Mondragon Group Research Articles

Country study on drivers and barriers for employee ownership: the case of MONDRAGON group

PurposeThis article analyses how the MONDRAGON Group has overcome the barriers that the literature identifies in the creation of employee owned companies (Mygind and Poulsen, 2021), and how it has managed to grow over the last few decades.Design/methodology/approachTo this end, based on an analysis of the legislative framework and the internal documentation of the MONDRAGON Group and its cooperatives, the case of what is often considered the most successful and highly developed network of co-operative firms is studied.FindingsThe study leads us to conclude that MONDRAGON has had sufficient capacity to overcome the barriers faced by worker-owned companies and has known how to adapt to the economic and social demands of each moment, despite the fact that at certain times it has had to act flexibly in its principles.Research limitations/implicationsThe work is limited to the analysis of the Group's internal documentation. It would be interesting to complement this vision with the perceptions of MONDRAGON's partners.Practical implicationsThe MONDRAGON Group's study can show other cooperative experiences what the keys to success are.Originality/valueMONDRAGON has been analysed from different perspectives, but how it has overcome the specific barriers presented by employee-owned companies has not been specifically studied. This perspective makes it possible to identify some of the group's success factors.

Participation and Organizational Commitment in the Mondragon Group.

The scientific literature has shown Mondragon Corporation (MC), with 65 years of history, as a clear example that cooperativism can be highly competitive in the capitalist market while being highly egalitarian and democratic. This cooperative group has focused on its corporate values of cooperation, participation, social responsibility, and innovation. Previous scientific research reports its enormous transformative and emancipatory potential. However, studies on the effects of various types of worker participation on competitiveness and workers’ psychological wellbeing in this cooperative group exist to a lesser extent. Specifically, one aspect that needs further empirical research and that represents a competitive advantage for Mondragon is the degree of commitment and emotional attachment that can be observed in the people who work there. For this reason, this article aims to identify key elements of the democratic participation of workers in these cooperatives that relate to the development of organizational commitment. Based on a communicative and qualitative approach, data collection included 29 interviews to different profiles of workers (senior and junior workers, members and non-members of the cooperative, and researchers involved in the cooperatives) from eight different cooperatives of the Corporation. Through this research methodology, the participants interpret their reality through egalitarian and intersubjective dialogue because their voices are considered essential to measure the social impact. This study found three different ways in which the democratic participation of worker-members in management and ownership contributes to developing affective organizational commitment among those working in Mondragon cooperatives, generating positive psychological and economic outcomes for both workers and cooperatives.

La comunicación interna en las cooperativas: la percepción de las personas trabajadoras sobre la escucha y la información

El objetivo principal de este trabajo de investigación es conocer las percepciones y expectativas de las personas trabajadoras de una cooperativa del Grupo MONDRAGON sobre la comunicación interna. Se ha puesto especial interés en conocer: por un lado, las percepciones de las personas trabajadoras sobre la información transmitida por la cooperativa; por otro lado, sus percepciones sobre cómo realizan la escucha los directivos y mandos intermedios cuando les trasladan sus preocupaciones y expectativas. Asimismo, con la intención de conocer si existen diferencias, se han analizado las percepciones indicadas teniendo en cuenta las siguientes variables: ser miembro de algún órgano, tipo de mano de obra, situación laboral y sede. Para la realización de este estudio de caso se han combinado la metodología cualitativa y cuantitativa: se ha llevado a cabo una recogida de datos cuantitativos a través de un cuestionario propio y datos cualitativos a través de la realización de entrevistas semiestructuradas. Los resultados de la investigación sugieren que por lo general, aunque las personas trabajadoras de la cooperativa se sienten informadas, tienen la percepción de que se les escucha poco a la hora de trasladar sus preocupaciones y expectativas; al mismo tiempo, encontramos diferencias estadísticas significativas al analizar esos mismos datos por variables.

La transmisión de los valores y prácticas organizacionales cooperativas en las filiales extranjeras: El caso de la cooperativa multinacional Fagor Ederlan

En la economía globalizada actual, muchas cooperativas se están viendo obligadas a crecer internacionalmente mediante estrategias de inversión directa extranjera para mantener su competitividad y sobrevivir en los mercados. Tomando como referencia un estudio cualitativo sobre Fagor Ederlan, una de las mayores cooperativas multinacionales del Grupo Mondragón, este artículo examina las contradicciones planteadas por la internacionalización en las cooperativas, así como las tensiones y oportunidades para que dichas organizaciones reproduzcan las prácticas idiosincráticas del modelo cooperativo en las filiales extranjeras. El estudio de caso se basa en el análisis de diversa documentación interna cedida por la compañía y en 23 entrevistas en profundidad llevadas a cabo en las plantas domésticas e internacionales con personal de distintas áreas organizacionales y rangos jerárquicos. Los resultados sugieren que la internacionalización puede desencadenar fuertes tendencias degenerativas en las cooperativas, afectando fundamentalmente al nivel de participación de los trabajadores en la empresa. Por otro lado, evidencian la influencia de barreras institucionales, así como de factores derivados del rol estratégico de las filiales y de las relaciones de poder entre matriz y filial, que dificultan la transformación de las filiales extranjeras en cooperativas. El artículo también discute algunos aspectos que resultan esenciales para avanzar en la implementación de políticas que acerquen el modelo de gestión en las filiales extranjeras a los principios y valores cooperativos.

SOCIAL CAPITAL, ASSET-BASED CAPACITIES AND THE WORKER CO-OPERATIVE MODEL

The interest in greater workers’ control of industry through co-operative enterprises has been fuelled by the extraordinary success of the Mondragon group of worker co-operatives in the Basque provinces of Spain. Efforts have consequently been made to replicate the Mondragon-style worker co-operatives in most western industrialized countries. This extraordinary success has been attributed to the worker co-operative model’s ability to promote and nurture social capital and asset-based capacities. This paper therefore examines how the worker co-operative model promotes and nurtures social capital and asset-based capacities. The study analyzes the nature of a worker co-operative as an organization model in search of credence to the assertion that these enterprises are inherently social-capital type organizations. The study concludes that a worker co-operative represents one of the best forms of a social-capital type enterprise. As membership based organizations, worker co-operatives’ main investment is on social capital. This paper also discusses how worker co-operatives promote asset-based capacities by building local assets and increasing economic stability for worker-owners and their communities. The study concludes that a worker co-operative’s model encourages and promotes the development and utilization of the resources that are embedded in local communities and their residents. As people exercise their capacities, they often find that they need the talents of others. This is the essence of worker co-operatives where individual members combine their own talents with the capacities of others to form co-operatives that can make extensive and valuable contributions to the members and their communities. JEL: E24, J24, O15 Article visualizations:

A participatory organization: The Mondragon group

Objeto: A partir de los objetivos con que han ido surgiendo las organizaciones participativas, se pretende mostrar sus similitudes y diferencias con las dinamicas participativas aplicables en Mondragon. Los cambios producidos en las tradicionales reglas de funcionamiento del Grupo para adaptarse a los procesos de internacionalizacion y ser competitivas en el mercado global, se juzgan en algunos estudios como renuncia a su esencia y en otros como muestra de su exito. Metodologia : El trabajo se ha realizado a partir de la consulta de las fuentes bibliograficas en la materia asi como de la informacion publica del Grupo. Tambien se han realizado dos entrevistas semi-estructuradas con una profesora y un responsable directivo de la Universidad de Mondragon. Aportaciones y resultados : Los resultados del presente trabajo giran en torno al protagonismo que la participacion ostenta en el Grupo Mondragon. Por una parte, como derecho que no necesita ser reconocida por nadie, sino que se integra entre los derechos que acompanan la posicion de socio/a, y ademas lo hace a todos los niveles identificados como criticos para que la participacion sea real: propiedad, gestion y resultados. Por otra parte, se describe el modelo participativo de su Universidad, caracterizado por la integracion como socios del personal, alumnado y empresas colaboradoras y el diseno del derecho de voto de manera que combina gestion democratica y representacion equitativa. Valor anadido : Tomando como hilo conductor los niveles de participacion en las empresas, se realiza un recorrido por la evolucion de las organizaciones participativas, que permite compararlas con Mondragon. La exposicion de las posiciones formuladas en torno a los efectos que, sobre la dinamica participativa de esta organizacion estan generando los cambios introducidos en la organizacion como consecuencia de la internacionalizacion y la competitividad invitan a la reflexion sobre la supervivencia de modelos alternativos en nuestro sistema.

Efficiency in Employee-Owned Enterprises

The authors undertake the first econometric study of efficiency for Eroski, the largest member of the Mondragon group of worker cooperatives. Three types of stores are found within Eroski: 1) cooperatives with significant employee ownership and voice; 2) cooperatives with modest employee ownership and limited voice (known as GESPAs); and 3) conventional stores with no employee ownership. Key data are monthly observations—9,800 for supermarkets and 2,150 for hypermarkets (large superstores combining supermarkets and department stores). By estimating first-difference models, the authors find that hypermarket stores with cooperative ownership have significantly faster sales growth than do GESPA stores. For supermarkets overall, they find no significant differences in performance among the three types of stores. For a subgroup of small supermarkets, however, cooperatives outperform conventional stores. To investigate the mechanisms that help explain why cooperatives perform better, the authors provide additional evidence that takes into account the more extensive opportunities for employee involvement, training, and stronger economic incentives in cooperatives. While cooperative members are better paid than peers in comparable firms, individual data show that job satisfaction is lower for cooperative workers than for GESPA workers. Though this may reflect higher worker expectations in cooperatives, alternatively cooperatives may constitute a “high-stress work system.”

The Role of Institutions in the Financing of Cooperative Firms

The problems faced by cooperatives in funding their investments with the scant contributions of their partners can be systematically solved by creating the assumptions for collaboration between labour and capital. The approach of the Mondragon group of cooperatives in Spain – a success story to which cooperatives from other countries look for inspiration – provides evidence that the odds can be beaten at group level, by putting in place organisational measures purposely devised to protect external providers of funds through the assignment of co-decision powers. The effect of these measures is to apportion powers among different factors of production through a system enabling capital owners to safeguard their interests.

El cambio organizativo e institucional en las cooperativas de Mondragón: el caso de la cooperativa AMPO

This article analyzes organizational and institutional change in cooperatives by focusing on the case of the AMPO cooperative, which was a member of the Mondragon Group until 2008. This study reveals how a new management model, inspired by Koldo Saratxaga's theory, was implemented in the cooperative

Efficiency in Employee-Owned Enterprises: An Econometric Case Study of Mondragon

We provide the first econometric study of efficiency for a member of the Mondragon group of worker cooperatives. Eroski is a retail distribution chain and, most unusually, there are two distinct types of hypermarkets: (i) cooperatives with significant employee ownership and voice; and (ii) GESPAs with modest employee ownership and limited voice. For supermarkets the chain includes conventional firms with no employee ownership as well. Our key data are a panel of monthly observations from February 2006 through May 2008, a total of 9,800 observations for supermarkets and 2,150 for hypermarkets. By estimating first difference models we find that hypermarket stores with cooperative ownership grow sales significantly faster than GESPA stores. For supermarkets overall we find no significant difference in performance among the three types of stores. However, for a particular segment of the supermarket called SUPERMARKET CITY (a subgroup of small supermarkets for which having customer service employees is particularly important), cooperatives are found to outperform conventional stores. To investigate mechanisms that help explain why cooperatives are better performers we provide additional evidence that takes account of the role of the more extensive opportunities for employee involvement and training, and stronger economic incentives that exist in cooperatives. Finally, while cooperative members are better paid than their peers in comparable firms, individual-level data also show that job satisfaction is actually lower for workers in cooperatives than for GESPA workers. Though this may be a simple reflection of high worker expectation in cooperatives, cooperatives may well be indeed a high-stress work system. The overall assessment of cooperatives will need to be nuanced.

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

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.

Specific tax issues of the cooperatives in the Mondragon group

Mondragon cooperatives must navigate a complex sea of tax regulation given their character as cooperative enterprises and their location in the Basque Country. This article outlines the tax issues the cooperatives face under these circumstances, that is, given both their specific legal structure and the special fiscal context of firms headquartered in the Autonomous Basque Community.

Cooperatism, social capital and regional development: the Mondragon experience

This article discusses the importance of the principles of social capital within the Mondragon cooperative experience. It investigates the impact of social capital on the value creation and innovation capacity of the Mondragon group. It proposes to investigate how social capital fosters collective action, participation and innovation to build dynamic communities and regional development. The article describes the development of the Mondragon cooperative movement around a four-pillared structure which includes training, research, enterprise promotion, and financial and social support. The article also demonstrates that the success of the Mondragon experience is linked to factors such the setting up of networks of communication, trusting relationships, and exploration and exploitation of new situations.

The Mondragon experience: serving as a source of inspiration for transfer issues

The main objective of this article is to identify the key factors associated with the sustainable success of the Mondragon Group (Mondragn Corporacin Cooperativa, MCC) and to investigate their transfer to other contexts. The first main section of this article focuses on the identification of key best practices that can be considered for transfer. The second section investigates the main conditions for a successful and sustainable transfer and places a greater emphasis on effective collaboration, learning and ethics.

COOPERATION AND TRANSITION: MONDRAGON'S SOCIAL, ECONOMIC, AND MANAGERIAL LESSONS

The Mondragon Cooperative Group has emerged as a major world market competitor while at the same time achieving freedom, justice, and equality. This paper examines the Mondragon Group's history and structure. It does so using the economy in society model as derived from social and institutional economics. Enhancing social communication within the group, the model leads us to understanding and better enables cooperatives to achieve their just, humane, and prosperous existence. The lessons of Mondragon challenge basic understandings of Euro‐American economic and management science about what can be. These lessons are examined not only for their import in managing change in transitional economies, but wherever economic liberalism has limited our ability to understand the full range of human experience and capabilities.

What Makes Mondragon Work?

It is commonly argued that over the course of economic history producer cooperatives have either failed or been modified to the extent that their structures were no longer consistent with a strict interpreta? tion of cooperative philosophy. The Basque city of Mondragon in north? ern Spain is the geographic nucleus of a group of producer cooperatives that after 28 years stand as a spectacular exception to this generaliza? tion. A total of 70 factories employing over 15,000 cooperative workers, a cooperative bank with 84 branch offices and 300,000 account holders, 43 education cooperatives with 26,000 students, 35 consumer coopera? tives with 70,000 members, plus cooperatives in agriculture (three), industrial services (two), research and development (one), and social security (one) made up the Mondragon group as of 1979. [Thomas, 1982] Mondragon's success is well documented. [See Oakeshott, 1978; Jones and Svejnar, 1982; Thomas and Logan, 1982] At issue here are the reasons behind that success.

Cooperative production and accelerated development: A review of potential and constraints

Producer cooperatives or, more generally, firms with extensive worker participation are only marginal to most economies. There is, nevertheless, considerable interest in the potential for greater productivity of such firms, and in their distributional implications. A number of examples suggest that, under the right conditions, cooperatives can make a useful contribution to regional development. This paper discusses three such cases: (i) the Mondragon Group in Spain and the Dairy and Sugar Cooperatives of Gujerat and Maharashtra, India. It considers the case for interventions along cooperative lines to assist in the rationalization of industries. Tentative conclusions are: (i) cooperative or participatory production appears to be easier to organize and sustain in less overwhelming, hierarchical societies; (ii) not all productive activities benefit equally from cooperative organization; (iii) industrial producer cooperatives are probably most suited to regions of limited labor mobility; (iv) cooperatives probably require quite broad-based participatory processes, which requires an incentive structure that links rewards to performance; (v) public role should be limited; and (vi) widespread employee shareholding is useful.