Mondragon Co-operative Federation

Value Differences From Typical Western Business Organizations

Although the value-related differences between the Mondragon Co-Operative Federation (Mondragon) and the typical business organization found in Western economies are many (Gilman, 1993, pp. 44-47), only four such differences are identified and discussed. These four differences are associated with ownership, participation, compensation, and control.

With respect to the value of ownership, Mondragon is a true cooperative in which each employee make an equal contribution to equity from earnings during their initial two years as members of the cooperative (Tseo & Ramos, 1995, pp. 25-31). The value of this ownership stake follows the fortunes of the cooperative as long an individuals remain with the organization. When individuals leave the organization, they are required to relinquish their ownership stake. Employee-owned firms are not rare in other Western economies; however, neither are such firms prevalent in any Western economy. A more common approach to some degree of employee ownership in Western economies are employee stock ownership programs (ESOPs), which tend to be much more limited in concept than is the Mondragon approach.

With respect to the value of participation, the employee owners and only those individuals elect the Board of Directors at Mondragon (Tseo & Ramos, 1995, pp. 25-31). Further, each member of the Board of Directors also must by

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een organizational components within a federated group (Tseo & Ramos, 1995, pp. 25-31). Compensation at Mondragon and Ethical Argumentation With respect to the value of compensation, it was noted in the preceding discussion that the ratio between the pay of the highest paid and the lowest paid position at Mondragon is 6:1. It was noted further that this ratio is far narrower than is typical in firms in Western economies and that the Mondragon ratio is mandated by federation charter. The differences between the Mondragon approach and the practices in most other firms in Western economies are considered within the contexts of utilitarianism, rights thinking, and justice thinking. Utilitarianism is a system of normative ethics in which "good" is defined as happiness or pleasure (Thompson & Thompson, 1982, pp. 22-25). The concept of utilitarianism is applied in one of two ways: (1) acting to provide the greatest good for the greatest number of people; or (2) acting to achieve a stated goal, i.e., the end justifies the means. Almost all actions result in both good and bad outcomes, a phenomenon that tends to complicate utilitarian evaluations. Utilitarian philosophy attempts to solve this dilemma through the criterion of the gr
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