The document explores the role of telecommunications cooperatives in promoting innovation in Argentina's information industry. It finds that cooperatives have innovated through business alliances, diversifying their services, and building infrastructure. They make decisions openly with community involvement. However, managing alliances between independent cooperatives has challenges. While reforms initially protected cooperatives, current laws prohibit some of their services. Overall, cooperatives have engaged in innovation through open models, but the regulatory environment could better support their local economic impact.

1. School of Information Studies
School of Information Studies
Cooperatives: Drivers of the Argentinean
Information Industry
Martha Garcia-Murillo,
Ph.D
Fatmia Espinoza
May 14th 2010

2. School of Information Studies
Objectives
• Explore the role of cooperatives as
innovators and promoters of the information
and communications industries in
Argentina.
• Explore their business model and
understand their ability to face challenges
of new telecom environment
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

3. School of Information Studies
Background: ICTs, innovation and
economic development
• Information and communication technologies (ICTs)
promote economic and social development.
• Telecom reforms have spurred investments in urban
areas, but less so in rural markets.
• In Latin America cooperatives and other small-scale
market entrants have played an important role in the
introduction and development of ICTs in rural areas.
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

4. School of Information Studies
Background: telecom cooperatives in
Argentina
• In the 1940’s government nationalized telephone
operator as a strategy to develop the industry. Rural
communities were left unconnected.
• Telecom cooperatives flourished in rural areas, tolerated
by the incumbent
• By 1965 there were over 100 cooperatives
• With the 1990 reforms, when ENTEL was privatized,
cooperatives were able to strengthen their business and
make new alliances.
• Today: over 300 cooperatives provide telecom services
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

5. School of Information Studies
Research Questions
1. What impact do cooperatives have on
innovation in the information industry in
Argentina?
2. What are the reasons that may have
prompted cooperatives to engage in
innovation? Has their modus operandi in an
open business model contributed to their
success/ failure?
3. Does Argentina have a regulatory framework
that can foster or hinder innovation in these
smaller organizations?
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

6. School of Information Studies
Theoretical Framework: Open
Innovation
• Open Innovation (OI) acknowledges the
reality of globalization, distributed
knowledge, and ubiquitous communication
media.
• OI takes advantage of external resources
and ideas and incorporates them into their
business processes.
• We think cooperatives can be considered a
special case of an open business.
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

7. School of Information Studies
Methods
• Exploratory qualitative analysis of
cooperatives in Argentina.
• In-depth semi-structured interviews with high
level officials at five cooperatives in various
regions of the country.
• Elicited information on company origins, their
innovations, and the rationale for innovating.
• Interview transcripts were analyzed using
computer assisted qualitative data analysis
software (CAQDAS)
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

8. School of Information Studies
Description of the Cooperatives in
this Study
Coop Type of services provided
Pseudonym
Coop A •Public telephony
•Analog and IP Telephony
Coop B •Telephony (local and international), and
Internet
Coop C •Public, Local, National, and International
phone and Internet services
Coop D • Telephony, Internet, Broadband, data
transport, home security systems,
Coop E •Telephony
•Internet (ADSL)
•Interconection to Bahia Blanca
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

9. School of Information Studies
Findings: Cooperatives have
innovative business processes
• Innovation in the way they conduct
business. Alliances allow them to generate
higher levels of volume, which can benefit
their clients and give them leverage. These
alliances are done through associations.
• Cooperatives have diversified their services
and entered new markets, built their own
infrastructure and managed their own
networks.
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

10. School of Information Studies
Findings: Cooperatives have innovative
decision-making and open boundaries
• The boundaries between cooperatives and their
environment are more permeable, they can have a
strong influence in the community and vice-versa.
• Cooperatives have open memberships and
decision-making that is done with some sort of
representation:
"... each customer becomes a partner, much like a
shareholder who can vote to choose the council who
leads the business. This generates a strong local
identity, utilities are distributed ........and the community
appreciates it." (Manager, Coop B).
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

11. School of Information Studies
Making alliances, diversifying
services and spreading risk
• Cooperatives often pool their resources to
accomplish their objectives.
• They cross subsidize among a portfolio of
very diverse services.
• However managing the alliances has not
been easy:
1) each of them is by nature highly
independent
2) lack of technical expertise in some of the
smaller cooperatives often makes them
much more risk-averse.
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

12. School of Information Studies
Findings: telecom reforms have been
a mixed blessing
• At first, cooperatives were granted monopoly
protection over local market (same as privatized
incumbent)
• In 2000 markets and interconnection rates were
liberalized
• The current broadcasting and telecommunication
laws prohibit cooperatives from offering cable TV
and wireless (Decree 22285/80).
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu

13. School of Information Studies
Conclusions
• Cooperatives have engaged in innovation as
business survival strategy
• Diversified product portfolio, introduced new business
models, engaged in open cooperation with neighbors
to develop shared infrastructure
• Decision-making is open to community members
• Boundaries are often permeable between
cooperative and community in general
• Regulatory environment does not properly
acknowledge role that cooperative play in local
economic development
© 2010 Garcia-Murillo, Espinoza mgarciam@syr.edu