Managing degeneration in large multinational-cooperatives: Lessons from the Mondragon Group

TOPIC 11-STAGE 5-MICRO Globalisation has made international expansion a prerequisite for competitiveness in firms, and worker-owned cooperatives have not escaped this phenomenon, thus increasing the emergence of degenerative... [ view full abstract ]

TOPIC 11-STAGE 5-MICRO

Globalisation has made international expansion a prerequisite for competitiveness in firms, and worker-owned cooperatives have not escaped this phenomenon, thus increasing the emergence of degenerative tensions (Flecha and Ngai, 2014). The Mondragon Group is a prime example of this scenario. Since the 1990’s, several of its industrial cooperatives have undertaken an internationalisation strategy that has increased their competitiveness and ability to generate wealth and employment. In 2014, Mondragon’s Industrial Division comprised 28 multinational cooperatives and 125 foreign subsidiaries, employing 31,736 people, 11,312 of them abroad.

However, the model of growth based on setting up capitalist subsidiaries abroad has undermined Mondragon’s democratic, cooperative-nature (Errasti et al., 2003). In recent years Mondragon has promoted a discourse of regeneration based on encouraging worker participation at its capitalist subsidiaries (Azkarraga et al., 2012). To date, however, few such initiatives have been implemented, and results have been limited. Strangely, the specialised literature has paid little attention to this issue. This article seeks to fill that gap. It sets out to investigate the challenges and opportunities entailed in setting up democratic regeneration schemes at multinational cooperatives, focusing on the problems cooperative parent companies face in reproducing democratic structures in their capitalist subsidiaries and on potential solutions for those problems.

To this end, a ‘contemporary case study’ on Fagor Ederlan is conducted, one of the largest cooperatives in the Mondragon Group and the most active in democratising its capitalist subsidiaries. Through 12 in-depth, face-to-face interviews carried out with staff from different areas of Fagor Ederlan, as well as through the review of internal documents on the cooperative dating from the late 1990s to 2015, the findings suggest that democratic regeneration is feasible at multinational cooperatives. However, evidence of external obstacles and internal reluctance was also found.

Keywords: Worker-Cooperatives, Degeneration, Regeneration, Mondragon.

References:

Azkarraga J, Cheney G and Udaondo A (2012): Workers Participation in a Globalized Market: Reflections on and from Mondragon. In: Atzeni M (ed.) Alternative Work Organisations. New York: Palgrave Macmillan (76–102).

Errasti A, Heras I, Bakaikoa B and Elgoibar P (2003): The Internationalisation of Cooperatives: The Case of the Mondragon Cooperative Corporation. Annals of Public and Cooperative Economics 74(4): 553-584.

Flecha R and Ngai P (2014): The Challenge for Mondragon: Searching for the Cooperative Values in times of Internationalization. Organization 21(5): 666-682.