XVI — Mondragon
Chapitre XVI
CASE STUDY: MONDRAGON COOPERATIVES
The Mondragon group, in the Spanish Basque Country, is the largest cooperative federation in the world [103][104]. Founded in 1956 by a Catholic priest, José María Arizmendiarrieta, it now employs more than 80,000 people in 95 cooperatives covering industry, finance, distribution, and education.
16.1 — What Worked
Longevity and growth. 70 years of continuous existence, with average regular growth of 5% per year [103]. Mondragon weathered the 2008 crisis and the 2020 pandemic without mass layoffs.
Inter-cooperative solidarity. Surplus cooperatives transfer funds to those in difficulty. A “relocation” mechanism allows reassigning workers from one cooperative to another. In 2013, when Fagor (appliances) went bankrupt, 1,800 workers were reabsorbed by other group entities [104].
Limited salary gap. The ratio between the highest and lowest salary is capped at 1:6 in most cooperatives (versus 1:300+ in multinationals) [103]. This moderate gap maintains cohesion without discouraging talent.
Crisis resilience. Rather than laying off, Mondragon temporarily reduces everyone’s salaries during crises. The burden is shared, no one is abandoned.
Integrated education. Mondragon University trains future cooperators. The training-employment link is direct.
16.2 — What Is Problematic
Fagor’s failure. The group’s largest cooperative (appliances) went bankrupt in 2013 despite solidarity mechanisms [104]. Proof that self-funding has its limits against global competition.
Chronic undercapitalization. Cooperatives struggle to raise external capital. The “one person, one vote” model makes external investment unattractive.
Spanish market dependence. Internationalization remains limited. Foreign subsidiaries are often not cooperatives but classic companies.
Tension between democracy and efficiency. Collectively made decisions are sometimes slow. Managerial agility is sacrificed to consultation.
16.3 — What We Keep from the Mondragon Model
- Inter-structure solidarity: ACs can help each other
- Worker relocation when one unit struggles
- Limited salary gap that maintains cohesion
- Resilience through burden sharing rather than layoffs
- Integrated education that trains future members
16.4 — What We Improve
- No mandatory federation: each AC is autonomous, partnerships are voluntary
- Openness to external capital: ACs can have investors (transparency about rules)
- No cooperative ideology: some ACs can be entrepreneurial with a founder who takes a margin
16.5 — What We Do Not Adopt
- Rigid salary caps: each AC sets its own rules
- Mandatory solidarity: transfer between structures is voluntary, not imposed
- Cooperative exclusivity: ACs can coexist with classic companies