Words Matter: Measuring the Co-Operative Identity Crisis

Identity is at the core of a rich body of business communications research, spanning studies on organizational identity, branding, and corporate social responsibility. This work has, however, neglected the question of corporate identity from the perspective of co-operatives—democratically-controlled businesses owned and controlled by their users—and the existential challenge posed by an operating environment often hostile to the business model. At the same time, the question of identity permeates the scholarly organizational and co-operative literature, shaping studies into co-operative identity crises, isomorphism, and from a transactions-cost economics perspective, the co-operative lifecycle. Bridging these literatures, we develop a first-ever conceptual dictionary of terms that we associate with co-operative and investor-owned firms (IOFs). Using text-as-data techniques, we apply the dictionary to a 15-year sample of credit union (a type of co-operative) and bank (IOFs) annual report texts. The resulting model ranks credit unions and banks on a co-op versus IOF firm scale and identifies credit unions that may be at risk of losing their identity because of their use of IOF language. To validate our results, we employ a variety of strategies, including novel machine learning models. Generally, these strategies support the findings from our dictionary model but also suggest the model may not be picking up on some creeping isomorphic pressures on credit unions to conform to IOF language. We conclude by noting that identity questions have important real-world implications, noting potential legal and public policy implications (e.g., loss of preferential tax measures) and pointing to literature that associates co-operative “identity crises” with business failures and demutualizations which, in turn, can lead to higher consumer prices.