mondragon cooperative model

Overall, Mondragon presents a unique model of collective ownership and democratic capitalism in an age awash with the opposite. Mondragon can serve as a model of how grassroots economic development creates strong viable businesses, local economic prosperity, and jobs that empower workers through cooperation. Noteworthy in particular is their commitment to manufacturing excellence and export growth, through cutting edge technological innovation. Number 19. But the people of Cleveland did not simply accept this situation. MONDRAGON’s Corporate Management Model Our Corporate Management Model (CMM) provides the Corporation’s Cooperatives with guidelines for their everyday business management in a manner so that they are both efficient and consistent with our corporate culture and ownership values. In analysis of the current state of the US’ economy, some of the most significant issues facing households are wage solidarity, structure of management, education, and perspectives on capital utilization. health care, housing, education). The Mondragon Cooperative Group Today The Mondragon Cooperative Corporation (MCC) is a highly complex federation of cooperatives bound together by much more than a formal contract of association. During his free time, he enjoys watching sports and playing music. Here’s how it played out when one of the Mondragón cooperatives fell on hard times. 2013. The Mondragon model: how a Basque cooperative defied Spain’s economic crisis ... of intensive research and development is the augmenting of … Tremlett, Giles. OUR ROADMAP MORE COMPETITIVE, COOPERATIVE AND FLEXIBLE. For instance, the largest Mondragon cooperative, FAGOR, is reputed to operate the most automated refrigeration assembly line in Spain. Furthermore, although mechanization is heavily used within the different cooperatives, manufacturing procedures are customized for specific applications (Wolff, 2012). Of these 91 are worker cooperatives and 44 are holding companies that are partly or Reflective of the high priority attached by the primary co-operatives to the competitive advantage of intensive research and development is the augmenting of the original Ikerlan research and development support co-operative with thirteen sister bodies, specialising in the needs of particular aspects of manufacturing activity and product development. He will be studying abroad next fall, participating in IFSA Butler's International Business program in Shanghai, China. His MARKETS WITH ITS OWN MODEL BASED ON PEOPLE AND INTERCOOPERATION. The current chairman, Jose Maria Aldecoa says, “the co-operative model is absolutely flawed, but it has shown itself the least flawed in a crisis of values and models”. Jon Wang is a sophomore this year at Bucknell University majoring in international relations and minoring in economics with a concentration in sustainability and economic development in Asia. One common issue within US firms has been poor relationships between workers and management. The Mondragon Cooperative Group has engaged in a domestic expansion process since the early 1960s and internationally since the 1990s. For the first time since its inception in 1959, Mondragon’s Eroski worker/consumer cooperative — until now Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls — experienced losses consequent on reduced consumer demand, and only in the current financial year anticipates a return to profitability. For example, capital for expanding existing businesses and establishing new ones is drawn in part from the group’s bank and social insurance funds and workers are skilled to high levels at a university of technology, which is itself structured as a co-operative and attracts students in disciplines such as engineering and metallurgy throughout Spain. This is not … 19-36. "Yes, There Is An Alternative To Capitalism: Mondragon Shows The Way". When looking at the Mondragon model as a whole, one of the major inefficiencies of the model is significant production costs. As motivational incentives, workers are granted portions of corporate earnings and also have the ability to decide how company surpluses are spent. They took the success of the Mondragón cooperatives as a model and created an urban economic plan with cooperatives and local production a… Currently, the MCC is comprised of 135 firms. One wonders what lessons for productivity, workplace wellbeing and industrial harmony might Australia learn from the Mondragon model of business. Oxford University Press. Although Mondragon does embody a profit motive and operates to create revenue and jobs, profits remain second in importance to employee care and social values. Although this has been believed to help boost output and enhance the overall economic welfare of companies, such practices have harmed overall household wellness, as longer working days essentially indicate less leisure time enjoyed (Wolff, 2012). He is a former federal MP and state MP and Minister. Taking an early opportunity to see for myself, it was impossible not to be impressed by what was already the world’s largest grouping of worker co-operatives, and my admiration has grown over subsequent visits, most recently late last year. Mondragon Cooperative Complex, of which ULGOR was the first of many connected cooperatives, had 21,241 member employees. That way, according to the study, between 40% and 50% of MCC employees are not officially its members. Essentially, by replacing worker satisfaction with profit maximization in the company’s mission statement, Mondragon presents the quintessential example of a company that values the opinions of its workers while also deterring internal wage disparities. (May 2007). References “Co-operative Experience.” Mondragon Corporation. In addition, due to the highly technical and specific nature of the cooperatives, the cooperatives are, more or less, shielded from foreign competition, thereby allowing for financial stability. MONDRAGON Corporation is the embodiment of the co-operative movement that began in 1956, the year that witnessed the creation of the first industrial cooperative in Mondragón in the province of Gipuzkoa; its business philosophy is contained in its Corporate Values: Cooperation. Mondragon on the other hand has realized the importance of technology in the modern economy. At the same time, much of the recent literature on Mondragon has questioned whether Mondragon’s democracy has degenerated, without drawing definitive conclusions. To ensure that this demise is avoided, the US firms should strive to follow Mondragon and its associated ideology. 2012. Senior Research Fellow (retired 1998), doctoral candidate, University of Divinity. Cooperation and the cooperative principles are steeped in the culture. Wolff, Richard. David Ellerman, "The Mondragon Cooperative Movement," Harvard Business School Case Study (1982) 8. 4th ed. In fact, the machines are so sophisticated that they can manufacture four models of refrigerators simultaneously. To provide further incentive, employees are also granted a share of corporate earnings (Tremlett, 2013). "The Mondragon Co-operative Federation: A Model for Our Times?". The Mondragon Co-operative Federation (MCF) is a community of economically highly successful worker-owned, worker-controlled production and consumption co-operatives centred around Mondragon, a town in the Basque region of northern Spain, and now spreading throughout the Basque provinces and beyond. Frequently, Mondragon in the Spanish Basque region – widely considered the most successful worker-owned cooperative enterprise in the world – is discussed as a model. The Mondragon Cooperative Group, which is the 10th-largest entrepreneurial group in Spain, is one of the most outstanding examples of worker cooperatives in history (Mondragon Corporation, 2013). Essentially, the workers of Mondragon own their labor as well as the products of their labor. These transformations, they suggest, sow seeds of socialism, or at least a more democratic and just capitalism – a welcome message after decades of virulent neoliberalism. This has, in turn, affected household ability to afford even necessities, such as adequate health care and nutrition – all of which entrap families in generations of financial hardship. As a result, all manufacturing processes within the cooperatives require continued human intervention, thereby providing continued, secure employment opportunities for workers. Some things speak for themselves: "Mondragon Corporacion Cooperativa or the Mondragon Co-operative Corporation (MCC) is a business-based socioeconomic initiative with deep roots in the Basque Country, created for and by people and inspired by the Basic Principles of our Co-operative Experience. Even so, the ongoing economic crisis has not left the co-operatives unscathed, and their return to growth has only recently gained momentum. The Mondragon Cooperative Corporation is a business-based, socioeconomic program that is committed to serving the interests of the environment, individual competitive improvement, and customer satisfaction (Tremlett, 2013). The cooperative from the Basque Region is now a model for companies and governments around the globe. It is no mean task to convert the cooperative model into something universal. Mondragon, by granting workers with the democratic ability and autonomy to choose who supervises their cooperative, is allowing employees the ability to select supervising officials they believe are best suited for their cooperative which, in turn, enhances worker-supervisor relations (Tremlett, 2013). Fagor, Spain’s largest manufacturer of domestic appliances (and also part of the Mondragon cooperative), has successfully managed down production by 30 to 40% in the face of a precipitous contraction of the consumer durables market. Members can agree to forfeit or postpone entitlements such as one or more of their fourteen per annum pay packets or the payment of interest on their individual capital accounts, or in extreme circumstances authorise individual capital account draw-downs. Therefore, Mondragon, in offering employees shorter working weeks and paid time off, places value on worker happiness. As populations of skilled labor continues to increase, capitalists increasingly have the power to exploit wages and extract greater margins of surplus value from the fruits of their workers’ labor. Gorka Lejarcegi. The Mondragon System: Cooperation at Work David Morris May 1992 ... model 2will be tested." Also, although Mondragon is efficient at maintaining low internal layoff rates, due to the fact that income is evenly distributed, it is easier for Mondragon employees to achieve subsistence, but very hard for them to thrive. What arose in 1956 as a handful of workers in a disused factory, using hand tools and sheet metal to make oil-fired heating and cooking stoves is today a massive conglomerate of some 260 manufacturing, retail, financial, agricultural, civil engineering and support co-operatives and associated entities, with jobs for 83,800 workers, and annual sales in excess of $US20 billion. Most of the cooperatives are deemed as economically sustainable, constituting a small, less competitive niche market (Wolff, 2012). The Mondragón Cooperative Corporation is a 35 year old experiment in building a comprehensive cooperative society in which labor plays the primary and dominant role. Essentially, these populations of low skilled labor lack the bargaining power to achieve higher wages (Wolff, 2012). The cooperative model is a structure, and we have to create culture within that skeleton. Mondragon uses this organizational approach to augment the involvement of workers in Mondragon’s initiatives as well as their participation in the management of the company. Mondragon is a highly successful cooperative model with over 60 years of proven success. This notion is different than capitalist firms where hierarchies inadvertently deter healthy relationships among workers and supervisors and avert the ability of workers to select the manager they think best for their corporation (Wolff, 2012). The collapse in 2013 of Fagor, Spain’s leading electrical appliances manufacturer, was a powerful symbol of the country’s economic woes, and saw 1,895 members of the Basque Country cooperative lose their jobs.For six decades, Fagor, based in the town of Mondragón, … Cooperative business is directly related to the improve the business and welfare of members, so that with good supervision will have a high beneficial impact for members. Today, it consists of 98 cooperatives with more than 80,000 employees in areas of finance, industry, retail, and knowledge … Our CMM has several interlocking elements, summarized below: In analyzing workplaces and companies in the US, it is important for scholars to reconsider how jobs can better serve the interests and well-being of employees. At Mondragon, cooperative education is framed as teaching people group process, for example, teaching members how to make decisions together. Remuneration within the cooperatives is egalitarian, with the highest rates payable other than in exceptional circumstances being no greater than six and a half times the lowest. Historically, profit-driven motives have been complementary to longer workdays and, more specifically, lofty output and revenue goals. Values. However, as a result of de-industrialization in large parts of the USA, many of the factories in Cleveland closed down. Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries, and are committed to their conversion to employee ownership on a case-by-case basis, consistent with local laws, customs and other cultural and economic considerations. Another significant aspect of Mondragon is the cooperatives’ mission in helping individuals accomplish personal development as well as foster collective achievement. The Guardian. As a result, the wage compression creates greater internal productivity as workers receive a higher share of profits, thereby offering employees greater motivation in their work. Consequently, workers can be less motivated, or even alienated, by their occupations. In 2012 Richard D. Wolff, an American professor of economics, hailed the Mondragon set of enterprises, including the good wages it provides for employees, the empowerment of ordinary workers in decision making, and the measure of equality for female workers, as a major success and cited it as a working model of an alternative to the capitalist mode of production. In order for cooperatives, such as Mondragon, to be economically successful, they must be able to offer goods and services that are within households’ marginal propensity to consume and embody enough utility for them to even consider purchasing. Participation. In analysis of present-day economic trends, if current wealth gaps continue to widen between capitalists and households, the phenomenon would increasingly jeopardize the ability of middle class citizens to live comfortable, competent lifestyles (i.e. The Fagor plant has shifted production from white goods and household appliances to machinery. Corporación MONDRAGON - Grupo Empresarial Internacional. It’s the way of life. One may argue that the Mondragon model is promoting socialist economic concepts. Richard Feldman, "An Illustrated Guide to the Internal Capital Account System for Worker-Owned Cooperatives," The ICA Group (1988) 9. Participation: Grassroots management. Mondragon today consists of 102 individual cooperatives united in a federation called the Mondragon Cooperative Corporation, which is also organized as a cooperative. Winter, 1996. pp. Details and registration for Monday’s free public lecture and Q&A dinner with Mondragon spokesman, Mikel Lezamiz, are at http://www.eventbrite.com.au/event/4470958758/. "Mondragon: Spain's Giant Co-Operative Where Times Are Hard But Few Go Bust". Mondragon University is a cooperative university, founded in 1997 and officially recognised under Act 4/1997 of 30 May, albeit comprised of three educational cooperatives (Mondragon Higher Polytechnic School S.Coop, Enpresagintza S.Coop and Teacher Training School S.Coop). The Guardian. For example, non-members employed on a temporary basis can be put off until conditions improve. Bowles, Samuel, Richard Edwards, and Frank Roosevelt. Innovation. Founded by a Basque Catholic priest, Father Don José María Arizmendiarrieta, in the 1950s, the cooperatives began with one small worker-owned business that made kerosene stoves. At the moment, Mondragón has decided to establish a dual corporative system that involves the coexistence of cooperative societies and corporations. As a participatory organization, Mondragon employees don’t necessarily have managers or supervisors (Wolff, 2012). https://www.theguardian.com/world/2013/mar/07/mondragon-spains-giant-cooperative. As wages are more equally distributed among the cooperative’s employees, you will seldom see Mondragon employees driving Rolls-Royces. In the last half of the twentieth century, Mondragon has grown and developed a unique worker democracy in https://www.theguardian.com/commentisfree/2012/jun/24/alternative-capitalism-mondragon. Therefore, rather than completing tasks under the alienating eye of a supervisor, employees of Mondragon work out of passion for their occupation and their drive to excel (Wolff, 2012). Therefore, by structuring the cooperative in this way, higher productivity and healthier work environments can be achieved. 8 The Basque name for Mondragon is Arrasate, but Mondragon is the more common usage. The Cooperative Group has amassed technical, managerial 6 known for his love of the Basque language and culture. However, this might just be the answer to some of the problems currently surrounding wage labor in the United States. Specifically, unlike most traditional US firms, Mondragon does not seek profit maximization at the expense of employee welfare (Tremlett, 2013). Social Responsibility. MONDRAGON is Cooperation A cooperative socioeconomic project, with dedicated people working in global companies that are profitable, competitive and enterprising, acknowledged for their human values, social impact and competitiveness. Jon recently completed an externship at Joseph Gunnar LLC., has recently competed in a StartUp Bucknell program sponsored by Deloitte, and is a member of the Bison Investment Club at Bucknell. Created by Father Jose Maria in 1956, Mondragon consists of 102 internationally competitive cooperatives that offer employment to over 73,000 employees. The success of Mondragon and other worker cooperatives such as The Co-operative group, Amul Dairy and Suma makes a strong case for worker cooperatives as successful capitalism in a liberal democratic age. The Mondragon experiment seems to prove that a corporation can be globally competitive without abandoning cooperative ideals and principles of worker participation. OUR AIM IS TO CONSTITUTE A BUSINESS. One example is Cleveland, USA. The largest worker cooperative in the world, Mondragon Corporation based in the Basque region of Spain, best exemplifies this claim. Copyright © 2010–2020, The Conversation US, Inc. Jobs of Our Own: Building a Stakeholder Society, unemployment nationally is in excess of 25%, http://www.eventbrite.com.au/event/4470958758/. They have established research centers, bank and credit unions, a university with several campuses, youth cooperatives, a culinary arts university, and small to large businesses. The essentials of the Mondragon story are simple. As equal co-owners of their workplaces, members enjoy job security together with individual capital holdings, equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in their governance. Since its founding in 1956 by Father Jose Maria Arizmendiarrieta, Mondragon has become the world’s largest and most advanced cooperative economy. Libertarian Labor Review. These measures often include the lengthening of the working day as well as pressure by managers to meet lofty goals. And members share at one remove in ownership of a unique system of secondary support co-operatives, from which the primary or frontline co-operatives draw resources including financial services, social insurance, education and training and research and development. The Mondragón co-operative movement, born in the 1950s around the local ... Flecha, R., and Ngai, P. (2014), ‘The Challenge for Mondragon: Searching for the Cooperative Values in Times of Internationalization’, Organization, 21(5), 666– 82. At the time of my first visit in 1985, their R&D priorities were already industrial robotics, computer assisted design and control systems, artificial intelligence and sustainable energy sources. A model for our times? However, cooperatives, such as Mondragon, consist of significantly compressed wage scales compared to capitalist firms, as members of the cooperative have the ability to vote on the distribution of wages and employee benefits (Wolff, 2012). Therefore, by lowering labor costs, capitalists are able to receive higher profit margins. Cooperation: Owners and protagonists. The structure of Mondragon University provides … Jose Luis Lafuente, Mondragon's Corporate Management Model specialist. In order to ensure that this disparity does not exceed tolerable levels, policymakers need to ensure that households can achieve what is necessary for subsistence. Race Mathews returned recently from the fifth of a series of visits to Mondragon, dating back to the middle 1980s. Co-operatives experiencing reduced demand are able to transfer members to ones where it is increasing, without detriment to their rights or entitlements. The Mondragón Cooperative Corporation (MCC), the largest consortium of worker-owned companies, has developed a different way of doing business —a way that puts workers, not shareholders, first. Back in the early 1980s, the former Secretary of State for Education in Harold Wilson’s Labour government, Shirley Williams, alerted me to a remarkable instance of regional economic development through employee empowerment, centred on Mondragon in the Basque region of Spain. Trust among coworkers and supervisors within the Mondragon Cooperative reduces the need for managers to closely monitor employees. Through this analysis we can see that the efficiency of capitalism is derived from the exploitation of labor and fierce competition with other firms. ... Mariposa Food Co-op, that looks at the role of cooperatives in building social justice. In 2011, the Basque Culinary Center was created and became part of Mondragon University. The cooperative group’s Caja Laboral credit union — effectively Spain’s ninth largest bank — is recovering from a 75% reduction in its profitability. Although beneficial for domestic workers, efforts to cultivate better work environments and conditions have lead to increases in capital costs and, ultimately, prices of final goods that are produced by the cooperative. And, the Mondragón Cooperatives have proven it with their highly successful model of worker-owned and democratically run businesses. n.d. Understanding Capitalism. With such an imperative enforced on extracting surplus value and profit squeezing, the goal of maximizing revenue has occurred at the expense of household and, more specifically, employee welfare. It consisted of a complex of more than one hundred enterprises and was worth more than $2.6 billion. Specifically, one notable privilege that is bestowed upon Mondragon employees is their ability to choose management. I recently had the opportunity to visit Mondragon, Spain to immerse myself into the world of worker-cooperatives. My 1999 PhD thesis and Mondragon book,Jobs of Our Own: Building a Stakeholder Society, set out in detail the origins of the co-operatives, how they work and the outcomes that have been achieved. Once known as one of the poorest regions in Spain, the Basque region is now the richest, prospering due to a strong sense of self-determination, grassroots participation and non-governmental intervention. In the past, Cleveland was a flourishing industrial city. The Mondragon Cooperative Corporation is a business-based, socioeconomic program that is committed to serving the interests of the environment, individual competitive improvement, and customer satisfaction (Tremlett, 2013). Following the global financial crisis in 2008, the Mondragon Cooperative Corporation was used as an example of an alternative to capitalist development. Therefore, the wage gap among Mondragon workers is significantly lower. Faced in the aftermath of the global financial crisis with circumstances — where unemployment nationally is in excess of 25% and 53% among young people — Mondragon has demonstrated impressive resilience in helping keep jobless levels in the Basque region to under half the national average. Amidst the fierce increasing competition among workers for employment in the United States’ economy, finding a means of subsistence has become increasingly harder for the population of skilled American households. Mondragon’s core values also entail the promotion of healthier relationships between workers and management. Worker Cooperative Statute in Massachusetts," 11 NYU Review of Law & Social Change 441 (1982-1983) 7. And supplementary capital can be accessed from centrally held inter-co-operative solidarity funds. The worker/owners and the managers met to review their options. WE ARE MONDRAGON A PROJECT SPANNING MORE THAN 60 YEARS, COMPETING IN GLOBAL. Write an article and join a growing community of more than 118,600 academics and researchers from 3,811 institutions. Faced repeatedly over their 50-year lifespan with cyclical economic downturns, the co-operatives have been able to avail themselves of significant flexibilities. Managers or supervisors ( Wolff, 2012 ) as foster collective achievement privilege is... Labor and fierce competition with other firms: Spain 's Giant Co-operative Times. 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