Mondragon Cooperative Corporation
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Mondragon: a for-profit organization that embodies Catholic social thought
by David Herrera
Abstract
The Mondragon Corporacion Cooperativa was founded in the 1950s to promote social and economic development in the Basque region of Spain. Its underlying mission and its working guidelines are based on Catholic Social Thought (CST). In this article we see how the CST foundations of Mondragon have led to a business organization that is very different from the standard business model.
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Introduction
Too often in business schools we look at the modern large corporation as the only model for organizing a business enterprise, yet there have been many successful organizations that have adopted a different form. One example is the Mondragon Corporacion Cooperativa ("Mondragon"), a large and successful business which has been built on Catholic social thought principles. This article addresses the response to the "calling" of the Mondragon Corporacion Cooperativa, a for-profit organization, to promote Catholic social thought by embodying it in its stated principles and in its day-to-day practice. Mondragon responds to a calling to holiness as an organization that competes successfully in a global market economy while maintaining its congruence with Catholic social thought. My goal is to illustrate how Mondragon embodies Catholic social thought, as reflected in the 10 basic principles (see Appendix) which, as will be shown, are not just part of an ideal set of guidelines, but are substantiated as pragmatic policies and practices.
This article is structured as follows: first, there is a description of Mondragon and of a contrasting "traditional organization." Then a brief definition of justice and solidarity according to Catholic social thought is provided, and further explicated throughout the article as the various practical applications of Catholic social thought in Mondragon are described. And third, the Mondragon principles, policies and practices are described, which, for the sake of clarity, have been classified under social justice, economic justice, the dignity of persons and their work, and solidarity, the four main themes in Catholic social thought. However, as will become evident to the reader, the Mondragon principles and practices are closely interrelated and are difficult to classify exclusively in terms of any one concept, because Catholic social thought permeates all aspects of Mondragon.
Description of Mondragon and a Traditional Organization
The following descriptions of Mondragon and a "traditional organization" distinguish the two types of organizations. Mondragon, a for-profit organization with headquarters in the Basque region of Spain, was founded in 1956 by five young engineers, inspired by a Catholic priest by the name of Jose Maria Arizmendiarrieta. Today Mondragon has 60,000 managers and employees (called worker-owners) in a conglomerate of almost 150 cooperative enterprises, with annual revenues of eight billion dollars. Mondragon has industrial, retail and financial operations throughout Spain, 34 manufacturing facilities in 12 other countries, three major research and development centers, a multi-campus university, and its own bank and health care system (www.mondragon.mcc.es).
Based on Arizmendiarrieta's teachings, and on the evolving practical experience of the Mondragon worker-owners for the last 45 years, Mondragon has institutionalized a system of work that is consistent with Catholic social thought. Mondragon is a principle-based, worker-owned and managed cooperative organization. It promotes broad participation in management while distributing decision-making power throughout the organization. Mondragon is a unique example of an integrated economic and social system that has thrived in profitability and accelerated growth for almost 50 years.
For the purpose of this study, a traditional organization (for-profit or not-for-profit) is characterized by top-down decision-making, (with) restricted participation of employees, a concentration of power at the top of the organization, and limited information about the organization available to employees. A traditional for-profit organization is further characterized by capital investors and employees usually being different people; maximization of economic benefits to primarily reward capital investors; objectives of investors, managers and workers often not being consistent with each other; and voluntary economic participation in the community.
Alan: The rest of this article can be accessed at http://robertaconnor.blogspot.com/2012/06/mondragon-embodies-catholic-social.html
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