Saioa Arando

Efficiency in Employee-Owned Enterprises: An Econometric Case Study of Mondragon

The authors undertake the first econometric study of efficiency for Eroski, the largest member of the Mondragon group of worker cooperatives. Three types of stores are found within Eroski: 1) cooperatives with significant employee ownership and voice; 2) cooperatives with modest employee ownership and limited voice (known as GESPAs); and 3) conventional stores with no employee ownership. Key data are monthly observations—9,800 for supermarkets and 2,150 for hypermarkets (large superstores combining supermarkets and department stores). By estimating first-difference models, the authors find that hypermarket stores with cooperative ownership have significantly faster sales growth than do GESPA stores. For supermarkets overall, they find no significant differences in performance among the three types of stores. For a subgroup of small supermarkets, however, cooperatives outperform conventional stores. To investigate the mechanisms that help explain why cooperatives perform better, the authors provide additional evidence that takes into account the more extensive opportunities for employee involvement, training, and stronger economic incentives in cooperatives. While cooperative members are better paid than peers in comparable firms, individual data show that job satisfaction is lower for cooperative workers than for GESPA workers. Though this may reflect higher worker expectations in cooperatives, alternatively cooperatives may constitute a “high-stress work system.”

Assessing Mondragon: Stability & Managed Change in the Face of Globalization

By drawing on new interview evidence gathered during several field trips and new financial and economic data from both external and internal sources, we document and assess the changing economic importance and performance of the Mondragon group of cooperatives as well as the two largest sectors within the group. Compared to conventional firms in the Basque Country and Spain, and producer co-ops (PCs) and employee owned firms elsewhere, in general we find evidence of growing group importance and strong performance and a similarly strong record for the industrial and retail divisions...