Publications

Survival Rates of Co-operatives in Québec

A study conducted by the Ministry of Industry and Commerce, Government of Québec, 1999
Contributors: Lise Bond, Michel Clément, Michel Cournoyer, Gaétan Dupont

Introduction

Non-financial co-operatives are businesses with a major economic impact: $6.2 billion in turnover. These businesses employ 28,300 people, an increase of 21% over the last five years [1994-1999]. From 1960 to 1995, over 2,000 co-operative businesses, excluding the housing sector, were created in Québec. It seemed useful for the co-operative movement and for the Co-operatives Branch of the Government of Québec to determine the survival rate for the businesses set up since 1960, and more specifically since 1984.

In fact, many questions have been raised concerning the longevity of co-operative businesses. Are non-financial co-operatives sustainable over the medium and long term? Is their survival rate comparable to that of other private businesses, higher, or lower? Are there significant differences in results between co-operative sectors? Are there any determining factors favouring the longevity of co-operatives? These are the questions this analysis seeks to address, based on administrative and financial data from the Co-operatives Branch.

Thus, our purpose is to determine the survival rate of co-operative businesses by type and by sector after 5 and 10 years of activity as well as over the longer term while establishing, insofar as possible, a comparison with other private businesses. As for the private sector data, it should be pointed out that the primary source used was Statistics Canada. However, data from the Institut de recherche sur les PME, the small-business research institute of the University of Québec at Trois-Rivières (UQTR), on manufacturing businesses was used in some cases for comparison purposes, especially in the case of worker-shareholder co-operatives.

The analysis of the survival rates of co-operatives should permit comparison between such organizations and other private enterprises. The study should also offer a clearer definition of co-operatives by broad sectors through the statistics and comments presented. In order to present a more precise description of the survival rate of co-operatives after 5 and 10 years, we analysed the changes in the number of such businesses created from 1960 to 1995. The number of businesses set up between 1960 and 1995 and still active in 1998 was verified. For the purposes of this study, we called this ratio the "general survival rate". This process enabled us not only to shed additional light on the viability of cooperatives, but also to identify development cycles in several co-operative sectors, and the main causes thereof.

Observations relating to the survival rate of co-operatives after 5 and 10 years

• Co-operative businesses tend to last longer than other businesses in the private sector.
• More than 6 out of 10 co-operatives survive more than five years, as compared to almost 4 businesses out of 10 for the private sector in Québec and in Canada in general.
• More than 4 out of 10 co-operatives survive more than 10 years, compared to 2 businesses out of 10 for the private sector.
• Consumer co-operatives have the highest survival rate, with an average of 82% over five years and 66% over 10 years.