Cooperatives/Democratic Management

4 thoughts on “Cooperatives/Democratic Management

  1. Jennifer Mcadams November 27, 2012 at 12:24 PM Reply

    Jennifer McAdams

    Case Example:

    Mariposa Food Co-op, a West Philadelphia neighborhood grocery store,
    is located on 4824 Baltimore Avenue, near Clark Park. West
    Philadelphia is known to be a neighborhood of unhealthy food choices
    found in local corner stores, so much so that Mayor Michael Nutter
    addressed this issue in the HBO documentary Weight of a Nation. West
    Philadelphia residents are in need of locally provided, healthier, and
    affordable food choices. Mariposa’s, a cooperative grocery store, is
    owned and operated by its membership. Similar to the Siekatsu
    article, Mariposa’s sells fresh organic, chemical-free, and
    conventional produce from local distributors and farms. Mariposa’s
    aims to buy locally (thus creating partnerships with like-minded
    organizations and encouraging the growth of such producers), and to
    sell high quality (healthy) goods in bulk at reasonable prices. It is
    important that local residents are able to afford the healthier
    options. Membership in Mariposa’s helps to make these choices
    possible. Furthermore, the co-op is deliberate about where the food
    it sells originates, specifically safe and sustainable sources,
    enabling consumers to make informed purchasing decisions, while
    encouraging the development of healthier and more sustainable markets
    and lifestyles.

    Mariposa Food Co-op is open to the public to shop; no residents are
    restricted from purchasing healthier food for themselves or their
    families. As an added bonus, the money the co-op earns stays local,
    instead of benefiting a multinational corporation. By supporting the
    local economy, members/consumers are helping to rebuild the West
    Philadelphia neighborhood economy, providing a tangible benefit to the
    on-going process of gentrification, which tends to displace older
    neighborhood members.

    Mariposa Food Co-op membership is open to any interested parties.
    Membership is accompanied by a 5 or 10% shopping discount, dependent
    upon members’ activity level within the co-op. Members are also
    entitled to promotional perks and bulk ordering. Joining the co-op is
    as simple as filling out a form to express interest in joining, paying
    some or all of your member equity, and attending a new member
    orientation. Member equity, or “ownership share” in the Co-op starts
    at $200 and is refundable upon your departure from Mariposa. The
    money/member equity paid into the co-op goes toward buying the food
    that fills the shelves. Members receive no monetary reward since
    economic drivers are not the goal of this cooperative, but rather the
    mission remains to provide a healthy and local food marketplace.

    Mariposa’s Co-op members are owners, as well as active participants in
    working shifts (if they choose to do so) and in the management and
    governance of the organization, reminiscent of the Cooperative Home
    Care Associates article. Mariposa Food Co-op has a board of
    delegates, made up of three officers and ten other members
    representing various committees of the membership, as well as the
    membership at large. The board of delegates meets monthly to discuss
    major corporate decisions, making changes through amendments to the
    organizational bylaws. Thus the co-op is built around democratic
    processes, where each member has a vote at the regularly held member
    meetings, three to four times per year.

    This cooperative illustrates that combining entrepreneurial and social
    objectives can be profitable while also making a social impact. The
    co-op is committed to minimizing the environmental impact of human
    nourishment while enhancing the local economy, by infusing it with
    business, and educating consumers. Furthermore, this co-op is
    fostering ongoing relationships with other community based
    organizations, achieving greater community cohesion. Community
    cohesiveness is important considering the hostility that exists
    between older residents and those who are just entering the
    neighborhood. By providing a model of neighborhood cohesion and
    development, as opposed to the traditional organizational practice of
    displacement, Mariposa’s is creating sustainable change in the
    community.

    http://www.mariposa.coop/

    • tlhill2012 December 15, 2012 at 2:16 PM Reply

      Mariposa is a great example of a grassroots attempt to improve access to healthy food. Its recent move to a larger store and decision to open to non-members further increased its effectiveiness in improving access. It might be interesting to explore how effective it has been in crossing race and class barriers in W Philadelphi and in catalyzing local economic development.

  2. megan edelman November 29, 2012 at 8:10 PM Reply

    As I was unable to attend class last night I thought I would add an interestiong addition to the conversation of coops, primarily food coops. In the last decade food coops have dramatically been on the rise, especially in the Greater Philadelphia area. Four established co-ops exist in the area in Swarthmore (started in 1937, making it the oldest), Weavers Way in Mount Airy and Chestnut Hill, Mariposa, and Selene, in Media, all of which are guiding the growth of Chester’s Community Co-op, which opened in March, and four more planned co-ops, in Doylestown, Elkins Park, Kensington, and South Philadelphia. Even with our economy suffering so greatly the increase of food coops in Philly and other metropolitan cities has been consistantly doubling.

    Nationally, the raw numbers are relatively small . Statistics from organizations like the Food Co-op Initiative cites 325 existing co-ops and 300 in various stages of starting, but each has hundreds, if not thousands, of members and many boast revenues in the millions. Long story short, these food coops can be prolific and luctrative. Proceeds from sales go into improvements or expansion, or are reinvested locally, as members see fit.

    Co-ops, which have had thier fair share of ups and downs since coming to existance in the 1840s, are now on the upswing again because of the intense interest in eating food that is locally grown using environmentally friendly, sustainable methods. As member-owned grocery stores and gathering spots, food co-ops educate and engage. They support small farms, reduce carbon emissions, stabilize neighborhoods, and spawn economic development.

    Ultimately, as far as coops go, food coops seem to be some of the most successful. Concentrating on the very basics of social awareness, food coops offer its memeber affordable, sustainable and local products. It is a testiment to power in numbers and the power of desire. People are finally getting what they want, and they want healthy and cost-efficient foods offered in a cooperative setting where community and awareness is encouraged.

  3. Jennifer Mcadams December 4, 2012 at 2:51 PM Reply

    Jennifer McAdams
    Case: How is the co-operative model coping with the recession?

    Mondragon Corporation (located in northern Spain) is the world’s largest group of co-operatives. Participating member co-operatives span across various industries, up and down the valleys of the Spanish Basque country.

    Mondragon’s strategic initiative is to maintain their core co-operative values in the face of a ruthless global business environment, which emphasizes competition rather than cooperation, increasing profits for the shareholders, rather than maintaining incomes for the worker-members. The Mondragon Corporation is demonstrating a competitive edge, without practicing the sort of behaviors that are making China wealthy, via sweat shops and impoverished laborers.

    Mondragon recognizes strength in numbers. It is strategically seeking out additional companies to join the co-operative, to buffer the whole unit in variable economic circumstances. Loss-making units/ companies are covered by those making a profit. In uncertain economic times, this offers some security to the entire co-operative and allows some industries within the co-operative to persist where others would fold. Furthermore, certain industries are prone to experiencing turbulence and short product life cycles, which can be counteracted by the sort of protection offered by the Mondragon Co-operative model.

    Mondragon’s co-operative social mission serves as a protective shield to the above strategic issues, while mapping out an alternative model for global capitalism. Central to Mondragon’s social mission is to ensure that member workers are employed, and to continue to expand their reach to further regions of northern Spain. Mondragon remains true to their co-operative values. They protect member workers’ jobs, primarily, while also working to strategically improve the diversity of their product offerings, as additional income and increase their stability in turbulent times.
    The fact that some subsidiaries chose to leave the co-operative, displays an inherent tension between profit in a global capitalist economy and the communal values of an “in the valley” co-operative. When prospering, it is difficult to “carry,” or support others, as that requires patience and a long view of economic circumstances, rather than the short-term quarterly perspective which so often drives stock market prices and consumer confidence. Often, those who are doing well, attribute their success to their own positive personal characteristics, without recognizing the strong support they received from this co-operative model. On the other hand, it is easy to assume negative internal attributes about those not prospering, ignoring any external factors and/or reasoning, and turning to a more insular view of the problem.

    The Mondragon Corporation maintains a long-term competitive advantage while it maintains its diversified product lines. Once the diversity in product lines diminishes because of spin offs, the Corporation will lose competitive advantage, being left to weather hard economic times with weaker product offerings, and much less cushion, and those spin-offs face total collapse if their product offerings diminish in value in the global market in the face of international competition or changing consumer tastes.

    Another structural issue that exists is the tension between size, efficiency, and the “one vote” co-operative model. As the Corporation grows larger, absorbing more members means establishing the means to “hear” all of those voices, and insure the democratic structure on which the cooperative was founded. Membership stake is essential to the co-operative model, and that stake is grounded in a democratic sense and respect for individual member voices.

    Mondragon’s social mission as a group of co-operatives, creates a stakeholder culture in which worker-owners are involved in the decision making processes of every aspect of the business, and have a great sense of efficacy because of their ability to shape the direction of the company as well as working within it. A strong focus on stakeholders strengthens the structure of the Corporation, and better use of new communication technologies can better facilitate the communication and voting processes that have defined Mondragon over the years. These technologies make it possible to grow the cooperative beyond what the founders, perhaps, had envisioned.

    Attracting and retaining talent proves difficult with the existence of wage caps, in much the same way that profitable units attempt to “go it alone,” when the market is favorable. In a local marketplace, they would do fantastically, but on a global scale, the reality of China’s abusive, and highly profitable, business practices provides an uneven competitive field. The huge salary gap that exists within US companies is another challenge, as more ethical members of the co-operative can chase the high management salaries that exist in the United States without feeling as ethically compromised as they would feel working for a Chinese company practicing work abuse and maintaining poor product standards.
    One managerial issue is that Mondragon has a much more complex decision making apparatus than other organizations, and one which few business schools teach because of the “survival of the fittest” top-down business model pioneered at schools like Wharton a century ago. The Mondragon process involves much more decision-making and collaborative decision-making than exists in the general Board-CEO model of most global corporations. This diminishes reaction times to new information and global trends, which top-down companies can more nimbly navigate.
    Although this co-operative group is much less nimble to market changes because of the complex decision making process, they do enjoy an advantage because their employees are also their owners, diminishing the likelihood that Unions or workers will strike against changes for which they had no voice. Mondragon has co-opted unions by, in essence, being a part of the unions themselves.

    Mondragon’s social mission exists to inform and empower worker/ owners. Mondragon can capitalize on its social mission as a means to attract dedicated and valuable management, who have an interest in the social and financial well-being of the northern region of Spain, and who are motivated more by quality of life/work issues than profits.

    Also, the Mondragon social mission of informing and empowering worker/ owners becomes a reality when member owners vote and voice their insights/ opinions. This can, potentially, lead to a much more harmonious workplace, which can cut the costs of conflict resolution and related expenses incurred in American and/or Chinese corporate environments.

    Social entrepreneurship’s has transformed from a merely non-profit model to a more business-like social enterprise model (Dart, Raymond. The Legitimacy of Social Enterprise. Wiley Periodicals, Inc. vol. 14, no. 4, Summer 2004. P.2) This transformation often results in more economic success thus extending the reach of the social good that social entrepreneurship seeks to do. Mondragon’s social mission enhances the units/ companies’ economic opportunities through the product diversity to cushion floundering units in turbulent economic times. They have established a structure in which there can be product loss leaders, which can ultimately lead to establishing firmer market shares in particular product lines where market share takes time to establish.

    The complex management structure poses a challenge in these times of rapid economic changes, because units and the cooperative will have a much more discursive process before setting long term plans and strategies. This slows down reaction times and can hurt market access and product offerings that require hitting trends on the rise, rather than at the plateau or decline.

    The social mission affects the local environment in a positive way. As Bloom and Dees state, “high impact organizations change the world around them” (Bloom, Paul and Gregory Dees. Cultivate your ecosystem. Stanford Social Innovation Review. Winter 2008. p3.) It provides a favorable environment for start-up companies to flourish by joining the co-operative group, and falling within its protective umbrella of diverse product offerings. Such a structure helps to encourage innovation, buy allowing co-op units to take more risks, which might take longer to coalesce into profitable product lines.
    It also helps by insuring that the work/owners will be more responsive to local conditions and needs, as opposed to absentee global owners who can more easily view communities as numbers and profits, and whose ignorance of local markets can lead to a mismatch between product offerings and consumers, as well as a greater disregard for the community needs.

    The social mission is the model in this case. The social mission drives the economics/ business. Mondragon’s existence is a challenge to the dominant global paradigm that management is only responsible for increasing profits for the shareholders, often at the expense of worker rights, the environment, wages, etc. Mondragon is pro-socially and financially motivated, resulting in focus on what was coined as “the double bottom line.”
    Mondragon’s management has to be much more socially adept. Bosses cannot just say and employees do, rather they must negotiate, since as worker/ owners, they are more equal to the other worker/owners. Management requires more interpersonal skills, communication and persuasion than a traditional top down hierarchy. Where decisions are made democratically, one must be able to persuasively distill a business plan down to its essence, shedding it of professional jargon, to better persuade a majority to vote in its favor.

    Mondragon’s group of co-operatives follows sound business practices and performs many of the same functions as other businesses. However, the managements skills they utilize differ from conventional business settings, in which employees have little say in organizational decisions, and must merely respond to the directives communicated down to them, usually in the form of memos or one way meetings in which management addresses the workers, often with little or no discussion or feedback.

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