Local Economies

HI everyone – given the storm, please post your local economies comments here.

Case studies and examples by 6 pm Tuesday.

Responses to one or more case studies and examples – by 6 pm Friday.

Questions to guide your thinking:
* What makes for a healthy local economy?  Consider multipliers, governance, social networks, orchestration, etc.
* What is the value of local distinctiveness?  The costs or challenges?
* What does it take to remain locally distinctive in a global world, ie., given globalization pressures?
* How does being local help social entrepreneurs?  Hinder them?




4 thoughts on “Local Economies

  1. tud34838 October 30, 2012 at 4:03 PM Reply

    Evan Williams Week 3: Localism Example
    Little Fish; Big Pond
    Community based enterprises encounter an interesting dynamic when addressing the expansion of their organization. The Agua Dulce example typifies this point, and it can be observed in other organizations as well. Their unique structure and culture, which makes these CBE’s successful upon startup, proves to be a major setback for them in expansion. This unique situation is one of the most challenging dilemmas that the organization must overcome to successfully grow.
    Agua Dulce’s community emphasized an accountability that was established within the social structure of the developing community. This created a notably unique organizational structure that was highly dependent upon community participation. Due to the community’s vested interest in the project, and majority participation in the organization, a highly effective system of checks and balances was established at Agua Dulce. This inter-organizational system of self regulation proved to be an essential key to the CBE’s success.
    Ingvar Kamprad, founder of IKEA, experienced considerable difficulty in expanding his culturally unique company internationally ‘Rapid growth would make it difficult to retain the company’s cultural values.” (Bartlett, 1990) It is clear to see that unique organizations have difficulties in transferring their specialized cultures in their expansion endeavors. When the culture is a key element in the company’s success, this turns into a serious problem. Agua Dulce, as well as other CBE’s, has the same problem in their expansion efforts.
    In an interview with Mikel Lezamiz, Mondragon’s director of cooperative dissemination, Lezamiz provided interesting insights into the organization’s most pressing challenges. He said: “How can we maintain the cooperative values and principles when we expand to other countries. Mondragon is based on a commitment through solidarity.” (Hollender, 2011) Lezamiz had further explained that in the countries where Mondragon has looked to expand into, they were having difficulty in turning employees to cooperative members. Mondragon, much like Agua Dulce, hinges upon not only workers, but workers who are vested in the organization through membership. Without membership, they run into financial setbacks, but worst of all the social structure and accountability suffers considerably as well.
    Therefore, to succeed locally the CBE institutes an organizational structure which will paradoxically inhibit its ability to grow beyond the local level. One could presume that this is simply an inherent limitation of most CBE’s. Assuming this infers that these types of enterprises can only expand beyond the local realm by reorganizing their overall structure. This thought process could be challenged, however, by delving deeper into the IKEA case. Ultimately, IKEA was successful in its global expansion. It had effectively opened international stores without compromising their original unique culture.
    It should be feasible to replicate and expand the distinctive organizational structure of the CBE. Execution and planning of this growth, however, would need to be conducted as an exploratory endeavor. As was the expansion planning at IKEA, expansion planning would need to be thoroughly strategized. An exceptionally keen attention to demographics must be utilized in order to determine the availability of the most invaluable resource for the CBE, its employees and cooperative participants. Without careful strategizing for full cooperative participation, the organization will fall short on establishing its essential social structure.
    Works Cited:
    Hollender, Jeffrey. “A Visit to Mondragon: Interview with Mondragon’s Director of Cooperative Dissemination.” A Visit to Mondragon: Interview with Mondragon’s Director of Cooperative Dissemination. N.p., 01 Aug. 2011. Web. 30 Oct. 2012. .
    Bartlett, Christopher A. “Ingvar Kamprad and IKEA.” HBS Premier Case Collection(1990)

    • tlhill2012 October 30, 2012 at 10:06 PM Reply

      Evan – thanks for this thoughtful comment. Growth and replication are critical business issues that bedvil most firms. Family firms are a great example, struggling to manage the triple challenge of increased scale (and increased capital requirements), increased complexity, and dissapating cultrue as they move from generation to generation. (See Lansberg’s work on succession for a good model.) Arguably, community based enterprises face even more acute challenges across these three dimensions of ownership, management and culture. The challenge for CBEs is that at each stage all three are likely to be more complex than for a private, or even a public, firm. Dispersed ownership, community-level culture (not just orgnizational or family), and the management of many stakeholders all contribute to a complex, challenging picture. IN this context, how should growth be managed? Mondragon provides one example in that it grows by spinning off (and now limiting the size of) firms, but keeping them knit together through an elaborate, country-like democratic system of checks and balances and through a capital management system centered in their bank. TL

      • tud34838 November 1, 2012 at 7:59 AM

        If an enterprise, structured much like that of a CBE, strives for global expansion, they truly have a complex feat to overcome. Some proven success of privatized growth models may be implemented; however, these enterprises must proceed with great attention to preserve the dynamic culture. Also since the cooperative model has a member owned and operated structure, the mission must be kept centralized as the ownership is diluted locally to a global presence.
        In order to strike an effective balance between a privatized growth model and organic culture, an enterprise could proceed with exploratory growth teams. This consists of a group of seasoned cooperative members who are solely responsible for establishing the enterprises’ culture and mission among the employees at the new location. Another group focusing on the actual start up of the new location with regards to logistics required for operational viability.
        The group responsible for transferring the core of the enterprise is especially detrimental in expanding an organization like a CBE. Quite simply, without the mission and the unique culture, the enterprise would be ineffective. This core growth group would need to focus intently on training. One of the only ways to impart the beliefs and norms of an enterprise on to new employees is through intensive training. A constant attention to the key aspects of the mission and the culture should be utilized as well. This could consist of things as simple as posters reminding the new employees of the core values. Quite simply a vast attention on human resource management would be essential.
        Finally, follow up assessments would need to be utilized to track the effectiveness of the orientation and training. Industry metrics would be key to determining the new locations evolution. Deficiencies in this area would clearly suggest problems with the new location’s core. Ongoing assessment interviews should be utilized to gauge the new staff’s comprehension of the culture as well. This will ensure they are ready to function more independently from the enterprise’s parent location.
        Expansion globally will most certainly never be an easy feat. The core and culture of organizations must never be put at risk for the sake of sheer growth. However, a unique balance of a strategic privatized growth model with a core focused growth model should enable enterprises as complex as CBE’s to expand without compromising their true values.
        Evan Williams

  2. Scott Bork November 2, 2012 at 6:11 PM Reply

    I want to share something that my family has been passionate about for some time now. Community supported agriculture (CSA) is a sustainable movement occurring across the United States. There is a communal and sustainable agricultural effort occurring here in the greater Philadelphia area. Greener Partners in a nonprofit business based in West Chester, which coordinates local farms for communal integration. Started by a successful Wall Street investor, the mission is to promote sustainable organic farmers. Members of Greener Partners CSA contribute $750 at the beginning of the year in return for a weekly share of the yield between May and Nov.
    Hillside Farms is a participating provider in Media PA. Each week members pick up a share of fruits, vegetables, meats, poultry, eggs, milk, and cheeses. The value proposition for farms is upfront financing and reduced risk of loss in the event of a poor crop. For the members, they receive organic, pesticide free food at a fraction of the cost…often hand picking and selected during pickup. Because the food is taken home in baskets and recycled bags, families are producing less rubbish. Coupled with being regionally grown, the carbon footprint of the food is dramatically lower. Energy cost for packaging and transporting the food is comparatively immaterial. The reduced energy cost translates into lower cost.
    The same farmer taking part in CSAs are also taking surplus yields to local markets and restaurants. The Farm-to-Table theme in local restaurant is a twist to the CSA movement. Menus can be seen promoting the farms contributing to your plate. Terrain at Styers is a popular destination in Glen Mills, while Supper is another located within the Philadelphia city limits. Talk about the multiplier affect. The communal nature of the CSA farmers is catalyzing job growth within the greater Philadelphia community. If you would be willing to include seed sales to home farmers, the proliferation of sustainable and communal food solutions is soaring. Your neighbor’s tomato plot is not so typical anymore; rotating the crop each year for Nitrogen fixing crops to reduce the depletion of minerals in the soil. Symbiotic and diversifying farming is also becoming commonplace in a practice that mimics natural forest growth. For example, planting marigolds between tomato plants promotes growth and inhibits proliferating populations of pests.

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