Imanol Basterretxea

Managing and Resisting ‘Degeneration’ in Employee-Owned Businesses: A Comparative Study of Two Large Retailers in Spain and the UK

Employee-owned businesses have recently enjoyed a resurgence of interest as possible ‘alternatives’ to the somewhat tarnished image of conventional investor-owned capitalist firms. Within the context of global economic crisis, such alternatives seem newly attractive. This is somewhat ironic because, for more than a century, academic literature on employee-owned businesses has been dominated by the ‘degeneration thesis’. This suggested that these businesses tend towards failure—they either fail commercially, or they relinquish their democratic characters. Bucking this trend and offering a beacon—especially in the United Kingdom —has been the commercially successful, co-owned enterprise of the John Lewis Partnership whose virtues have seemingly been rewarded with favourable and sustainable outcomes. This article makes comparisons between John Lewis Partnership and its Spanish equivalent Eroski—the supermarket group which is part of the Mondragon cooperatives. The contribution of this article is to examine in a comparative way how the managers in John Lewis Partnership and Eroski have constructed and accomplished their alternative scenarios. Using longitudinal data and detailed interviews with senior managers in both enterprises, it explores the ways in which two large, employee-owned, enterprises reconcile apparently conflicting principles and objectives. The article thus puts some new flesh on the ‘regeneration thesis’.

Management training as a source of perceived competitive advantage: The Mondragon Cooperative Group case

The academic literature argues that managers, with their resources and capabilities, constitute a source of competitive advantage for companies, but that cooperatives generally have difficulties attracting and retaining competent managers. The present study examines the special efforts made in the creation and development of cooperative managers via corporate training centres in the Mondragon Cooperative Group. The fieldwork that supports this research is a qualitative study based on a series of in-depth interviews with 12 people in charge of Mondragon’s training structure. This study confirms that Mondragon’s cooperatives have overcome the difficulties common to other cooperatives in attracting and retaining valuable managers. The study also confirmed that Mondragon’s management training policy, based on its corporate training centres, is internally perceived as a source of competitive advantages to the cooperatives in the attraction, development and retention of managers.

Impact of Management and Innovation Capabilities on Performance: Are Cooperatives Different?

The principal purpose of this study is to evaluate if management and innovation capabilities differ between cooperatives and investor‐owned firms (IOF). We do also want to analyze if those differences, in case they exist, cause different business performance levels. The fieldwork is based on a sample representative of the population of Basque industrial firms comprising 861 firms, 44 of them cooperatives. The results of our analysis are contrary to Social Economy literature statements. Basque industrial cooperatives are in a situation of competitive parity to investor‐owned firms and do not differ in management and innovation capabilities. The large size of Basque industrial cooperatives, environmental factors, networking and the help of the supra‐structure of Mondragon Corporation are explored as possible causes of those results.

Types of embedded ties in buyer-supplier relationships and their combined effects on innovation performance

Purpose – This paper aims to analyze the impact of three types of embedded ties, namely, specialized complementary resources, idiosyncratic investments and knowledge sharing, on the innovation capacity of firms. It also examines the particularities of the machine-tool industry. Design/methodology/approach – The evaluation of the embedded buyer-supplier ties is based on the potential sources of relational rents proposed by Dyer and Singh (1998). It also draws on Uzzi and Lancaster (2003) and Noordhoff et al. (2011), among others, to discuss the positive and negative aspects of embedded ties. Using data from a survey of 202 European machine-tool firms acting as buyers and sellers, the study proposes and evaluates a structural equation model. Findings – Only knowledge-sharing routines exert a significant positive effect on product innovation performance. Neither an increase in idiosyncratic investments nor in complementary resources and capabilities enhances innovation performance. Moreover, knowledge-sharin...

Does Training Policy Help to Attract, Retain, and Develop Valuable Human Resources? Analysis from the Mondragon Case

The aim of this chapter is to ascertain the degree to which a training policy developed through corporate training centers is recognized as a source of competitive advantage for attracting, developing, and retaining valuable staff. The fieldwork is based on a survey of Human Resource (HR) managers from 66 cooperatives of the Spanish Mondragon cooperative group. The empirical test carried out confirms that Mondragons training policy, backed up by its corporate training centers, is perceived by HR managers as a tool that provides advantages to attract, develop, and retain valuable human resources. The results also suggest that those advantages are more moderate than has been cited in classic literature on Mondragon. The results of this study can be helpful for the growing number of companies choosing to create and reinforce corporate training centers. The link between training policy and the perceived ability to attract and retain valuable employees showed in this case can also be helpful for other companies that, as Mondragon, face limitations in wage policy. This chapter contributes to the literature on the educational fabric of Mondragon adding updated empirical evidence and incorporating the point of view of HR managers of the groups cooperatives. With respect to the contribution of this chapter to the literature on training policy, the chapters findings, in particular those regarding the effect of training on worker attraction and retention, add empirical evidence to the few studies on the subject.

Collaborative relationships with customers: generation and protection of innovations

Purpose This paper aims to discover the key elements for generating and protecting innovations based on the customer-supplier relationship in industrial sectors. Design/methodology/approach This exploratory qualitative study was performed using semi-structured interviews with chief executive officers and innovation managers of 22 industrial firms and institutions from the machine-tool industry. Findings Key forms of knowledge must be shared by the two agents. Producers have to obtain in-depth knowledge about customers’ needs and customers need knowledge on producer’s absorptive capacity. Producers distinguish between three types of customers: reference customers, necessary for innovations with greatest scope, clientes amigos or test users, required to test innovations currently being developed, and traditional customers, associated with incremental innovations. The traditional means of protecting innovations is a detailed contract between customer and supplier; and patents are used for innovations of greater technological scope, as a form of defense against third-party patents and as a signaling element of absorptive capacity. Originality/value The paper draws on the direct experience of executives from companies whose innovation is based on a close relationship with customers to answer questions to which the literature has yet to provide definitive answers: What sort of information to be shared is relevant for the generation of innovations? Are all customers equal or are there profiles that contribute more effectively to the development of innovations? What attitude and mechanisms are most effective for protecting the knowledge and competitiveness generated through knowledge sharing?

Do employee-owned firms produce more positive employee behavioural outcomes? If not why not? A British-Spanish comparative analysis

Whether ‘employee ownership’ takes the form of worker cooperatives, co†ownership or simply employee share ownership plans, there are normally high expectations that a range of positive outcomes will result. Yet many empirically based studies tend to find a much more complex picture. An influential segment of that empirical literature has posited the need for a number of mutually reinforcing workforce management components to be in place alongside co†ownership. Drawing on detailed case research in two large and successful co†owned retailers in Spain and Britain this paper examines the role of these wider elements supporting employee ownership. We find that employee ownership can be linked to higher productivity and lower employee turnover, while at the same time being linked to higher absenteeism and mixed effects on attitudes. Expectations held by managers and employees are higher; these expectations are not always fully met. The role of managers was also found to be crucial.

Mediation effects of trust and contracts on knowledge-sharing and product innovation: Evidence from the European machine tool industry

Purpose The purpose of this paper is to analyze the mediating role of contracts and trust on the generation of product innovations stemming from buyer-supplier knowledge-sharing (KS) among the members of the supply chain. Together with the individual effects of trust and contracts, their joint effect is examined in order to determine whether these are complementary or alternative mechanisms of safeguarding and control. Design/methodology/approach Drawing on a survey of 202 European machine tool firms acting as buyers and sellers, the authors propose and evaluate a structural equation model. Findings Results confirm that there is a positive relation between contracts and trust with respect to buyer-supplier KS, and of the latter with respect to innovation performance. They also show that firms in which both the levels of trust and contract use are high reinforce their product-innovation capability based on buyer-supplier interaction (complementarity thesis). However, results also show that, contrary to trust, contracts by themselves do not act as a stimulus for product innovation. Research limitations/implications Establishing contracts seems to be a highly recommended action in a buyer-supplier relationship focused on increasing innovation capacity. This does not go against engendering trust in a relationship. Both trust with a degree of formalization, in different ways, help to increase the effect of sharing valuable knowledge on innovation capacity. Originality/value To the authors’ best knowledge, no prior study has delved into differentiating the use of contracts and trust as mechanisms in mediating the effect originated from knowledge-sharing on product innovation performance with two different samples formed by buying and selling firms.

Automaker-supplier relationships and new product development in the truck industry: the case of Volvo do Brasil

Previous studies have focused on differences between western and Japanese approaches to supply chain network management techniques as regards NPD and relationship-specific ties. Based on in-depth interviews with senior managers at Volvo Trucks Brazil and two Spanish first tier suppliers, the aim of this research is to learn about the types of NPD collaboration ties used between Volvo and suppliers and to examine the supply chain network management techniques and routines used to intensify inter-firm collaboration and promote value-chain optimisation. One main finding of this research is that there is not one best buyer-supplier relationship style for NPD, but that relationships differ significantly depending on the degree to which the buyer relies on the capacity and technology possessed by each provider. Lower NPD frequency than in the car industry and the introduction of the Volvo production system in 2007 also make buyer-supplier relationships focused on NPD stronger in Volvo Trucks than in previously researched big car firms.