Mondragon Corporation's success was used as a case study at the Mainstreaming Co-operation conference held in Manchester last week.
Fernando Molina, lecturer at the University of the Basque Country, and Naroa Elortza Gorrotxategi, lecturer at Mondragon University’s Business Faculty, described how Mondragon became the most successful co-operative of the Basque Country.
A major role in Mondragon’s success was played by its founding father-Jose Maria Arizmendiarrieta. According to Fernando Molina, Mondragon’s uniqueness can be attributed to the religiosity of the Basques and the Basque organisational tradition as well as to the coop’s original status as a social movement.
In 1941, Mondragon was an industrial town. Educated as a social priest, Arizmendarieta started fundraising, promoting social activities, and gradually took on leadership and management tasks. He soon came to be regarded as dissent during Franco’s regime, due to his social projects on equality and conciliation.
In spite of being influenced by the welfare state ideas of some British Labour and Socialist thinkers such as William Beveridge and by former PM Clement Atlee, Arizmendarieta managed to create a unique Basque co-operative movement, which sought to benefit the society first, not its own members. The model was based upon four pillars of co-operation: education, social welfare, finance and innovation.
“Arizmendarieta wanted to create a new catholic enterprise to promote co-operation at every level between social classes, generations, believers and non-believers, liberal and Marxists, men and women,” Fernando Molina said.
At Arizmendarieta’s call, catholic bishops decided to start a new business enterprise based upon equality. The first company was Fagor, founded in September 1955. The business model was to be followed by others and soon Caja Laboral was later created in 1959 as a coop bank to offer financial support to these co-operatives.
After Arizmendarieta’s death, it was difficult to sustain Mondragon, a catholic business, in the political context the increasing popularity of Marxism and Basque Nationalism and secularisation after his death.
Nevertheless, the co-operative not only survived, but also continued to develop. It has also coped well the most recent financial crisis. Naroa Elortza said the longevity of the coop is due to the network that had been created throughout its six decades of existence. Mutual support and joint action as well as an efficient crisis management through support institutions and business-to-business co-operation were key elements to Mondragon’s success.
The co-op has also placed a strong emphasis on member’s participation in the decision making process and on balancing social and economic objectives which both reduced the crisis’ effects and ensured not too many jobs were lost, managing to maintain (85%) and even expand employment.
Today, Mondragon comprises of 258 co-operative enterprises, 82,000 jobs within four sectors: Finance, Industry, Retail and Knowledge. It is today the foremost Basque business group and the seventh largest in Spain. In 2010 it accounted for 3% of the total employment rate in the Basque country.