Scaffolding without Dependence: Local Government Roles in Good Cooperative Governance in Lamongan Regency, Indonesia

Abstract

Governments in many developing economies are again placing cooperatives at the centre of local economic policy, yet how the state can support member-owned enterprises without taking them over remains unsettled. This study explains how local government contributes to cooperative development through the principles of Good Cooperative Governance (GCoG): democratic member control, member economic participation, and autonomy and independence. We conducted a qualitative case study in Lamongan Regency, East Java, Indonesia, drawing on in-depth interviews with 24 informants (15 of them key informants) from the regency cooperative office and four contrasting cooperatives, field observation, and programme and regulatory documents. Data were analysed through three-level coding and pattern matching. Local government acts as regulator, facilitator, and catalyst, and the three roles work as a sequence rather than as separate functions. Regulation secures legality and formal accountability, but it does not by itself produce democratic control. Facilitation is the most extensive form of intervention, reaching 4,724 cooperatives with financial reporting assistance and 2,346 with annual member meeting (RAT) assistance through only 11 mentors, while intensive oversight thins out to 75 monitored cooperatives and 17 fit-and-proper tests. Catalytic support triggered business transformation only where leadership was active and communication with the office regular. We call this pattern institutional scaffolding: public support strengthens GCoG when it builds members' own capacity and is withdrawn as that capacity grows, and it weakens GCoG when it substitutes for member agency. The study extends GCoG theory by treating local government as a bounded governance actor and offers a design principle for cooperative policy: scaffolding without dependence.