From Legal Formation to Economic Empowerment: Assessing Institutional Readiness of Village Cooperatives in Coastal Communities of Indonesia

Sofhian Sofhian (Faculty of Islamic Economics and Business, Sultan Amai State Islamic University, Gorontalo, Indonesia)
Wiwin Koni (Faculty of Islamic Economics and Business, Sultan Amai State Islamic University, Gorontalo, Indonesia)
Niswatin (Faculty of Economics and Business, State University of Gorontalo, Gorontalo, Indonesia)

Greenation International Journal of Tourism and Management
Vol. 4 No. 3 (2026): (GIJTM) Greenation International Journal of Tourism and Management (September -

Village cooperatives are being widely advocated as structural means to bolster rural economies and alleviate poverty; yet, the formation of formal entities does not inherently ensure their efficacy as instruments of economic empowerment. This research investigates the preparedness of Village Red and White Cooperatives (Koperasi Desa/Kelurahan Merah Putih—KDMP) in Indonesia's coastal regions by assessing the disparity between their legal establishment and functional capacity. A mixed-methods study approach was utilized, incorporating 27 KDMPs from three coastal subdistricts in Gorontalo Regency, Indonesia. Information was gathered via surveys, interviews, focus group discussions, observations, and document examination. Quantitative data were subjected to descriptive analysis, and qualitative results were assessed by theme analysis and combined with SWOT analysis to ascertain strategic circumstances. The results indicate a significant disparity in institutional preparedness: whereas all KDMPs received official legal acknowledgment, merely one cooperative had initiated activities, and just five had established business venues. The primary limitations were recognized across four facets of institutional readiness: inadequate collaborative management expertise among leaders, feeble governance structures, insufficient financial and business acumen, and restricted adaptive capability. SWOT research reveals that KDMPs have considerable external prospects due to governmental backing, societal endorsement, and regional economic capabilities, yet internal deficiencies need to be rectified prior to firm growth. This research introduces an Institutional Readiness Framework that delineates the transition from legal establishment to economic empowerment via human capacity, governance proficiency, business preparedness, and operational efficiency. The results underscore the necessity for policymakers to recognize that rural cooperative advancement necessitates the enhancement of skills rather than only the formation of institutions.