Tag: Mondragon

Visiting Scholar Anjel Errasti Speaks on Cooperative Multinationalization at the CBS Lecture Series

Last Thursday, visiting scholar Anjel Errasti (University of the Basque Country), gave an engaging lecture on the debate about cooperative internationalization. In his talk, Errasti explored the cross-national transfer of cooperative employment practices in multinational worker cooperative, drawing on detailed case studies of two historical and successful European cooperatives: the French ‘Up Group’ and the Mondragon ‘Fagor Ederlan Group’.

Up, headquartered in Paris, is one of the largest cooperatives in France. Founded in 1956, Up has 3,400 employees in 17 countries, mostly in Europe and Latin America, who work with more than a million customers and 21.3 million users of its services and products. In contrast, Ederlan has 3,456 workers and operates as copperative integrated in the Basque Mondragon Group, one of the leading cooperative groups in the world. Ederlan is a global supplier of automotive components for large multinational manufacturers, and has 20 plants and productive alliances in Europe, North and South America, and Asia.

Based on the firm’s documents and interviews with cooperative members and subsidiary employees at different organizational levels, Errasti highlighted the tensions that face Workers Cooperatives when they expand globally through the setting-up of capitalist subsidiaries. He demonstrated there was a great effort  made by both cooperatives in the cross-national diffusion of work organization systems and certain HRM practices on behalf of employee efficiency. However, the attempts that were made for the implementation of the core cooperative practices in the foreign subsidiaries have been unfruitful and were deferred, contrary to what has been done in the their domestic subsidiaries.

Errasti concluded that the policies and actions developed by the multinational Workers Cooperatives to transfer cooperative employment practices (ex: employee participation in ownership, profit sharing, and general management) are not only conditioned by institutional factors, as literature maintains, but mainly in politics and power relations between the headquarters and the subsidiaries. Errasti’s talk ended with a lively discussion among the faculty, students, and other visiting scholars at the Center for Basque Studies. Eskerrik asko, Anjel!

About Anjel:

Anjel Errasti investigates cooperatives, especially Mondragon cooperative internationalization, at the Institute of Cooperative Law and Social Economy (GEZKI) at the University of the Basque Country (EHU-UPV). He is visiting the CBS to do research in the Jon Bilbao Basque Library about Mondragon subsidiaries in the United States. This is what he says about his stay in Reno, “This is the second time I have come to Reno. Both times, I came with my son Lur Errasti, who goes to Reno High School. Somehow, both of us are attached to the Center for Basque Studies, UNR, this city and this country, where we have marvelous friends. We are leaving by Christmas, but we hope that we will come back in the future. It’s been such an awesome experience!”

CBS Graduate Student Horohito Norhatan Successfully Defends PhD Dissertation

CBS grad student Horohito Norhatan defended his PhD dissertation yesterday! The title of his dissertation was “The Roles of a Basque-inspired Cooperative in the Community-based Economic Development in Cleveland, Ohio.” Based on mixed methodology including interviews and content analysis, Hito investigated how the Cleveland-based Evergreen Cooperative used the elements of the Mondragón cooperative for its various operations. The PhD committee was chaired by Xabier Irujo from the Center for Basque Studies. Other committee members included Aleksey Kolpakov (Political Science), Xiaoyu Pu (Political Science), Johnson Makoba (Sociology), Mariah Evans (College of Business), and Joseba Zulaika (CBS).

Hito will pursue another PhD degree at the Department of Political Science at UNR. Zorionak Hito, and best of luck in the future!

 

 

How the Basque Country provides intriguing solutions to some of the world’s thorniest challenges

 

The Democratic Party’s Presidential hopeful Bernie Sanders took inspiration from Denmark when he proposed a 60 percent income tax increase in exchange for public services. However, American voters apparently did not welcome a candidate who wanted to increase taxes. Had Mr. Sanders taken inspiration from the Basque Autonomous Government instead of northern Europe, he may have had a better chance of gaining support from American voters.

The Basque Country, with a total population of 2.2 million, is the richest and most advanced economic region in Spain. According to an article by Sami Mahroum in the National, “it is among Europe’s top 20 percent of regions in wealth.”It also has the highest percentage of employment for medium to high-tech manufacturers in Europe. Many regard the Basque Country as a robust competitor to the advanced manufacturing regions in Germany. However, the greatest achievement of the Basque Country is how it has overcome local terrorism, globalization, and leadership challenges rather smoothly compared to both the Spanish state and the European Union.

Mr. Sanders could have also learned from the Basque Cooperative economic model. 60 years ago, Jose Maria Arizmendiarrieta formed the Mondragon federation of cooperatives. Today, Mondragon is Spain’s largest cooperative group, providing employment for more than 75,000 people and contributing 12 percent of the region’s GDP. Mondragon owns subsidiaries in 125 countries around the world. The Mondragon cooperative model is unique, as it has a cap on the CEO’s salary, limiting it to six times the lowest salary offered at the cooperative. Employees put aside 6.5 percent of their earnings toward a foresighted fund as a part of their pensions and contingencies.

The Basque Country’s unique cooperative model provides an inspiration in innovation for the world’s poverty and inequality issues. This model echoes the sentiments of American voters well, who are dissatisfied with globalization, rambling capitalism, big government, and high taxes. The Mondragon model serves as a mutual-capitalism or democratic capitalism model rather than the “invisible hand.”

For further reading: https://www.thenational.ae/opinion/how-the-basque-country-provides-intriguing-solutions-to-some-of-the-world-s-thorniest-challenges-1.623572

Mondragon Model: Independent and Community Based Development

Co-Op-Principles

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.

Auzolan: A Form of Social Innovation Rooted in Traditional Basque Culture?

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Basque women engaged in traditional communal work. Photo via Wikimedia Commons

In Basque Culture: Anthropological Perspectives, William Douglass and Joseba Zulaika discuss the importance of the auzoa, the neighborhood or local district, in traditional Basque culture:

Within the householdcentric auzoa, neighborhood ties and obligations constitute primary networks of social and economic relations, including the special relationship that a household maintains with its closest or “first” neighbor(geographically defined), the relationship that the household maintains with three or four of the physically most proximate households, and the relationship that the household maintains with all other households within the auzoa. . . . Traditionally, every household depended on another for first-neighbor obligations. The first neighbor was the initial outsider to be informed whenever there was a crisis . . . The importance of the first-neighbor relationship is eulogized in refrains and reflected in the common statement that it was more important to be on good terms with one’s closest neighbor than with a brother.

The same authors then go on to cite an example of these first-neighbor relations as described in Sandra Ott’s The Circle of Mountains: A Basque Shepherding Community, whereby a loaf of “blessed” bread was circulated around the village of Santa Grazi (Zuberoa) in a clockwise direction as a means of social solidarity and binding ties in the community.

When extended to the second level of relations, auzolan (neighborly or communal work) became especially important at key times of the year: close neighbors assisted one another at harvest time, for example, or during the traditional ritualized slaughtering of household pigs, with perishable meat rationed out to those assisting (and of course the favor returned when it came time for these neighbors to kill their own pigs).

Many of you out there from a rural background, as I am, will probably be familiar with friends and neighbors helping out during harvest time, and returning the favor when called on to do so. And I wouldn’t suggest that such communal ties are specific to traditional Basque culture alone. Indeed, I’m sure they exist all over the world. Nor, indeed, would I say that such traditional bonds need necessarily be just evident in rural life. Indeed, even if we haven’t experienced them first-hand, I’m sure we’ve read books or seen movies set against a backdrop of tight-knit urban communities, whether in small towns or big city neighborhoods.

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New World Basques enjoy a break from communal work. Photo from Basque Library archive

What does fascinate me, though, is the idea that these kinds of local community relations and communal ties, so ritualized in the Basque context and rooted in traditional, rural society, may serve as the basis for more contemporary forms of social innovation. Douglass and Zulaika, for example, go on to mention the claim that the strength of urban industrial cooperativism in the Basque Country, as exemplified by the Mondragon Corporation, is down to traditional forms of economic cooperation in Basque agricultural and fishing practices.  They also qualify the idea, however, by pointing out some of the flaws in this argument.

But whatever the case of this particular argument, I think modern studies of social innovation could benefit from studying these traditional practices in Basque society, practices that predate the strong cooperative movement in  the Basque Country. In 2009, the White House Office of Social Innovation and Civic Participation (SICP) was created to engage the social sector (individuals, communities, non-profit organizations, foundations, social enterprises, faith-based organizations, and so on), as well as business and government, in finding new solutions to the challenges facing American society today. This office recognizes the importance of new, bottom-up, grassroots, solutions to such challenges as well as the communal, shared responsibility in finding these solutions. We speak and hear a lot today about the importance of “community” and its associated values. Do we have something to learn from traditional Basque culture? Or is that society too outdated, too rigid? Does it offer little to a contemporary urban society that privileges global movement, flexibility, and change and sees little to learn from traditional rural society? Surely the root of human innovation lies in the very practice of agriculture itself, the techniques and implements developed by humans to work the land. What do you think?

If you’re interested in the subject of innovation, social or otherwise, see Innovation and Values: A European Perspective, by Javier Echeverria, an ambitious attempt to combine different perspectives on innovation in one single work that argues for a “philosophy of innovation.” that addresses different types of values (economic, technological, social, legal, political, and so on), assessing these values in terms of the effects and consequences of innovation processes on their advocates and other agents concerned with them.

See, also, two books in the Center’s Current Research series in partnership with the University of the Basque Country: Implications of Current Research on Social Innovation in the Basque Country, edited by Ander Gurrutxaga Abad and Antonio Rivera; and Innovation: Economic, Social, and Cultural Aspects, edited by Mikel Gómez Uranga and Juan Carlos Miguel de Bustos.

 

 

The European Cooperative Boom

manifesto

 

In the Europe there are more than 140 million people who have become members of cooperatives. European countries have experienced an expansion in the number of worker cooperatives. There are currently more than 83,000 cooperatives businesses in 42 European countries, well over double the number in 1980s. There are some regions in Europe that  have, for the most part, a strong historical background of cooperativism such as the Emilia Romagna region in northern Italy and the Basque Country, with its Mondragon Cooperative. Both the Emilia Romagna and Mondragon cooperatives are networks of cooperatives that produce products and services including sales, finance, machinery, and universities. Favorable local government policies toward the cooperative movement are behind the recent growth of cooperatives in Europe. European cooperatives enjoy tax benefits and supportive legislation that spur their success as the driving force for economic development at the community level. Nevertheless, cooperatives also face several challenges, including just in time production methods, lack of union representation, and loss of solidarity among workers.

For further reading please read the following books and article:

https://basque.unr.edu/docs/CR6.pdf

http://www.amazon.com/The-Myth-Mondragon-Cooperatives-Working-Class/dp/0791430049

http://www.redpepper.org.uk/Europe-s-co-op-boom/

** Horohito Norhatan is a graduate student at the Center who is interested in cooperatives and is sharing with us a series of articles on his favorite research topic, cooperatives, Horohito received his M.L.S. in political leadership and public services from Fort Hays State University. His research focuses on cooperative movement, economic democracy, political economics, and development policy. In his graduate thesis, “Cooperative Impacts on Poverty Eradication in Indonesia,” he investigated the impact that Indonesian cooperative organizations had in reducing the poverty rate, generating community wealth, and increasing the regional gross domestic product. Under the guidance of Dr. Xabier Irujo, Horohito is conducting research related to Basque cooperative organizations and their impact on the development of the Basque economy.

Governor Walker Visited the Basque Country and Mondragon

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Picture: Governor Scott Walker (center) visits the Mondragon Corporation
and Mondragon University while in Spain

Scott Kevin Walker, an American Republican politicians and the 45th governor of Wisconsin, visited the Basque Country and Arrasate-Mondragon on April 17, 2015, during his business tour series in Europe. In the Basque Country, Governor Walker gave a talk at the roundtable discussion organized by the Basque Country’s Trade Investment Agency. During his talk, Governor Walker promoted business opportunities in Wisconsin to executives, directors, and managers of Basque companies. In addition, Governor Walker also met with the Basque Government’s Minister of Economic Development. During the conversation, the two leaders agreed to strengthen the economic and cultural relationship between the State of Wisconsin and the Basques Country. The Governor pointed out that there are strong similarities between the Basque Country and Wisconsin, as both of regions are home to advanced industrial institutions in the fields of energy, aeronautics, and robotics. While visiting Arrasate-Mondragon, Governor Walker was amazed by the economic efficiency that the Mondragon Corporation has achieved in terms of labor-management relationships and labor productivity. It is hoped that Governor Walker can take away some of the Mondragon concept of non-confrontational and cooperative interactions between labor and management and implement the concept in Wisconsin, especially as there is growing research interest about the cooperative movement in Wisconsin.

For further reading:

http://www.mondragon.edu/en/phs/current/news/wisconsin-state-governor-walker-visits-mondragon-university

http://www.postcrescent.com/story/opinion/readers/2015/04/23/letters-walker-can-learn-workers-cooperative/26236133/

http://www.uwcc.wisc.edu/

The Cleveland Model: Basque style cooperative organization in America

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(Source: www.garalperovitz.com).

In a traditional hierarchical company, workers have no influence on the day-to-day business routine and have no share in the corporation’s profit pie. As a result, the workers can be apathetic toward the company, as they do not feel like a part of the organization. The everyday working experience is just another clocking in and clocking out, collecting the hour’s wages. On the other hand, in a worker-owned and worker-controlled business firm such as a cooperative, employees have the opportunity to participate in the decision-making process and be a part of the company’s success. The cooperative organization is the depiction of capitalism with a human face, a hybrid economic model between socialism and capitalism. Although operatives have the characteristic of a philanthropic based organization, in structure most cooperatives are a for-profit organization, owned and run by the people who actually work in the organization. In this type of business, each worker, from production worker to top management, gets one vote in the major decision-making process. Both the lower level employees and administration staff earn an equal share of income, disposing of the requirement for any government-set minimum wage. In addition, workers participate in a voting process and group discussion to secure their business interests and ensure a healthy monetary position for the cooperative from which they earn their fortune. Therefore, cooperatives tend to encourage long-haul and stable employment with a better working environment and better income.

The study of the cooperative movement is gaining public attention when it comes to economic inequality issues. One the most cited cases studied in this matter is that of the Mondragón Cooperative Cooperation (MCC) located in the Basque Country of Spain. Mondragón is a prime example of how a cooperative structure can provide goods and services to society while at the same time creating wealth for the community. Mondragón co-ops have turned a formerly depressed area of the Basque Country in Spain into a thriving community, producing, among other things, computer chips, high-tech machinery, and large appliances. As Mondragón and most cooperative organizations tend to reinvest some of their corporate earnings back into the local community, they tend to favor sustainable business models that generate local employment and promote entrepreneurship. While embracing free market principles, Mondragón energizes its employees to strive for proficiency, quality control, and productivity so that their organization competes successfully in the commercial world. Following labor union standards, the Mondragón cooperative also tends to allow its employees to sort out and arrange their working environment, sensible working hours, and reasonable pay. The Mondragón business methodology decentralizes forces within the managerial structure and in this manner reduces the possibility of corruption and corporate espionage. The superiority of Mondragón cooperative models in resolving the antagonism between labor and capital has inspired others to embrace the cooperative as a model for community development in lower income regions.

Mondragón Style Cooperatives in America

One of the pioneers of an alternative business model in America, based on the highly successful Mondragón cooperative, is the Evergreen Cooperative in the Cleveland, Ohio. The Evergreen Cooperative was initiated in 2008 as a result of a joint venture among Cleveland-based organizations Including the Cleveland Foundation, the Cleveland Clinic, University Hospitals, the University of Maryland College Park, Case Western Reserve University, and the City of Cleveland. The Evergreen Cooperative Initiative is attempting to create occupations with livable wages in six neighborhoods with an average income per household below $18,500. This region is also known as the Greater University Circle (GUC).

 For further reading please visit:

http://basquebooks.myshopify.com/products/basque-cooperativism

http://www.thenation.com/article/cleveland-model

http://evergreencooperatives.com/

http://community-wealth.org/content/cleveland-greater-university-circle-initiative