Axis 1: Governance of Financial Cooperatives

Objectives

Despite a unique legal status and a priori an identical governance, financial cooperatives are characterized by a large organisational diversity and decision-making processes.

As it is suggested below, at each level we can find quite clear alternatives concerning the actions and missions under the responsibility of the existing structures.

Most of the time, each of the three levels is run by formal structures, but sometimes they may be informal. Certain levels do not define the structures of some cooperative organisation: local level for Banque Populaire, regional level for Desjardins or Rabobank, national level for certain German cooperative groups. A detailed analysis of the prerogatives associated with each level in the different possible situations will facilitate the estimation of their importance in the decision-making process.

The objective is to understand the decision-making process within each different model and provide criteria for the evaluation of the process efficiency.

Project 1 - The diversity of cooperative models and of governance models in the banking sector

Prof. Aude Deville (Université de Nice) / Prof. Eric Lamarque (IAE de Paris)
For the academic world, the media and the general public, there is a difference between cooperative banks and the others. Cooperative banks share a certain number of qualities, notably an organisational anchorage around the definition of the cooperative member. However, is it possible to affirm the perfect equality between cooperative banks? What happens when the focus is put on their organisational models and governance?

This is a three-fold research axis. The first-fold objective aims to bring evidence about the diversity of the cooperative banking organisation and governance models. Attention is focused on the banks’ decision-making structure by distinguishing three decisional levels: local, regional and national. As such our tenet implies studying cooperative banks governance strictly through the management decision-making process. The decision –making process involving the elected members in the assemblies is not put aside or ignored but as a first step it is considered more as a back up to the management decisions. The first results force us to reconsider this basic premise.
A few elements showed in the research have already been part of a dissemination step through the writing of an expert report, a working paper and the participation at a congress:

• We have studied the particular organisation context of cooperative banks bringing new elements to the classical literature on finance and banking activity, which often considers the financial cooperative world as a homogenous one. More pragmatically the research enabled the building of a cooperative bank’s typology based on different hierarchical levels with when necessary the integration of comments concerning the control and owner structure.
• We have proposed a group of various criteria for the performance evaluation: financial, client, HR, cooperative performances. Then we associated them with different organisational and governance models.

Two additional folds complete the first research.

The second-fold objective is to assess and discuss the decisional influence of the political structures (the elected member assemblies) on the management strategic decisions. The point is to test the possibility for a professionalization of these assemblies. Expert members, capable to challenge the bank management, would manage the assemblies in order to improve the general practices and to set up the organisational training both for the elected members and for the managers.

The third-fold objective is to analyse the consequences of the new regulation since, through the new evaluation measures, it tends to reduce the banking model diversity and could make the cooperative model disappear. This last part questions the meaning of evaluation and of the criteria choice. In fact performance indicators should be easy to assess, interpret and be fairly applied. However, the evaluation systems should not be limited to the assessors’ use but also to the targeted entities, in this case the financial institutions. Surely a certain degree of governance models homogeneity may be desirable, helping for a better understanding and a less risky evaluation. However, could this be a sufficient argument to diminish the diversity of models?

Project 2 : Organizational/cooperatives values and performance measurement systems

Nathalie Bénet (IAE de Toulouse) / Prof. Aude Deville (Université de Nice) / Séverine Ventolini (Université de Bourgogne)

Descriptif :

This project of the axis 1 aims to analyse the influence of organizational values, and more specifically those conveyed by a financial cooperative, on management behaviours and management control systems.

A first part focuses on the estimation of the influence of values on performance measurement systems. This study is exploratory and relies on the Simons’ levers of control. The purpose is to answer the following question: how does control is used in the banking sector, and particularly in a context of cooperative banks?

Simons distinguishes “interactive” control and “diagnostic” control. The “interactive” control is composed of management control systems which are “formal information systems managers use to involve themselves regularly and personally in the decision activities of subordinates” (Simons, 1995, p. 95). “Diagnostic” control systems rather correspond to “management control systems viewed as management-by-exception tools for implementing intended strategies” (Simons, 1991, p. 49). In complement to these two levers of control, Simons also considers “beliefs” systems and “boundary” systems. In this study, we are interested in estimating the influence of values via “beliefs” systems, which usually refer to informal controls. To conduct this study, data will be collected through interviews with customer account managers, agency directors and regional network directors.

A second part of the project is related to the complex relation between performance measurement systems and business units’ performance (bank agencies). The purpose is to focus on the emphasis on non-financial measures in the management of employees in contact with customers. The questions we address in this study are the following:

• Is the business unit performance influenced by the bank organizational/cooperative values?
• Is the account manager's commitment related to the bank organizational/cooperative values?

In relation with the first part of the project, this second study aims to analyse the influence of values on both behaviours and management control systems. Data will be collected through interviews in a first time, and online surveys in a second time.

Bibliography

Simons, R. (1991). Strategic orientation and top management attention to control systems. Strategic Management Journal 12 (1): 49-62.

Simons, R. (1995). Levers of control: how managers use innovative control systems to drive strategic renewal. Boston: Harvard Business School Press.

Thesis - Work in progress: Salma Elkaoukabi

Thème:

Gouvernance et portefeuille d'activités des banques : Le cas des banques européennes

Sous la direction :

Mme Joanne Hamet (Université de Bordeaux) et M. Julien Batac (Université de Bordeaux)

Problématique :

la thèse portera alors sur le secteur bancaire en Europe et plus précisément sur le modèle coopératif, ses caractéristiques, les mutations qu’ont subies les banques coopératives européennes et leurs conséquences sur l’avenir de ces institutions. Spécialement, sera menée une étude comparative entre ce modèle coopératif et la banque capitaliste en se focalisant essentiellement sur leurs portefeuilles d’activités respectifs afin de voir si les particularités des banques coopératives ont toujours un impact sur le choix et la composition de leurs portefeuilles d’activités.

Objectifs :

• Les structures coopératives détiennent-elles toujours des portefeuilles d’activités significativement différents de ceux des banques capitalistes ?
• Les valeurs et principes des banques coopératives continuent-ils de les guider dans le choix de leurs activités ? Les activités des banques coopératives sont elles toujours en adéquation avec leurs valeurs ?
• Les mutations qu’ont connues les banques coopératives peuvent-elles entrainer leur disparition dans l’avenir ?
• La proximité géographique forte des banques coopératives implique-t-elle une relation client durable ?

Démarche empirique :

comparaison banques mutualistes / banques capitalistes, impact sur la constitution du portefeuille d'activités des banques (activités de détail, de finalement et d'investissement) et la prise de risque associée à cette gestion.