Creating a Financial Viability Model among Cooperatives Using Management Practices as Predictors

Abstract

The contribution of cooperatives in the Philippine economy has been increasingly felt as it generated millions of business volume from various sectors and thousands of direct employment among Filipinos, however, only few continue to exist. This paper used management practices as predictors in creating a financial viability model among cooperatives. This paper clustered the multipurpose cooperatives operating in a Philippine province into large, medium, and small cooperatives based on their asset size and chose the top two as representative cooperatives in each cluster for a total of six out of 42 multipurpose cooperatives. This study assessed the management practices using these dimensions, strategy, execution, culture, structure, talent, leadership, innovation, and strategic linkages and partnerships and measured financial viability using Altman’s Z”-score model. This study also applied regression analysis in creating a prediction model which revealed that only culture, structure, and strategic linkages and partnerships can significantly predict financial viability among cooperatives. The model suggests that cooperative’s financial viability increases when it puts premium on improving its culture and structure. The model even suggests that cooperatives are discouraged in making strategic linkages and partnerships to become financially viable. In other words, this model proposes that closed-type cooperatives seem to be more financially viable than open-type cooperatives.