16th ICA CCR ASIA-PACIFIC RESEARCH CONFERENCE, IKOPIN University, Bandung, Indonesia,

December 15-17, 2022

Digitally Enhanced Cooperative and Resilient Economy

Galih Prasetya Utama1*
1
Manggala Wanatani Indonesia Cooperative, Jakarta, Indonesia

*Corresponding author email: galih@avicenniams.com

Abstract

Based on data from Ministry of Cooperatives and MSMEs, as of 2020, there were 127,124 units active cooperatives in Indonesia
with a business volume of Rp174 trillion and 25 million members, which showed an increase from 2019. To increase the national
per-capita income, cooperative governance requires to improve their competitiveness so that they are adaptive to changes, adding
that the modernization will be focused on developing multiparty cooperative system, real sectors, partnership facilities, payment
facilities, and digitalization. Many cooperative activities can be facilitated by digital technology. Starting from daily activities
such as registration of new members, account opening, fund deposit, to annual activities such as announcements. Digital
transformation can provide great savings for traditional cooperatives. Cooperative operations involve a lot of administrative and
financial recording. This can be simplified and accelerated with digitization. Digitalization can be done by adding a web-based
system that supports for integration through the API. The digital cooperative application can initially serve to check balances,
check membership profiles, information, education and announcements such as shareholder meetings. Digital platforms allow
worker cooperatives to consider a variety of different governance and ownership structures due to the dispersed nature of their
stakeholders. To maintain the convenience of existing platforms, most platform co-ops will require an option where individuals
can download the app and set up a free account as a user. The problem for emerging platform cooperatives is they lack access to
the capital investment needed to scale their operations. This would encourage a form of crowd-funding in which individuals could
invest in the capital of the organization but retain a right to withdraw their share at close to purchase price at the discretion of the
cooperative’s board.

Keywords: digital, collaborative, democratic, governance, technology

1. Introduction

Based on data from Ministry of Cooperatives and MSMEs, as of 2020, there were 127,124 units active cooperatives in
Indonesia with a business volume of Rp174 trillion and 25 million members, which showed an increase from 2019.
To increase the national percapita income, cooperative governance requires to improve their competitiveness so that
they are adaptive to changes, adding that the modernization will be focused on developing multiparty cooperative
system, real sectors, partnership facilities, payment facilities, and digitalization.

Many cooperative activities can be facilitated by digital technology. Starting from daily activities such as registration
of new members, account opening, fund deposit, to annual activities such as announcements. The operational costs
incurred for such activities are considerable. Digital transformation can provide great savings for traditional
cooperatives. Cooperative operations involve a lot of administrative and financial recording. This can be simplified
and accelerated with digitization. Digitalization can be done by adding a web-based system that supports for
integration through the API. Once the back end is ready, your fintech company can create a front-end application to
use by its members. The digital cooperative application can initially serve to check balances, check membership
profiles, information, education and announcements such as shareholder meetings. The rise of collaborative economy
should be taken as opportunity to modernize the business model of Indonesian cooperative movement. the history of
cooperatives shows that it really is possible to democratize the services we use — so long as it’s connected to a wider
redistribution of power in society. Considering the different possible ownership and governance structures can help us
reimagine socialism in a digital age — one that innovates beyond the rigid strategies of twentieth-century state
socialism and its top-down nationalizations. Marrying new technologies with the promise of democracy, they can give
us a clearer picture of a digital future worth fighting for.

Digital platforms allow worker cooperatives to consider a variety of different governance and ownership structures
due to the dispersed nature of their stakeholders. To maintain the convenience of existing platforms, most platform
co-ops will require an option where individuals can download the app and set up a free account as a user. But users
16th ICA CCR ASIA-PACIFIC RESEARCH CONFERENCE, IKOPIN University, Bandung, Indonesia,
December 15-17, 2022

and service providers could be able to make a small investment in the organization in exchange for a share in the
capital and voting rights.

The problem for emerging platform cooperatives is they lack access to the capital investment needed to scale their
operations. Venture capital and even so-called “impact” investors generally steer clear of co-ops because of the low
return on their investment and the lack of control over the organization. This would encourage a form of crowd-
funding in which individuals could invest in the capital of the organization but retain a right to withdraw their share at
close to purchase price at the discretion of the cooperative’s board. Shares would provide democratic control to
members and limit the extent to which any individual could exercise undue influence over the cooperative. The
organization itself would be internally democratic and enable different stakeholders to have input into the design and
management of the service. These principles do not provide a complete blueprint for a new platform, but they do help
to show how new democratic models of ownership and governance represent a step forward and a victory of
democracy over private power.

As the digital world is bringing in new models of organizations and collective entrepreneurship, it is worthwhile to
see how these technologies and philosophies are leveraged by cooperatives all across the world to strengthen their
cooperative identity, existence and growth.

As of March 2017, the total number of cooperatives in Indonesia reached 208,373, consisting of 151,546 active
cooperatives and 56,917 inactive cooperatives. There has been a significant increase from 1.71 percent in 2014 to
almost 4 percent in 2016. Moreover, the number of cooperatives classified as active cooperatives has increased by an
average of 2 percent annually. Around 26.6 million people joined as members of cooperatives, with a total business
volume of 175 trillion Indonesian rupiahs with the share of the SHU (member profits) of 8.2 trillion Rupiah. In terms
of employment, cooperatives were able to absorb up to 344,000 workers, consisting of 22,000 managers and 324,000
employees. All cooperatives in Indonesia had a total capital of 160 trillion Rupiah divided into internal capital of 78
trillion and external capital of 82 trillion Rupiah.

Cooperatives play an important part in Indonesian economic growth, especially when combined with the Small and
Medium Enterprises (SMEs) sector. Data from the Ministry of Domestic Product (GDP) reached 61.41 percent. This
considerable contribution becomes important because these two economic sectors compose significant measures of
the real conditions of economic growth in Indonesia. These two sectors can also contribute positively to the
employment absorption in Indonesia for up to 96.71 percent.

This research documents organizing strategies and alternative business models currently being deployed by platform
workers across the world to reclaim their civil-political and economic rights in the platform economy.

2. Literature Review

As the emerging architecture of economic organization, the platform economy has been at the centre of intense
debate. Bringing together the gift of the Internet’s inter-connected nodes and the wealth of intelligence reaped from
data, platformization represents promises and perils alike. The decentralized peer-to-peer networking affordances of
the platform business model hold the possibility for a radical reorganization of production and distribution to build an
alternative economy (Slee 2017; Scholz 2016). However, as things stand, the platform model has disproportionately
benefited a few first-mover corporations (such as Google, Apple, Facebook, Amazon and Microsoft) that have
amassed huge amounts of data and are, hence, able to monopolize critical sectors (UNCTAD 2019; Srnicek 2016).

As critical infrastructure bridging different economic nodes — consumers, advertisers, service providers, producers,
suppliers and even objects connected by the Internet of Things (IoT) — platforms constantly harvest intelligence to
optimize interactions, thereby maximizing profits for their owners. Digital intelligence has emerged as a key factor of
production to orchestrate market exchange in global value chains, enabling platform owners to selectively mobilize
and demobilize labour at will (Kenney and Zysman 2018). The “intelligencification” of value chains under the
capitalist platform model has seen a concentration of economic power in the hands of a few powerful transnational
corporations and an accompanying increase of labour precarity.
16th ICA CCR ASIA-PACIFIC RESEARCH CONFERENCE, IKOPIN University, Bandung, Indonesia,
December 15-17, 2022

3. Materials and Methods

The object research of this paper are:

1. Koperasi Wana Lestari Menoreh of Jogjakarta

2. Koperasi Perkumpulan Bening Jati Anugerah of Bogor
3. Koperasi Manggala Wanatani Indonesia, of Jakarta

The data for this exercise has been collected through an in-depth review of both academic and non-academic literature
as well as through face-to-face and phone interviews with representatives from academia, global trade union
federations, traditional and new-age trade unions working with platform workers, apex organizations of the
international cooperative movement, traditional cooperatives and new-age platform
cooperatives..

We deepened our analysis of the reasons behind the current situation of digitalization in cooperatives based on in-
depth interviews with employers and senior managers. In semi-structured interviews, we asked them to explain digital
system problems, share their opinions on the suitability of digitalization, and explain causes for the lack of use of
digital systems. Simultaneously, surveys and interviews enabled us to map the cooperatives' obstacles, mostly related
to the use of information technology to improve cooperatives competitiveness.

4. Results and Discussion

Table 1 Coop Data Ministry Cooperatives and MSME Indonesia 2020

Number of Value Measurement

Total Cooperatives 208,373.00 Unit

Active Cooperatives 127,124.00 Unit

Inactive
Cooperatives 81,249.00 Unit

Members 26,538,940.00 Individual

Managers 22,579.00 Individual

Employers 324,108.00 Individual

Internal Capital 78.27 Billion IDR
External Capital 81.55 Billion IDR
Business Volume 175.05 Billion IDR
Profit Sharing 8.22 Billion IDR

Digital media can be used by businesses such as cooperatives in various operational activities. We found an
interesting phenomenon from the data analyzed that digital media for cooperative marketing products occupied the
lowest rank, with only 20 percent of respondents reporting its usage. One of the keys to supporting the success of a
cooperative business lies in its marketing management. Digital media for product marketing does not only serve to
provide information on cooperatives' products, but it can also be used to expand and optimize market reach both
within the geographical area of the cooperatives or outside the area. Furthermore, digital media for product marketing
can build a positive brand image and brand loyalty for the cooperatives.

It can also be identified that the highest use of digital media by respondents was for member databases. Digital
member database storage was considered more efficient and effective because it facilitated cooperatives to access
member data faster and more safely and minimize physical data file storage. Besides, digital systems allow for
making data changes more comfortable, more quickly, and more accurately.
16th ICA CCR ASIA-PACIFIC RESEARCH CONFERENCE, IKOPIN University, Bandung, Indonesia,
December 15-17, 2022

Furthermore, the second-highest use of digital media was for financial transaction activities by 55 percent of
respondents. The use of computers for financial transactions was considered to facilitate the transaction process,
record financial transactions faster and more accurately, and secure financial data. However, 45 percent of
respondents conducted conventional financial transactions without computer assistance. Another area of inquiry was
the use of information systems in cooperative financial statements. Forty percent of respondents stated that their
cooperatives had used information systems for their financial statements and to analyze performance. Respondents
reported that they used these systems to generate financial statements to meet internal and external audiences'
demands for transparency. In other words, these cooperatives ran their businesses using conventional paper-based
methods.

5. Conclussion and Suggestions

1. Design platform SSE models towards “regenerative appropriation”: SSE enterprises should explore platform
models that are founded on data ethics of respect for individual and group privacy, and sustainable creation and
equitable distribution of data value. Federated design can bring additional advantages in the form of network effects
and optimize supply through peer collaboration

2. Provide capacity building and support for the platform context: Intermediary organizations should provide the
much-need linkage for meeting the capacity-building needs and effective implementation of social insurance, credit
and care services for worker cooperatives

3. Adopt voluntary codes of conduct: Sector-specific codes of conduct for ethical business and worker practices
should be adopted by platform employers. Platform companies providing integrated financial services/products to
workers should adopt the tenets of “responsible finance”.

4. Creating alternative business models for workers in the platform economy based on a cooperativist ethos is
not simply about finding an alternative business structure (incorporationas a cooperative), funding strategy
(community shares instead of venture capital) or method of surplus distribution (allocation of dividends based on
member contribution rather than amount of share capital held). Choices of techno-design architecture are also equally
important in the creation of platform enterprises in the social and solidarity economy tradition. The data ethics
informing the intelligence frameworks of such enterprises as revealed through our study, especially in key informant
interviews — have to be radically different, ensuring the fair accumulation and equitable distribution of the value
generated.

5. Data collectivism . This is the techno-design choice embraced by worker cooperatives which are convinced
that, in an economic context where data has become the foundational source of value creation, it is important to
develop an appropriate stewardship model for workers to obtain a share in the collective value extracted from their
aggregate data. Such models reject the economy of data extractivism and, therefore, do not allow the creation of a
commodity market where individual workers can trade their data. Instead, they focus on creating a fiduciary structure
where the transactions data that workers generate in the course of their labour are pooled into a collective data pool on
the basis of informed consent and clear use and purpose limitations. This is managed by a set of democratically
elected trustees (akin to a credit union cooperative arrangement) who may then generate value from this aggregate
data by licensing it to public authorities or business innovators.

6. Inventory based credit as instrument to operate inside the closed loop of cooperative ecosystem, with data
collectivism and data minimalism first
16th ICA CCR ASIA-PACIFIC RESEARCH CONFERENCE, IKOPIN University, Bandung, Indonesia,
December 15-17, 2022

Acknowledgments

Thank you to Pak Bernardus Windratmo as the chairman of Koperasi Wana Lestari Menoreh, Pak Agus Mintarto as
the chairman of Koperasi Manggala Wanatani Indonesia, and Bu Purnanik as the chairman of Koperasi Manggala
Wanatani Indonesia

References

Kenney, Martin, and John Zysman. 2018. “Work and Value Creation in the Platform Economy”, BRIE
Working Paper 2018-4. https://brie.berkeley.edu/sites/default/files/brie_wp_20184.pdf

Nurdany, Achmad. Prajasari, Anniza Citra. 2020. Digitalization in Indonesian Cooperatives; Is It

Necessary?. Journal of Developing Economy. Department of Sharia Economic, Universitas Islam Sunan
Kalijaga Indonesia

Scholz, Trebor. 2016. “Platform Cooperativism: Challenging the Corporate Sharing Economy.” Rosa
LuxembuSrg Stiftung.https://rosalux.nyc/wp-content/uploads/2020/11/RLS-NYC_platformcoop.pdf

Slee, Tom. 2017. What’s Yours Is Mine: Against the Sharing Economy. New York: OR Books, LLC

Srnicek, Nick. 2016. Platform Capitalism. Hoboken, USA: John Wiley & Sons

UNCTAD. 2019. Value Creation and Capture: Implications for Developing Countries. Digital Eocnomy
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