The Mondragon Experiment
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The Mondragon Experiment * Government * Econ
By Greg MacLeod | April 4, 2009 | 10:28 PM
The concept of the corporation reaches back to Roman times. However, the modern business corporation evolved radically from its ancient roots into a form with little relation to the purpose as understood by historians of law. Today, the typical business corporation seems to be a disjointed entity whereby shareholders seek maximum income, labor unions seek maximum income, and managers vie for maximum salaries and bonuses. The needs of society in general seem to be ignored in this dynamic. Indeed, the formula appears to point in a direction that can only lead to trouble for those outside the three …show more content…
The best answer to this is a real world case-study: the Mondragon Cooperative Corporation. This corporation began in Basque Spain in 1956, with its purpose clearly stated from the beginning: to create jobs for the five young founders and to help their rural community survive. Community survival and job creation are Mondragon’s explicit public purpose. Over the last sixty years this business corporation has grown exponentially from five workers to over 100,000. From its early years, this corporation adopted most of the methods of the most successful business corporations, modeling leaders such as Mitsubishi. Mondragon sought the best technology available and set up a series of its own research centers. They set up their own bank and thus avoided dependence on the blindness of the stock market. They did not retreat into the protection of their home country; rather, they expanded globally into 26 …show more content…
In the Middle Ages it was called a “persona ficta”. This is a very useful way of looking at a business corporation, because it suggests correctly that the corporate person has a certain personality. It has duties and responsibilities vested unto it by the legitimate government or society that fostered it. The corporate person receives great benefits from society – and, in return, it must exercise great responsibilities. One of the most basic responsibilities is job creation, a fundamental need in any society.
The Mondragon Corporation is striking in that their annual strategic plan usually includes a job creation target. Most large global corporations, in contrast, develop strategies to increase earnings through job reduction. Conventional corporate managers argue that a “job creation” strategy necessarily leads to inefficiency and losses. But empirical testing suggests otherwise. * 1 *
The Mondragon Experiment * Government * Econ
By Greg MacLeod | April 4, 2009 | 10:28 PM
The concept of the corporation reaches back to Roman times. However, the modern business corporation evolved radically from its ancient roots into a form with little relation to the purpose as understood by historians of law. Today, the typical business corporation seems to be a disjointed entity whereby shareholders seek maximum income, labor unions seek maximum income, and managers vie for maximum salaries and bonuses. The needs of society in general seem to be ignored in this dynamic. Indeed, the formula appears to point in a direction that can only lead to trouble for those outside the three …show more content…
The best answer to this is a real world case-study: the Mondragon Cooperative Corporation. This corporation began in Basque Spain in 1956, with its purpose clearly stated from the beginning: to create jobs for the five young founders and to help their rural community survive. Community survival and job creation are Mondragon’s explicit public purpose. Over the last sixty years this business corporation has grown exponentially from five workers to over 100,000. From its early years, this corporation adopted most of the methods of the most successful business corporations, modeling leaders such as Mitsubishi. Mondragon sought the best technology available and set up a series of its own research centers. They set up their own bank and thus avoided dependence on the blindness of the stock market. They did not retreat into the protection of their home country; rather, they expanded globally into 26 …show more content…
In the Middle Ages it was called a “persona ficta”. This is a very useful way of looking at a business corporation, because it suggests correctly that the corporate person has a certain personality. It has duties and responsibilities vested unto it by the legitimate government or society that fostered it. The corporate person receives great benefits from society – and, in return, it must exercise great responsibilities. One of the most basic responsibilities is job creation, a fundamental need in any society.
The Mondragon Corporation is striking in that their annual strategic plan usually includes a job creation target. Most large global corporations, in contrast, develop strategies to increase earnings through job reduction. Conventional corporate managers argue that a “job creation” strategy necessarily leads to inefficiency and losses. But empirical testing suggests otherwise. * 1 *