International Conference on Economics, Business and Social Sciences (ICEBUSS 2016) December 6-7, 2016, Malang Mediating Role of Members Participation and Sense of Belonging In The Effect of Service Quality on Co- operatives Performance Nur Hidayati Magister Management, Post Graduate Programme, Islamic University of Malang Hafid Aditya Pradesa* UB Graduate Program, Brawijaya University Malang Rifki Hanif Asia Malang Economy Science College Hadi Sunaryo Department of Management, Faculty of Economic Islamic University of Malang Abstract As a social and economic entity, co-operative has become important in development of society especially in developing countries. In Indonesia, co-operative plays role as one of economic pillars beside state and private institutions. This paper aims at developing a empirical evidence with contributing to a more comprehensive theoretical understanding of different attitudinal mechanism among members toward organization that increasing the effect of service quality on co-operative performance. About 163 members from 5 largest co-operatives in Malang, East Java, participated in this study. Structural equation modelling was used to test the hypotheses proposed. As members sense of belonging have no important effect to increase co-operative performance, findings has also revealed that only members participation has important role in contribute to greater co-operative performance, with its significant mediating effect in relationship of service quality and sense of belonging on co-operative performance. Practical implications of these results are discussed. Introduction Increasing the number of members and the capital does not guarantee an increase in sales and co-operative profitability. It also means that increased member has not been able to optimally empowered by the manager or even board of co-operative enterprise. The co-operative organizations in such developing countries like Indonesia have a long tradition. Thus, it does not perceive themselves as business oriented towards the common good but are focused solely on members‟ advantage. Jones and Kalmi (2012) explained the essential features of co-operatives are given by with the two special characteristics: 1) Co-operative ownership is not determined solely by investment or capital ownership in shares, but by model of transaction relationship of members with the enterprise; 2) Voting rights in co- operative model are not determined in relation to capital ownership, inspite of being divided equally among its members. Business-model co-operatives aim at mobilizing resources through building relationships with their members. It means that members are needed to contribute more in their participative decision. The emergence of social enterprises has also led to a dynamic of hybridization and broadening in the cooperative sector. Academic interest in cooperative organizations as alternative providers of public and social services in recent years. Deregulation and liberalization tendencies have created new opportunities for cooperatives but have also redefined their traditional societal role and organizational identity. Traditional cooperatives are member-focused in their goal structure as they aim at generating economic benefits primarily for their organizational member base. The co-operative organizations in such developing countries like Indonesia have a long tradition, do not perceive themselves as oriented towards the common good but are focused solely on members‟