RESAERCH WORK

Cooperative model of microenterprises, small and medium enterprises aimed at local agricultural development

J.C. Michalus¹, L.A. Hernández², G.D. Hernández³, J. Suárez² y W.A. Sarache⁴

¹Facultad de Ingeniería, Universidad Nacional de Misiones. Juan Manuel de Rosas No 325, CP 3360, Cuidad de Oberá, Misiones, Argentina
E-mail: michalus@fio.unam.edu.ar
²Estación Experimental de Pastos y Forrajes“Indio Hatuey” , Matanzas, Cuba
³Universidad Central “Marta Abreu”de Las Villas, Santa Clara, Cuba
⁴Universidad Nacional de Colombia, Sede Manizales, Colombia

ABSTRACT

This contribution aims at the conceptual planning of a model of flexible cooperation among microenterprises, small and medium enterprises (MSMEs), so that it acts as a strongly stimulating practice of local agricultural development in livestock-production regions, such as the case of the Misiones province, Argentina, based on enhancing this component of entrepreneurial tissue through associativity. As main characteristics of the proposed model, its intersectoral (containing MSMEs from different sectors) and multi-relational character (establishing cooperation relationships of various types) stand out and it is based on the active participation of the stakeholders present in the territory. It is conceived to enhance the joint work of enterprises so that they can act afterwards as a group in an independent way, multiplying small networks of MSMEs and establishing a «virtuous cycle»favorable for sustainable local development.

Key words: Cooperation networks, sustainable local agricultural development.

INTRODUCTION

The important role played by microenterprises, small and medium enterprises (MSMEs) is largely known, for invigorating and enhancing the performance of economies as generators of employment and the gross internal product, in the so-called developed countries as well as in the developing countries. They even show more flexibility than large enterprises for modifying their activities and adapting to new market demands (Lagemann, 2004). At the same time, they have more possibilities of contributing to the enhancement of the communities where they perform, as compared to large enterprises, generally with extra-local interests (Martínez, 2007). Specifically, MSMEs in Latin America and the Caribbean represented, according to regional statistics, 96% of the total existing enterprises and generated 57% of the employment (Albuquerque, 2004).

From the point of view of development, employment generation and economy invigoration, the role of MSMEs, which include livestock production cooperatives and farms, must be emphasized, because although they show a series of difficulties and limitations, they also have characteristics that favor their performance, such as flexibility, capacity to react and their articulation in the environment of more complex systems. Likewise, they can contribute to the utilization of local capacities, population retention in their communities and environment protection.

Several authors also coincide in stating that the higher obstacle of MSMEs is not their size, but their isolation (Ramírez, 2004; González and Gálvez, 2008), for which diverse alternatives have been displayed to solve this difficulty, based on cooperation relationships among enterprises, with heterogeneous results, but turning out to be the most adequate way for their survival. Nevertheless, an additional topic this paper attempts to approach is cooperation within a network framework, aiming at improving the conditions of the territory where the entrepreneurial tissue is established, so that they represent a tangible and/or intangible benefit for its inhabitants, thus contributing to local development.

The perspective of local development

Local development (LD), also called endogenous local development, is a multidimensional concept, which includes economic, social, environmental, cultural and institutional aspects (Coraggio, 1996; Tejera, 2006). It also constitutes an integral process based on the agreement of local stakeholders which incorporates, in turn, the dynamics of sectoral, functional and territorial development undertaken by the State. Thus, Enríquez (2005) defines LD as: " A complex process of agreement among the stakeholders sectors and forces- that interact in a certain territory, to promote a common development project, which combines the generation of economic growth, equity, social and cultural change, ecological sustainability, gender approach, quality and spatial and territorial balance, in order to increase the living standards of each family and citizen who live in that territory and contribute to the development of the country and to its better insertion in the international economy".

As important characteristics of LD, Albuquerque (2004) emphasizes, among others: priority attention to MSMEs, ensuring the supply of services of entrepreneurial development or support to production (advisory on economic, technical, juridical aspects, training and information, etc.); the introduction of social profitability criteria (considering the benefits for society, among which environmental protection can be included, until now very proclaimed and reclaimed, but not always taken into consideration with the necessary priority); the generation of employment and income among most of the population, instead of being guided only by narrow criteria of short-term financial profitability; the development of institutional networks, territorial cooperation and complementarity agreements which facilitate progressively the construction of a local innovative environment that allows satisfying the expectations of higher prosperity and welfare of the populations and territories most disfavored by the current stage of the globalization and internationalization process of the world economy.

In this sense, the cooperation networks of enterprises also constitute a highly useful element, with favorable impacts to start sustainable local development processes aimed at exploiting the endogenous potentials of the territories, as it is shown below.

Cooperation networks of enterprises

The trend to form entrepreneurial networks, especially of MSMEs, constitutes a generic form of organization (Sarache, 2003), by means of which enterprises are associated in order to improve their position in the market without competing among themselves¹, which allows them having a structure of large and competitive enterprise, as well as providing the associated enterprises with a profitable² access to specialized services of technology, input purchase, promotion, commercialization, design, productive processes, financing and other common activities, facilitating the emergence of scale economies (López-Cerdán, 2003; Sarache, 2003).

These networks also emerge as a response to the challenges and high demands derived from the hyper-competitiveness present in current globalized markets. In fact, many authors coincide in stating that they constitute an organizational phenomenon in itself, which is in turn formed by one or several models of alliances among traditional enterprises (López-Cerdán, 2003; Ramírez, 2004). In this sense, Coraggio (1987) presented a concept that complements such networks, the one relative to territorial complexes, generated from the regionalization of social relationships among the stakeholders of a territory.

Cooperation networks show a large variety of types and structures, and even with several classifications; thus, for example, a distinction can be made between horizontal and vertical networks (López-Cerdán, 2003; Nüske, 2006), interorganizational, intra-firm and regional networks (Cleri, 1999), social, bureaucratic and proprietary networks, value networks (Acevedo, 2008), associative models (Barreto and García, 2005) and strategic alliances (Ramírez, 2008). Several authors also state that the formation of cooperation networks has a favorable impact on the competitiveness, innovation and productivity of local enterprises (Albuquerque, 2004; Enríquez, 2005).

Although the high importance of the local/territorial dimension in the performance of the national economy has been widely disseminated in the reviewed bibliography, particularly that of industrializing countries, emphasizing the establishment of entrepreneurial networks as one of the favorable elements which in turn enhance it, it is not always clear for all contexts how this biunivocal and complementary relationship can be implemented in a pertinent way with the interests of the territory and its inhabitants, and in turn as it is natural- compatible with the demanded returnability of the invested capital, individually as well as collectively by the entrepreneurial tissue existing in the territory.

In this sense, this work presents an alternative contribution which tends to articulate and balance the above-mentioned interests. In its content a cooperative model of flexible integration of MSMEs aimed at local agricultural development is conceptualized, based on an essential attitude towards cooperation and a necessary dose of aptitude, which allow achieving competitiveness levels, in a framework of interests agreed with the different stakeholders present in a given territory.

Cooperation networks between MSMEs aimed at local agricultural development: main characteristics of the proposed model

As a proposal for solving the above-mentioned problem, an alternative methodological solution was developed to form flexible cooperation networks of MSMEs that contributes to sustainable local agricultural development.

Figure 1 shows the conceptual model that explains the essence of the problem briefly characterized in previous paragraphs, which in turn supports the solution, as it is conceived and explained below.

The conceptual model, which is being applied in the Misiones province, Argentina with an agricultural and forestry economy-, considers the territory as an open system, in constant interaction with an environment characterized by the effects of economy globalization and internationalization; the uncontrolled increase of competition; the increasing demands of clients, often stimulated by consumerist policies which are above the real possibilities of developing economies; and the high and increasing presence of «globalized products» in local markets that displace national products, with harmful consequences, particularly for endogenous development at local scale. In this environment other territories, organisms and/or countries3 are also involved, with which a voluntary, or even involuntary, interaction already exists or is established, resulting in a continuous exchange of information and resources in both senses, through the limits of the system, represented by the contour in discontinuous lines.

The Model of creation of cooperation networks among MSMEs aimed at local agricultural development, as it has been called by other authors, appears as an alternative, which, through inclusion, can contribute to LD and, in turn, improve the conditions for the survival of the MSMEs that adhere to this proposal.

It has been represented as an arrow which tries to "hit the bull's eye" (impact) on what is precisely its main objective: sustainable local agricultural development4. The arrow departs from a local reality of the entrepreneurial sector which can be currently summarized, and almost as a general rule, in the isolation, the low competitiveness of the enterprises that form the entrepreneurial tissue at territorial scale, and in the non coordinated policies aimed at local development.

The essence of the model, represented by the body of the arrow, focuses on the creation of flexible cooperation networks among MSMEs, promoted by the invigorating action of a four-helix, more potent than the traditional triple helix (University-Enterprise-State) by explicitly incorporating a fourth actor: local organizations, active representatives of the interests of civil society and committed to the enhancement of the territories they inhabit.

Besides the additional power provided by the fourth stakeholder, the strategic orientation towards sustainable local agricultural development is important as a goal to be attained at short term, but which road is concretely initiated with a first step that searches for the progressive improvement of its entrepreneurial tissue (not only of isolated organizations) and its relationships to the Academy (different not only for its semantics from the classical element University), and adequately balancing the effects (positive and negative) derived from the dynamic and even random (temporary) behavior, of specific influential factors of the environment (technological, economic, organizational, political, legal, sociocultural and environmental) which can affect the «precision of the shot to the bull´s eye» (the main objective).

The distance to the «bull's eye» represents the gap that this methodological solution proposal attempts to save so that its positive impacts progressively contribute to transform reality often adverse for most inhabitants- in the territory.

The application of this model demands the fulfillment of the following premises:

• The existence of a policy aimed at local development, by the Government
• Participation of local stakeholders
• A will of the livestock production enterprises to improve their performance
• A necessary minimum social capital
• Institutional stability

Likewise, the fulfillment of the following principles is necessary:

• Cooperation among stakeholders
• Contribution to sustainable local agricultural development
• Voluntary participation
• Ethics and responsibility
• Equity
• Willingness to share information among stakeholders
• Continuous improvement and learning
• Plurality, without exclusion
• Agreed management
• Decision-making in the administrative levels closest to the key stakeholders

In addition, the model is distinguished by the following characteristics:

• Relationships based on trust and reciprocity
• Commitment for joint work
• Possibility of including enterprises from several production and/or service sectors, associated to agriculture and food
• Consideration of local interests
• Management through an organization formed with local stakeholders
• Flexibility
• Promotion of the existing resources and their utilization
• Continuous improvement of the organizational performance

Such model, based on the conception of the four helix, relies on four institutional stakeholders, whose substantial functions are described below:

• The State or Government (national, regional or local) is the entity that has the faculties and political, economic and legal resources to act, due to its nature, as main promoter and working warrant of this mechanism and the cooperation networks that can be generated. From the political point of view, it should accompany and protect the initiative, making sure that no deviations occur from the original directing principles based on solidarity, cooperation and complementarity, and acting as a coordinator of interests among the involved stakeholders. From the economic and legal point of view, it has the mission of providing the economic resources (or at least part of them) and promoting the necessary legal initiatives for the functioning of the cooperation networks. Its participation is conceived at all levels, starting from the local one; it comprises the regional and national sectors, as a means to facilitate the harmonization of policies, plans and actions; it also prevents discoordinations, overlapping and all types of barriers that delay or hinder the casuistical needs of cooperation networks.
• The local organizations are legally constituted entities which, as they belong to the territory, are interested in its development and are willing to work to make it real. Examples of these organizations are: farmer's unions or associations, livestock production professional associations or colleges, non governmental organizations, chambers of agricultural entrepreneurs, and all other organizations which have any insertion in local society.
• The Academy represents the set of scientific institutions and/or higher and technological formation institutions, generators or depositories of knowledge and technologies which can be used and/or transferred to the other stakeholders, as new competences, capacities, aptitudes and abilities to develop their tasks in a more effective way. Among the institutions that are part of the Academy are: public and private universities, technological institutes, research and development centers and agencies, interface agencies and technological parks.
• The entrepreneurial tissue is constituted by the productive and service enterprises/organizations including cooperatives and small farms- which are established in the territory, the MSMEs that are involved or interested in integrating flexible cooperation networks as well as the other organizations that participate in the entrepreneurial tissue and do not belong (or do not want to be incorporated) to these networks, but are interested in establishing some link with them.

The intersectoral strategic integration recommended by the model, states the possibility of searching not only for the traditional practices of intrasectoral cooperation among enterprises of a particular sector from the ones present in the local economy, but also for forms of horizontal cooperation among organizations from different food and agriculture subsectors (Michalus and Hernández, 2007; 2008), within the framework of value chains.

At the same time, the cooperation promoted should have a multi-relational character, that is, it should involve multiple alternatives of cooperation among local MSMEs, which allow integration through the use and shared management of one or more resources and capacities, in an environment of sustainability and coherence with the economic, social and environmental development of the territory. On the other hand, it is possible to initiate cooperation among enterprises gradually, through a certain action in an area considered important for the interested enterprises and, once a trust basis is established, it can be extended until forming a wider cooperation environment.

General methodological procedure for implementing the model

Derived from the above-explained conceptual model, a general methodological procedure was conceived and developed to implement the flexible cooperation network among livestock production MSMEs, which is synthetically structured into four (4) stages: 1) preparation; 2) creation and starting; 3) consolidation; and 4) reproduction, which have been schematically represented in figure 2.

The first one, called preparation stage, involves the creation of a management unit (MU) integrated by the local stakeholders (four helix), which is in charge of making a strategic diagnosis of the current local situation, identifying the production and/or service sectors likely to be developed in the territory; in addition, it allows estimating the sectoral impact on local agricultural development from the evaluation of the direct or indirect benefits to be obtained, which would allow establishing priority cooperation areas and their promotion through different channels or means, in order to achieve the highest possible diffusion and capture the interest of potential interested stakeholders.

The creation and starting stage comprises the individual diagnosis of every interested organization, the selection of those that show adequate conditions for being part of the network, the elaboration of an action plan and formation of ad-hoc sub-networks, according to the interest of farmers and the local needs. Afterwards, the consolidation stage takes place, which involves increasingly important cooperation activities (higher scope, scale, or both), where the objective is to enhance the network and consolidate organizational and cultural changes in the participating enterprises, preparing them for a future operation as independent network, with its own identity and indissolubly linked to local interests.

The above -described stages (successive and interdependent) are coordinated by a management unit (which is shortened to UG1), formed by representatives of the main local stakeholders (four helix). This entity is in charge of carrying out activities aiming at the enhancement of the network of MSMEs, supporting it in its technical, economic, legal and organizational needs; for that purpose it resorts to the competences of its members, who aid it in its requirements from their competences, acting together and/or individually accordingly.

Finally, once the cooperation is consolidated, the reproduction stage begins, in which the sub-networks that reach certain maturity and development degree are identified, and their gradual detachment is coordinated until the conditions are given for them to work almost independently from the initial cooperation network, but always maintaining links with it, in a constant search for LD-favorable synergies. The reproduction stage represents a transition, in which a new management unit (MU2) is created, established to coordinate the functioning of each sub-network independently; in it, the State and local organizations maintain a participation, which objective is to guarantee that the detached network continues aiming at local agricultural development.

Based on the above-explained general procedure, a group of necessary specific procedures is derived for its implementation, in which a series of important aspects are established in detail, among them: the creation and functioning mechanisms of the management unit; the procedure for making the local strategic diagnosis and the establishment of priority areas; the way of evaluating and selecting the enterprises that will be involved in the network; the procedure for conforming the sub-networks and elaborating the respective action plans, with their follow-up indicators and necessary adjustment mechanisms; the ways of enhancing cooperation in the sub-networks, as well as a general methodological procedure for executing the detachment process, respecting the individualities of each case.

FINAL CONSIDERATIONS

From the problems unleashed by the globalization phenomenon in its current stage, which in a quick balance in spite of the favorable integrationist perspectives which progressively emerge and try to be consolidated in the region- shows undesired effects, particularly in developing countries (called collateral effects, as a way of stating the crude reality), which are magnified with particular rigor in MSMEs, because it puts them in a difficult survival situation, an alternative methodological proposal has been developed to strengthen this component of the entrepreneurial tissue, supported by the wide possibilities provided by mutually binding cooperation and complementarity, essentially aimed at assisting sustainable local development.

In this sense, the networks among MSMEs aimed at local agricultural development try, as ultimate and transcendent benefit for the locality, to contribute to its development through the improvement of local entrepreneurial tissue, maturated with the participation of local stakeholders, which healthily reinvigorates the roots of the territory, with the benefits this entails.

Thus and summarizing, the flexible cooperation network acts as an incubator it can also be called strengthener- of networks, where it captures the enterprises from different sectors, assist them in the journey until conforming cooperation networks, enhancing them enough so that at the end they are dispensed to the territory and have higher possibilities of subsisting in time. This process allows multiplying the networks, which can incorporate new enterprises in a «virtuous circle» favorable for local agricultural development.