Assessing Mondragon: Stability & Managed Change in the Face of Globalization

Abstract

By drawing on new interview evidence gathered during several field trips and new financial and economic data from both external and internal sources, we document and assess the changing economic importance and performance of the Mondragon group of cooperatives as well as the two largest sectors within the group. Compared to conventional firms in the Basque Country and Spain, and producer co-ops (PCs) and employee owned firms elsewhere, in general we find evidence of growing group importance and strong performance and a similarly strong record for the industrial and retail divisions. These stylized facts do not support hypotheses concerning PCs such as predictions that PCs will restrict employment and become progressively comparatively under-capitalized. In accounting for this record, we highlight key and, at times, not uncontroversial institutional developments in the group during the last 20 years or so that indicate the existence of a continuing capacity for institutional adaptation in Mondragon - an ongoing ability to innovate and make institutional adjustments to deal with emerging challenges. In addition, we provide more detailed information than before on some key distinguishing institutional mechanisms of the Mondragon group, including the extent of worker-member transfers during economic crises, the patterns of profit pooling and the type and volume of training. The aggressive and extensive use of these and related mechanisms, themselves formulated and refined only after a deliberative democratic process, may help to account for some of the outstanding features of the Mondragon group record. Overall these findings represent suggestive evidence that groups of employee-owned firms are feasible and sustainable organizational forms; in a world of declining labor power and tepid employment recovery by private firms, the institutional arrangements at Mondragon are worthy of deeper study by many including policymakers, other co-ops and other employee-owned firms.