Given that I busted my butt writing this document for the better part of a year in order to finish my masters degree, I might as well make it available for public consumption. Read the whole thing here (pdf); the Abstract follows the break:
Though there is a moderately extensive literature on the developmental paths of credit unions, little has been written on the entrepreneurial process through which these institutions come into existence. The wider co-operative studies literature suggests that "supportive external stakeholders" play an important role in the process of co-operative entrepreneurship, but the motivations of those agents is often unclear, as are the changes and continuities in the nature of the relationship between the two entities over time.
To shed light on these issues, this thesis investigates the relationship between the Vermont State Employees Credit Union (VSECU) and the Vermont State Employees Association (VSEA), which was the "supportive external stakeholder" that helped to establish the credit union. Beginning with the founding of the credit union in 1946, this study demonstrates a variety of ways in which the VSEA supported and subsidized the growth of the credit union, and postulates that it was, in part, motivated to make these investments by the fact that, since only VSEA members were allowed to use the VSECU, the credit union served as an incentive to labor union membership.
However, as a legally independent entity, the institutional interests of the credit union gradually diverged from those of the VSEA, which manifested in the form of struggles over the boundaries of the common bond. Additionally, this study postulates that this divergence was reflected by the emergence of a new identity among both the credit union's leadership and its rank-and-file. Whereas the earlier members viewed the interests of the credit union as subordinate to those of the VSEA, a growing number began to identify more with the VSECU than they did with the union.
The strength of this "credit unionist" identity grew over the course of the 1960s, and culminated in a campaign at the end of that decade to open credit union membership to all state employees, regardless of union membership. After a near-miss, this was achieved in an overwhelming vote at the organization's annual meeting in 1970. The break with the "parent" organization was further confirmed two years later, when the membership overwhelmingly rejected a proposal to permit VSEA employees to join the credit union.
This narrative suggests that, when attempting to understand co-operative entrepreneurship and development, it is extremely important to take the ideas and identities of co-operative members into account. Although leaders certainly exert influence in co-operatives, the organizations' unique democratic corporate structure based on the principle of "one member, one vote" means that the subjective interests of their members are more easily translated into policy changes than would be the case in more hierarchical organizations. As such, the importance of a "bottom up" approach to the study of credit unions and other co-operatives is emphasized.