Democracy, Cooperation and Business Success: The Case of Mondrag�n Corporaci�n Cooperativa

Abstract

Are democracy and success compatible in a business organization? In this work we show how Spain's Mondragón Corporación Cooperativa (MCC) has made it possible. MCC can be considered the world leader in cooperativism. It is one of the few contemporary business organizations that can be viewed as a democracy, and it represents a unique experience in the use of democratic and participatory methods in management. MCC has developed its own Management Model based on its cooperative principles, on modern management practices and on the cutting edge experiences of the most advanced companies. In this work we analyze the key elements of MCC's democratic management model, developed around aspects such as corporate culture, organizational structure or human resources. We also look at the case of Irizar, a component cooperative of MCC internationally known for its successful management model. Finally, we outline some practical implications of introducing democracy into organizations, drawn from the experiences of MCC and Irizar.

Communitarian governance in social enterprises

“…Evidence from the field trip confirmed previous claims (Whyte and Whyte, 1991;Forcadell, 2005) that democratic assemblies have considerable power to elect and remove the members of both a governing council, and one or more social councils. The Director of the Mondragon Management School provided insights into the composition of governing councils (the cooperative equivalent of a UK board of directors or trustees):…”

The virtue of participatory governance: a MacIntyrean alternative to shareholder maximization

“…Participatory governance practices serve to cultivate individual virtue and to mitigate the conflict between the individual and common good. This perspective has similarities to the recommendations for increasing employee ownership or governance in Forcadell () and Sauser (), but our approach emphasizes the virtue‐instilling benefits of participation in employee governance rather than, for example, the benefits accruing from better decision‐making outcomes.…”

“…It performs ‘the functions of a labor union and acts as a consultative body representing the members before the internal authorities of the cooperative’ (Forcadell : 260), and is concerned with working conditions and communication between management and workers. The Audit Committee, also nominated by the General Assembly, consists of an ‘odd number of accounts auditors, normally three … [and] has the basic role of auditing the accounts and financial documents presented to the General Assembly’ (Forcadell : 260). This internal audit helps ensure that Mondragon's operations are in ‘compliance with its formally established policies and procedures’ (Matthews : 192).…”

Mettre en œuvre une gouvernance démocratique suite à une reprise en SCOP

“…Ces parties prenantes peuvent alors freiner, voire rendre impossible, la mise en place d'une gouvernance démocratique. Les financeurs peuvent, par exemple, exiger des garanties et des transformations organisationnelles pour s'assurer de la pérennité économique de l'entreprise ; transformations en contradiction avec les principes de gouvernance démocratique (Forcadell, 2005 ;Jardat, 2012 (Friedland, 2013). Le travail institutionnel fait ressortir la complexité de ces changements et leurs dépendances aux rapports de pouvoir entre des acteurs animés par des visions du monde différentes et des intérêts divergents (Slimane et Leca, 2010).…”