Roles of Federation of Small BusinessAssociations

２０２０National Federation ofSmall Business Associations

Three SMEs Organizations
1. NFSBA(1) Member organization: 35 thousand associations, 3 million SMEs
(2) 47 Prefectural Federations of Small Business Associations

Fund for activities (FY2010 Grants for supporting collaborations for 47 Prefectural
Federations of Small Business Associations: Total 6.4 billion yen)
(3) Role: Providing guidance to associations, making policy recommendations, implementing
policies, informing of actual conditions, etc.

2. Japan Chamber of Commerce and Industry
Support organization including those engaged in commerce and industry, etc. in “city” areas• Urban areas, large enterprises and medium enterprises

3. Central Federation of Societies of Commerce and Industry
Support organization including those engaged in commerce and industry, etc. in “town” and“village” areas• One Village, One Product campaign• Advanced primary sector2Outline of National Federation of Small Business
Associations
National Federation of Small Business Associations
Prefectural Federation of Small Business Associations (47)Business cooperative(20,084)
Federation of business cooperative(448)
Cooperative partnerships(502)
Shopping district promotion(826)association
Environmental hygiene trade(135)
AssociationOthers (including incorporated(4,243)
association)

Small business cooperative
Credit cooperative
Joint business cooperative
Commercial association
Federation of shopping district
promotion association
Federation of environmental
hygiene trade association

(3)
(103)
(931)
(933)
(64)
(11)

28,283 organizations, etc.

Nationwide cooperative association (128)
Nationwide federation of cooperative(including fire mutual aid cooperative, credit
cooperative, shopping district promotion
association, environmental hygiene tradeassociation) (84)
Nationwide commercial association and theirfederation (55)
Nationwide commercial organization (otherIncorporated association, etc.) (115)382 organizations, etc.

about 2.57 million companies

National Federation of Small Business Associations

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Activities of Federation of Small Business Associations➢ Providing guidance and support for all the business activitiesof SMEs, including the establishment of cooperatives,
organization, operations, and management→ Broad support for business cooperatives, joint business cooperatives,cooperative partnerships, commercial associations, shopping district
promotion associations, and LLP, LLC and new collaboration thatconsist of SMEs, and individual SMEs
➢ Providing education and information on cooperatives forSMEs➢ Research and development of cooperatives for SMEs
➢ Proposals to the assembly and the administrative agency forthe development of SMEs and cooperatives
National Federation of Small Business Associations

4Characteristics of the System of Small and Medium
Enterprise, etc. Cooperatives<Establishment of the system of Small and Medium Enterprise, etc. Cooperatives>
Establishment of the Small and Medium Enterprise Agency ...... August 1948
Enactment of Small and Medium-sized Enterprise Cooperatives Act ...... June 1949
Small and medium enterprises, etc. cooperatives = business cooperatives, credit cooperatives, federation ofcooperatives, joint business cooperatives
Establishment of National Federation of Small Business Associations ...... April 10, 1956

<Characteristics of the system of Small and Medium Enterprise, etc. Cooperatives>i

Small and medium enterprises that lack financial resources conduct joint businesses based on a spirit of mutualaid to raise their economic status.

ii

There are a variety of cooperatives and associations, including credit cooperatives that are not allowed to conduct
other businesses than credit business.
iii Introduction of the joint business cooperative system based on an entirely new concept
iv Expansion of membership eligibility due to widely ranging cooperatives(membership of credit cooperatives and joint business cooperatives)v Clarification of standards and principles of cooperatives and exception of the application of the Antimonopoly
Act in principle
vi Ensuring independence and democracy of cooperatives
vii Emphasizing characteristics of cooperatives as a business entity
viii Approving collective agreement in order to improve the economic status of cooperatives
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Standards and Principles of Small and Medium
Enterprise, etc. Cooperative[Standards] (Article 5, paragraph 1 of Small and Medium-sized Enterprise
Cooperatives Act)

(1) Purpose of mutual-aid(2) Freedom of joining and withdrawing(3) Equal voting rights and rights to elect (one vote perperson)(4) Standard of dividends from surplus(dividend in accordance with the amount of use andrestraint of investing dividend)[Principles] (Article 5, paragraph 2, 3 of Small and Medium-sized Enterprise
Cooperatives Act)

(5) Direct and fair service(6) Politically neutral
National Federation of Small Business Associations6Characteristics of (Small and Medium Enterprise, etc.)
Cooperative(1) Business management:
Generating profits and establishing a basis for economic independence
Conducting necessary business for members based on members’ economy(self-responsibility of members and cooperatives)(2) Business entity:
Conducting profitable businesses as an independent business entity
Investing capital to generate sustainable profits as a business entity(3) Actors are people (personality), not capital:
Participation in management of an organization with one vote per person
Restraint of investing dividend in principle
Profits belong to members, not capital(dividend in accordance with the amount of use and restraint of investing dividend)(4) Organization with high ethics
Consequence of an organization of personality

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Characteristics of (Small and Medium Enterprise, etc.)
Cooperative(1) Trinity organization:
Ownership (investors) equals management (managers) and utilization(users)(2) Changing organization:
Started to meet members’ needs and its organizational structure changes tomeet members’ needs
Joint businesses also change to meet members’ needs(3) Self-help organization:
Members generate their own profits through joint businesses(4) Mutual-aid organization:
Mutual-aid is established as a system by members who use joint businesses
in order to create the basis of their economic independence.

National Federation of Small Business Associations

8Trinity Structure of Small and Medium Enterprise
Cooperative
Members as investors (general meeting)

Investment

Investment

Members as managers (Board of directors)
Decision-making andexecution of business

Utilization

Utilization

Members as users (customers)
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Types of Joint Businesses of Small and Medium Enterprise
Cooperative
Support operations forinfrastructure

Joint operations (upstream)

Support operations for collaborationand exchanges

Finance

Procurement, purchasing
Production, processing

Industry-academia-government
collaboration

Debt guarantees
Mutual aid
Shared use of facilities
Transportation andStorage Information
serviceResearch and studies
Staff training
WelfareOutsourcing etc.

Cross-industrial exchanges

Members’ business (management)
Current operations

Joint operations (downstream)
Sales, acceptance of order
Advertisement, market development

National Federation of Small Business Associations

Operations in new fields

Support operations for development ofnew fields

Development of new technologies andnew products, development of a newmarket, and development of a newbusiness model

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Types of Joint Businesses of Small and Medium Enterprise
Cooperative Support operations for infrastructure
Operations for members’ general management regardless of types or contents of
their businesses Joint operations
Operations for practical business conducted by members
Upstream: operations for procurement of raw materials and merchandise
Downstream: Operations for sales of products

 Support operations for the development of new fields
Support operations for members’ advancement to new fields, not for current
operations

 Support operation for collaboration and exchanges
Operations to provide opportunities to collaborate and exchange between
members and outside institutions, or to become a liaison between the two for
their collaboration and exchanges
National Federation of Small Business Associations
国11Types of Joint Businesses of Small and Medium Enterprise
Cooperative••
•
•••

•

•
•

(Business Cooperatives and Minor Business Cooperatives)
Article 9-2 A business cooperative or a minor business cooperative may conduct allor part of the following activities:(i) Production, processing, sales, purchasing, storage, transport, inspection and otherjoint activities related to the business of partner(ii) Loan of business funds (including discounting of negotiable instruments) topartner and borrowing of such funds for partner(iii) Activities related to the welfare of partner(iv) Activities related to the education and offer of information for achieving an
improvement of the management and technology concerning the business of partner
and the dissemination of knowledge concerning the cooperative's activities(v) Activities related to research and development with regard to new goods or new
technology or the cultivation of a demand for facilitating partner to advance into new
business fields(vi) Conclusion of collective agreements for improving the economic status of partner(vii) Activities incidental to the activities set forth in the preceding items
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Types of Joint Businesses of Small and Medium Enterprise
Cooperative Mutual-aid and support and cooperation

 Risk-aversion organization and business model organization (risk-taking) Organization to adjust the economic and business environment and toprovide outsourced business resources Organization that allows the freedom of no use of joint businesses andthat does not allow the freedom of no use of joint businesses Business collaboration and business integration

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Structure of Business Operations of Small and Medium
Enterprise Cooperative
Influence of environmental
changes

Products and merchandize markets

Influence of environmental
changes

Members as investors
Changes in needs

Decision-making

Members as managers
Execution of joint businesses(management)(Board of directors and Secretariat)

Utilization of joint
businesses

Members as users of businesses
Response to environmental
changes

Response toenvironmental changes

Markets for the factors of production

Changes in business (management) environment

Changes in business (management) environment
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Three Participations in Small and Medium Enterprise
Cooperative
Three participations in cooperatives
General meeting
Participation in decisionmaking

Members

Board of directors
Committee
Participation in decisionmaking

Chief Executive
Officer
Participation in decisionmaking
Execution of joint
businesses

National Federation of Small Business Associations

Decision-making ofbusiness policyby members
Decision-making ofbusiness strategy bymember
representatives
Overseeing ofbusiness operations
Opinions to Board ofDirectors
Business planning
Direction of thesecretariat forbusiness operations
Members’ use ofbusinesses15

SME Policy and Small and Medium Enterprise
Cooperative(1) Organized as major propositions of SME policy (after World War Twoto early 1950s)•At this time, the government intended to mainly guide SMEs to establish their own
independent cooperatives and rationalize their management through their proactive
joint businesses.

(2) Modernization and enhancement policy and diversified forms oforganization (late 1950s to early 1960s)•SMEs created various forms of organizations such as industrial parks, wholesalecommercial parks, truck associations, joint plant associations, joint store associations,chain business associations. The enhancement policy of the structure of SMEs
promoted the diversification of organizations, including business cooperatives.

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SME Policy and Small and Medium Enterprise
Cooperative(3) Actor of developing a structural improvement policy and planning (late1960s to early 1970s)•Cooperatives were required to play a role of developing “plans” starting with astructural improvement system. The role was played for structural improvement
plans and other planning systems based on “SME Modernization Promotion Act” andvarious Acts.

(4) Knowledge-intensive policy and qualitative changes of cooperatives(mid-1970s to 1980s)•The policy changed the quality of businesses as “software” of cooperative businesses
and created a form of organization called cross-sector cooperative (integratedcooperative). The integration was a role of organizing SMEs in the structuralimprovement (conversion) policy.

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SME Policy and Small and Medium Enterprise
Cooperative(5) Structural reforms, business start-up policy and various forms oforganizations (1990s)•With support of “organizing various forms of body” including the establishment ofcooperatives such as joint investing companies and voluntary groups, small andmedium enterprise cooperatives have been regarded as an option among various
forms of organizations.

(6) Competition-promoting policy for SMEs and independence fromgovernmental policies (since 2000s)•Small and medium enterprise cooperatives are one of various measures to promote
SME policy. They are not in a position to play a role as the basis of developing
measures to promote SME policies. It is necessary for small and medium enterprisecooperatives to become independent from governmental policies.

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