The cooperative business model has been implemented across the globe to improve the living of lower income populations in many parts of the world. Birchall (2004) notes the cooperative movement contribution in reaching the United Nations Millennium Development Goals (MDG) in poverty eradication. In South Africa, cooperatives have become an alternative source of income in the face of growing unemployment and under employment among the low-income population (Khumalo, 2014). Nevertheless, not all cooperatives in the world perform well. Prior study on the cooperative movement shows that self-determination, grassroots participation, and nongovernmental intervention are the basis of a successful cooperative (OCDC, 2007). On the other hand, the government mobilization model tends to obstruct the competitiveness of cooperatives, as evidence shows how cooperatives in the less developed countries have a low survival rate due to governmental intervention, which has created a group of opportunists among members of the cooperatives who take advantages of governmental subsidies and assistance (Nyambe, 2010; Dyi, 2011). One cooperative that seems to be successfully withering the internal issues related to self-determination and internal conflict is the Mondragon Cooperative in the Basque Country, Spain.
The Mondragon Cooperative represents the prime example of how cooperative entrepreneurship based on community participation and democratic structure eradicates poverty and creates sustainable living for the members. The social entrepreneurship of Mondragon is rooted in the cohesiveness and collective tradition of Basque culture. As a result, Basque traditions have cemented the members and community dedication and efforts to establish an autonomous cooperative movement. In contrast to outdated stories of failed cooperatives, the Mondragon Cooperative has grown extraordinarily since its infancy, and it still progresses in terms of real-growth of revenues and workforce (MCC, 2015). During the early years of this cooperative’s development, the Mondragon founders successfully mobilized the local community to establish their grassroots efforts to fight against their economic constraints by establishing cooperatives. The founders focused on maintaining their independence and kept the cooperatives out of the governmental influence. Admiring the success of Mondragon model, Clamp and Alhamis (2010) stipulate that the independence of Mondragon contributes to its maturity and growth into a complex of cooperative networks, a concept that should be replicated elsewhere, and the spirit for self-determination and community efforts should be the basis for building a successful cooperative in developing countries. One example of such implementation is how the Mondragon cooperative has served as a model inspiration for CODC (Cooperative Ownership Development Corporation) in New Mexico, which aims at developing businesses that serve the local economy (Clamp & Alhamis).
If managed well, cooperatives can be a critical instrument in the poverty eradication effort across the globe. Prior study in the developing world shows how cooperatives have stimulated economic activities in smaller communities in which large enterprises cannot operate due to small profit margins. However, in order to function properly as a grassroots based institution, cooperatives must remain independent and free from political intervention. Instead, the government should facilitate policies that enable cooperatives to function as autonomous entities, and to provide managerial and administrative training.
References for Further Readings
Birchall, J. (2004). Cooperatives and the millennium development goals. Geneva: International Labour Office.
Clamp, C. A., & Alhamis, I. (2010). Social entrepreneurship in the Mondragon Cooperative Corporation and the challenges of successful replication. Journal of Entrepreneurship, 19(149), 149-177.
Dyi, L. (2011). Status of co-operatives in South Africa. East London, South Africa: The South African Department of Trade and Industry.
Khumalo, P. (2014). Improving the contribution of cooperatives as vehicles for local economic development in South Africa. African Studies Quarterly, 14(4), 61-79.
Mondragon Cooperative Cooperation (MCC). (2015). History | MONDRAGON Corporation. Retrieved from http://www.mondragon-corporation.com/eng/co-operative-experience/history/
Muthuma, E. (2012). Do co-operative development policies really lead to the development of co-operatives?: Lessons from Kenya. Africa Insight, 41(4), 176-191.
Nyambe, J. (2010). Workers’ cooperatives in South Africa, an assessment and analysiso of conditions of cuccess and failure. In DGRV-South Africa-working paper no. 6. Berlin: Deutscher Genossenschafts und Raiffeisenverband.
Overseas Cooperative Development Council. (2007). Pathways to economic, democratic and social development in the global economy. Washington, DC: US Overseas Cooperative Development Council.