Mondragon Multilocalisation Strategy (JM Luzarraga PhD Defense 4th June 2008)
1. Doctoral thesis in Business Management dissertation MONDRAGON MULTI-LOCALISATION STRATEGY: Innovating a Human Centred Globalisation An empirical case study on the Mondragon Co-operatives production plants in emerging countries Sanctis Spiritus – Oñati 4 th June 2008 PhD Candidate: JM Luzarraga Directors: Dr. Iñazio Irizar & Dr. Dionisio Aranzadi
5. Context of Research – Mondragon Industrial Division 1) 2) 3) 5) 4) Source: ex novo - Adaptation from MCC - 2007 Years 1) First production plant abroad 2) MCC holding structure creation 3) 26 Production plants abroad 4) 65 Production plants abroad 1) 2) 3) 4) Total employees Employees abroad (since 99)
6. To remain competitive Mondragon assumed the global production dimension, opting to use FDI on private companies abroad Context of Research – Mondragon Industrial Division (*) BRANDT Mondragon Industrial Division – Employment growth Source: ex novo
8. Research interest Is this new reality of the Mondragon Group a step forward in the worker co-operative international movement that enables to face globalisation, not only by maintaining jobs’ communitarian wealth at Mondragon traditional environment, but also creating communitarian wealth through employment growth abroad? Does a broad analysis about Mondragon globalisation process sustain that the success of its multi-localisation strategy strengthens its social goal while facing “the business dilemma versus a social imperative”? (Macleod, 2006). Or does it confirm Webb and Webb thesis on co-operative degeneration, which argues that in a capitalist economy long-term economic success is not compatible with the maintenance of co-operative and democratic principles? (Web and Web 1921) Is this an ongoing process, one that follows Vanek’s thesis on natural evolution of Mondragon subsidiaries from infancy, through adolescence to maturity? (Vanek, 2007).
9. Research objective The main goal of the research is to offer input from the academic field on the Mondragon co-operatives in their “globalisation process”, thus identifying management best practices to foster new international social enterprises structures. The research has also the objective of presenting the case study of the Mondragon Group as a place-based corporation facing human centred globalisation.
10. Research questions 1) Do Mondragon co-operatives, through FDI multi-localisation, defend better the interests of parent co-operatives on local community employment? (Phase I) 2) What is the FDI impact on member vs. non-member evolution in parent co-operatives, and internationally? (Phase I) 3) Is the Mondragon Group international strategy mostly a HFDI, being competitiveness through international sales growth the main objective of production plants abroad? (Phase II) 4) Is there a social objective in the Mondragon Group international projects? (Phase II) 5) What are the main limitations and incentives to the international expansion of co-operatives principles? (Phase II) 6) Which are those best practices in CSR management performed at the subsidiaries coherent with co-operative philosophy? Are they to be practiced only in specific countries, or is it possible to assume co-operative principles abroad for every country? (Phase III) 7) Is there any subsidiary best practice which assumes every co-operative principle abroad, or until now best practices include co-operative principles partially? (Phase III)
12. Research methodology - framework Context: “Social enterprises operating in global markets” Case study: Mondragon Group Globalisation impact on Mondragon Group net job growth 1996-2006 Case studies: best practices in CSR management in production plants abroad International strategy & mapping subsidiaries by countries and timing IRIZAR TVS (India) ORKLI CH (China) FAGOR MASTERCOOK (Poland) FAGOR EDERLAN (Brazil) COPRECI CZ (Czech R.) INTERNATIONAL CLUSTERS (China, Mexico Czech R. Slovak R.) Secondary source gathering & systematic review: Mondragon Group & Globalisation
13. Field work – interviews conducted People interviewed (N=176) Source: ex novo Based abroad YES NO Works at Mondragon YES NO Job activity MOI MOD Coop membership YES NO 65% 35% 82% 18% 93% 7% 37% 63% Basque country Spain (rest) India China Mexico Brazil Poland others Interview Location 4% 6% 20% 21% 13% 20% 12% 4% Basque country India China Mexico Brazil Poland Czech Republic Slovak Republic Nationality 49% 4% 16% 5% 5% 15% 2% 4%
14. Field work – production plants visits & analysis Source: Luzarraga, 2006 Feb – Mar 2007 Jan – Feb 2007 Mar – Dec 2006 Oct – Nov 2006 July 2007 June 2007 Mondragon representative offices 6 (4 visited) Production plants abroad 65 (40 visited) Source: ex novo
15. Research methodology – main characteristics 1) MCC EMPLOYMENT DATABASE: For the first time a merged database of Mondragon GLOBAL COOPS exists, allowing us to compare their performance with other cooperatives. The sample has been constructed from MCC annual reports. This database includes co-operative activity reports during 1996-2006 for Mondragon industrial co-operatives. 2) PRODUCTION PLANTS ABROAD ANALYSIS: For the first time Mondragon production plants abroad have been analyzed. It has been visited, studied and analysed 40 factories in developing countries 3) EMPLOYEES AND MANAGERS ABROAD INTERVIEWS: For the first time a wide survey on production plants abroad has been conducted interviewing 135 people working on Mondragon production plants abroad
17. 4.1- Phase I: research questions 1) Do Mondragon co-operatives, through FDI multi-localisation, defend better the interests of parent co-operatives on local community employment? 2) What is the FDI impact on member vs. non-member evolution in parent co-operatives, and internationally (parent co-operatives + subsidiaries)?
18. Phase I: test 1 - Global vs. Local Co-ops net-job growth H1: “Those Cooperatives with at least one production plant abroad create more jobs IN THEIR PARENT COOPERATIVE” H2: “Those Cooperatives with at least one production plant abroad create more jobs IN THEIR LOCAL COMMUNITY” Mondragon Industrial Division – “GLOBAL COOPS vs. LOCAL COOPS” ACCEPTED ACCEPTED Source: ex novo
19. Phase I: test 2 - FDI impact on employment growth H3: “FDI generates a bigger net-job growth IN THEIR PARENT COOPERATIVE during the three years after starting FDI”. H4: “FDI generates a bigger net-job growth IN THEIR LOCAL COMMUNITY during the three years after starting FDI”. ACCEPTED Mondragon Industrial Division – “GLOBAL COOPS vs. LOCAL COOPS” Source: ex novo
20. Phase I: test 3 - FDI impact on members vs. non members H5: “Those cooperatives with at least one affiliated production plant abroad do not necessarily have a smaller percentage of voting members INTERNATTIONALLY”. H6: “Those cooperatives with at least one affiliated production plant abroad do not necessarily have a smaller percentage of voting members IN THE PARENT COOPERATIVE”. ACCEPTED Mondragon Industrial Division – “GLOBAL COOPS vs. LOCAL COOPS” Source: ex novo REJECT ED
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22. 4.2 - Phase II: research questions 3) Is the Mondragon Group international strategy mostly a HFDI, being competitiveness through international sales growth the main objective of production plants abroad? 4) Is there a social objective in the Mondragon Group international projects? 5) What are the main limitations and incentives to the international expansion of co-operatives principles?
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28. 4.3 - Phase III: research questions 6) Which are those best practices in CSR management performed at the subsidiaries coherent with co-operative philosophy? Are they to be practiced only in specific countries, or is it possible to assume co-operative principles abroad for every country? 7) Is there any subsidiary best practice which assumes every co-operative principle abroad, or until now best practices include co-operative principles partially?
29. 4.3 - Phase III: Case studies database Source: ex novo MasterCook Mondragon international clusters Olomouc
30. Phase III: Case studies database 1) Orkli China 2) Irizar TVS Production plants case studies Mondragon international clusters 3) Copreci CZ 5) Fagor MasterCook 4) Fagor Ederlan Brasileira Source: ex novo
34. Research hypothesis “ The strategy of international production multi-localisation of the Mondragon industrial co-operatives has defended the stability of the local community by creating co-operative and non-co-operative employment, alongside with a concurrent improvement in competitiveness; furthermore, by means of new job creation it has also enabled wealth growth in emerging countries, providing also certain best practices in CSR management coherent with co-operative philosophy” ACCEPTED
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36. Eskerrik asko Muchas gracias Thank you 谢谢你 “ The economic revolution will be moral or will not be; the moral revolution will be economic or will not be” P. JM Arizmendiarrieta
37. ULMA Group NOT Included ULMA Group Included in 2001 Mondragon Group industrial d. net-job growth 99-06 IRIZAR Group NOT Included IRIZAR Group Included Source : ex novo Source : ex novo The weight of the IRIZAR Group The weight of the ULMA Group TOTAL COOPS GLOBAL COOPS LOCAL COOPS 94% 141% 21% 78% 125% 6% 41% 53% 25% 29% 42% 10% 22% 28% 14% 10% 17% 0% PT PIN P COOP