Limitations of Cooperative Organisation

1. Limited capital: Because membership is largely drawn from people of modest means and shares are kept at low, affordable denominations, a cooperative society's own capital base tends to stay small, restricting the scale on which it can operate or expand.

2. Lack of managerial expertise: Management is usually in the hands of elected members rather than trained professional managers; office-bearers may lack the specialised business, financial or marketing expertise a large, competitive enterprise needs, which can affect efficiency.

3. Possibility of internal conflict: Because members come from varied backgrounds and each has an equal vote regardless of contribution, differences of opinion, factionalism and internal friction among members can slow decision-making and, in some cases, paralyse the society's functioning.

4. Excessive government control: The very state assistance and concessions cooperatives receive come bundled with correspondingly close government regulation, audit and inspection, which can reduce the society's operational freedom and burden it with compliance.

5. Limited motivation for capital contribution: Since interest on capital is deliberately kept low and surplus is distributed by patronage rather than by shareholding, members have less financial incentive to invest larger sums, which reinforces the capital-scarcity problem described above.

6. Dependence on government support: Many cooperatives, over time, become dependent on continued government aid, subsidies and cheap institutional credit rather than developing full commercial self-sufficiency. …