Milcobel). Thus, in spite of various

weaknesses and limitations, farmer cooperatives have used various strategies to spur survival

and longevity in the agri-food industry. However, farmer cooperatives must beware of possible

internal inefficiencies in case of organizational growth.

Phuyal, Rajesh in his study “ Challenges and Opportunities: A case study of Aalapot

Multipurpose Cooperative Limited” find-out internal and external challenges associated with the

case company and make suggestion and recommendations in accordance with customer
needs. This research aims at finding challenges and opportunities in the local market by

analyzing market and customer needs of Aalapot Multipurpose Cooperative Limited. This

research focused on the development of financial services in the local market and people’s

expectation and motivation towards cooperative. This research succeeded in charting the

challenges and opportunities facing the case company. Recommendations and suggestions are

made by analyzing the current situation, observation, interview, and customer survey.

Jason R.V Franken (2013) with his study “Governance and Performance of Multipurpose

Cooperatives” states that Limited inquiry into cooperative governance and performance

suggests that best practices from corporate governance literature may not apply uniformly to

cooperatives. The rarely addressed issue of endogeneity limits confidence in recommendations

for corporations and cooperatives alike. By accounting for commonly recognized sources of

endogeneity, superior performance among multipurpose cooperatives with more experienced

CEOs and larger boards is detected. The latter result contradicts findings of a negative

relationship between board size and performance in the corporate governance literature,

confirming limitations of direct application to cooperatives. Multipurpose cooperatives appear to

require larger boards to represent heterogeneous interests of diverse patron memberships. This

study focuses on key aspects of governance emphasized in the corporate governance literature

in order to facilitate comparison. Extensions of this analysis may add board processes identified

by Burress, et al. (2011) in addition to board composition. Conceptually, the anticipated causal

relations and path-like effects of past performance influencing aspects of governance that

subsequently influence performance suggest opportunities to address associated endogeneity

issues using structural equation models (Pennings and Garcia, 2001) and directed acyclic

graphs (Franken, et al., 2011; Franken, et al., 2012; Haigh and Bessler, 2004).
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