University of Wisconsin Center for Cooperatives

From Case Studies in Organizational Communication 2: Perspectives on Contemporary Work Life, Edited by Betty Davenport Sypher, The Guilford Press, New York & London, 1997.


CHAPTER 4

The Many Meanings of "Solidarity": The Negotiation of Values in the Mondragon Worker-Cooperative Complex under Pressure

    GEORGE CHENEY


George Cheney is a professor in the Department of Communication Studies, University of Montana-Missoula, Missoula, MT 59812.


Contrary to popular assumption, solidarity is not in contradiction with efficiency. In fact, the most advanced form of capitalism uses as a basis for progress attention to the person as a member of the organization, developing his/her initiative and freedom of activity, especially within the context of teams.

 

- JOSE MARIA SARASUA, "Our External Mission:'

Work and Union (corporate house organ of the Mondragon cooperatives) (1anuary 1994, p. 12)

THEORETICAL ORIENTATION

This passage, quoted from the corporate magazine of the Mondragon Cooperative Corporation in the Basque Country of Spain, captures well one of the defining tensions of modern organizational life: that between the individual and the organization. As typically discussed, this tension—especially as manifested in for-profit firms—pits individual needs against organizational efficiency. Too often the organization and the individual are largely seen as exclusive of one another and as being in unending conflict. Their interrelationship is not recognized, nor are the various ways in which these organizational and individual values are understood in practice. Still, the synthesis of the two is not easy. Weber (1978), of course, was keenly aware of the importance of values in the development of any organization and in the rise of the modern organization as an institution. Writing at the beginning of the 20th century, Weber identified three basic "logics" of authority in social organization. Charismatic authority (focusing on the compelling and exceptional qualities of a leader), traditional authority (emphasizing a preeminent lineage or a custom), and rational-legal authority (involving a systematic attempt to regularize behavior) correspond to and are expressed in the prototypic forms of religious sects, monarchies, and bureaucracies.

Of these types, Weber was centrally and acutely concerned with bureaucracy as the emergent and soon-to-be-dominant form of organization in modernity. Differing from Marx, Weber saw the logic of social relations in the organization as ultimately more important than the nature of ownership and control over the means of production in shaping an organization's functioning and the day-to-day life within it. (Still, as one sociologist has insightfully observed, both Weber and Marx focused their attentions of forms of "severance" in modern life, specifically, how persons were becoming separated from control over some of their most defining activities; see Sayer, 1991.) Weber was simultaneously a cheerleader and a doomsayer for what he called the "iron cage" of bureaucracy. He pointed out clear advantages to this rational and systematic order. First, it was considered nonarbitrary (with respect to personnel). From this standpoint, roles would become more important than the individual persons filling them. Such a system advances the value of equality of opportunity in terms of merit. Second, bureaucracy has as its basis clear and easily applied standards. And third, it offers a blueprint for organizing giant and far-flung enterprises. At the same time, Weber feared the overconcentration of power at the apex of the hierarchical pyramid, the depersonalization of relations between and among members (i.e., "We are all cogs in a machine"), and the supplanting of a concern for basic values (e.g., "What are we here for?") with narrow calculations of technical matters (e g., "How many widgets have we made today?").

Weber's (1978) ponderings over values and the collective never expressed themselves in a full-blown model of organization alongside his other ideal types. However, at least two sociologists have argued that such a model is in fact implicit in Weber's writings (see Rothschild-Whitt, 1979; Satow, 1975). In the view of these researchers, we ought to extrapolate from Weber's writings a type of organization that features grounding in and regular collective reflection on basic values. It is important to consider such a possibility not so much because we should feel the need to round out Weber's works but because of the imperative for exploring alternative forms of organization at a time when public confidence in all of the major institutions of our society is waning. I call this an imperative because both individual alienation and organizational ineffectiveness abound in the public and private institutions in which we participate today. We are not happy with the way most of our organizations are working or with our-' work within them.

The question underlying this case study' of a cooperative corporation is this: Can an explicitly value-based organization maintain its "integrity" over time? A reconsideration of Weber's theory for the late-20thcentury world leads us to explore what is possible for an organization that attempts to be true to its overarching mission. How do the internal dynamics of the organization affect organizational integrity? Is internal deterioration, such as bureaucratic stultification, inevitable? Is goal displacement, as witnessed in so many service-oriented organizations, really unavoidable? Are external market pressure, such as the need to be bigger and more competitive (especially in the case of for-profit firms) necessarily going to demand that the organization become just like the mainstream, in the sense of being reshaped into an uncreative and unreflective standard hierarchical organization?

The case illustration that follows features just such questions. But it does so from the perspective of communication, that is, special attention is given to the ways values are understood, expressed, and transformed in the ongoing interactions that constitute much of what the organization is. After all, if we take democracy and social values seriously for an organization, then their very meanings must be subject to reflection and critique (see Cheney, 1997). Terms for values, such as "democracy" or "efficiency" become part of the ongoing process of (re)organizing. In her insightful treatment of the relation between words and values, for example, Rosenthal (1984) shows how a great deal can be "going on" under the umbrella of a common term like "growth"—a term used to refer to such diverse situations as expansion of an organization and the maturation of an individual (and in both cases with an almost unquestioned positive tone). And in an interesting study with even greater relevance to the present one, Stohl (1993) reveals how a term such as "employee participation" is understood in very different ways by managers from the various European Union nations. Also, Berggren (1992) reveals how a buzzword such as "teamwork" in organizations can function in some ways that may have little to do with small-group cooperation. Specifically, the present case analysis concerns the polysemous but inspiring value of social solidarity and the ways it is expressed, maintained, and yet transformed over time.
 

BACKGROUND ON THE CASE

The Mondragon cooperatives, located in the heart of the Basque region of Spain, represent one of the world's largest and longest-lived organizations characterized by real worker ownership and governance. Founded on values of democracy, solidarity, and equality/equity, the co-ops are a conscious attempt to combine systems of individual incentive and group cooperation and welfare. The ten official principles of the Mondragon system are:

    1. Open membership

    2. Democratic structure

    3. The sovereignty of labor

    4. The instrumental and subordinate nature of capital

    5. Participation in the management of the firms

    6. Remunerative solidarity

    7. Intercooperation (between and among co-ops)

    8. Social transformation

    9. Universal character

    10. Education

 

    Of these value-based principles, numbers 6 through 9 deal especially with issues that co-op members would classify under the heading of "solidarity." Indeed, the term "solidarity" is important for the co-ops on interpersonal, intergroup, and societal levels, as we will see in considering the ways in which solidarity is being (re)negotiated today.

    The Mondragon cooperatives were founded through the efforts of a quiet but persistent Basque priest, 10Se Marfa Arizmendiarrieta, and five engineers. Years of bloodshed and strife in Spain through the Civil War (1936-1939) and World War 11 (1939-1945) led Don lose Maria and his group to reflect upon new methods of social organization. After reviewing the histories of a variety of organizations, especially the experiences of utopian communities in Great Britain in the 19th century, the founders settled on a "third way" between the poles of unbridled corporate capitalism and centralized state socialism. The creation of a technical school in 1943 was followed by the development of the first manufacturing co-op in 1956 and a cooperative bank in 1959. These and all other parts of the system are cooperative in two senses: economically, in that all worker-members are also owners (there still is no outside stock held); and socially, in that each co-op is governed by a complex system of direct and representative democracy (along with governance by a congress of all co-ops).

    Today the co-ops number more than 150, collectively forming the 15th largest private firm in Spain, the Mondragon Cooperative Corporation. The system currently employs more than 23,000 persons. The co-ops are centered in manufacturing (including, for example, Spain's largest maker of refrigerators), but they also include a large bank, a social security system, and a complete educational system. Many of these are "second-order" co-ops, in that they count among their membership both individuals and other co-ops. The single largest co-op today is Eroski (which rough means "group buying" in Euskera, the Basque language chain of grocery stores with nearly 9,000 employee-owner-members. In addition, there are more than 250,000 consumer-members of Eroski, most of whom are citizens of the Basque Country.

    Each socio~trabajador (worker-owner-associate-member) is an economic owner of a co-op through a complex system of investment and return. Up to 70% of the profits go to owner-members in the form of individual capital accounts and direct benefits; approximately 20% of the profits are reinvested in the co-ops themselves; and about 10% are contributed to community projects (notably, to Basque-language schools but also to drug education and AlDS-related programs).

    The cooperative system is governed at the broadest level by a Cooperative Congress, which meets once a year and has proportional representation from all of the individual co-ops. At the same time, there is a corporate superstructure for the management of the daily affairs of the co-ops and representation of the co-ops in the marketplace. A president of the corporation, the closest person to being like a corporate chief executive officer, is elected by the Cooperative Congress. Each individual co-op has its own general assembly, meeting once a year to consider major policy issues. Each assembly operates on a one-person, one-vote principle, so each "socio" (or member) has a direct voice in its deliberations. Members of the assembly elect a governing or guiding council, which is typically the most powerful group in the day-to-day affairs of the co-opt There is also an elected social council, which deals with issues of personnel and human resources; it is designed as a check on the power of the governing council, although its charge is largely advisory. In larger co-ops, there is also a management council, whose membership is determined in part through election and in part through appointment. The manager of the co-op heads the management council. (See Whyte & Whyte, 1991, for much more on the history and structure of the Mondragon cooperatives.)
 

CURRENT CHALLENGES

    The Mondragon co-ops face significant social and economic challenges today. (These are detailed elsewhere; see Cheney, 1995,1997.) This case study is based on two general categories of changes: what we might call sociocultural transformation in the larger society and the real and perceived external economic pressure. These changes provide a context for considering the complexities surrounding the term and the value of "solidarity."

    The sociocultural transformation is manifested in several ways. Basque society is strongly communal yet applauds self-reliance. Basque culture still privileges orality; however, the requirements of modern institutions have made written (and electronic) communication more and more common. Basques are, generally speaking, intensely proud of their ethnic and cultural distinctiveness, especially of their ancient and complex language, Euskera (a tongue that is not a member of the Indo-European family of languages and whose exact origin remains a mystery). Of all the 17 provinces of the contemporary Spanish state, the Basque Country enjoys the greatest autonomy in its own governance; nevertheless, its linkages with Madrid remain controversial and challenged from a variety of quarters.

    Today Basque society is undergoing rapid change, as are the other societies of Spain in the post-Franco era. Secularization, the advancement of women in the workforce, increased consumerism, the careerist aspirations of many young people, and the general acceleration in the pace of life are profoundly affecting the everyday lives of Basques and non-Basques living in the three provinces constituting the Spanish part of the Basque region.

    These trends, especially the faster pace of life and the independent-minded orientations of young professionals, are seen as threats to social solidarity, a value central not only to the official "constitution" of the coops but also to Basque culture more generally. As many citizens complained to me on the street while I was there for 5 months in 1994,"Everything is changing. And people don't have the time for each other that they used to have. We're becoming more like you, the Americans, and the Germans and the Japanese, but we don't necessarily like it." Among the hundreds of people I talked with either formally or informally in 1994,1 encountered virtually no dissent from this view of what is happening to the society. They justified the changes on the grounds that "we must do this to compete in the global economy."

    Related to this set of concerns is the pressure for the co-ops to grow and to be more economically competitive (see, e.g., Moye, 1993). Growth, from the very beginning of Mondragon, has been seen as important to give the co-ops a broad capital base as a buffer against the economic fluctuations of the larger market and to enable the co-ops to be a visible force in that same market. And the actual pressures to compete have become more obvious and more intense since the dropping in 1992 of most barriers to trade within the European Union (which Spain joined in 1986). Originally, the Mondragon co-ops conceived of themselves as competing in a Basque market; later they saw themselves in a Spanish market, and now they see themselves in European and global markets. As one worker-member said to me during my first visit to Mondrag6n in March 1992, "We must grow or die."

    The typical framing of the matter of market pressure is interesting from a communication standpoint. Many co-op members spoke to me in interviews2 about the need to be more competitive and more efficient economic terms, describing "the market" as if it were something totally out of human hands-a wholly external force (e.g., "The market requires that we expand" or "We have to respond to thc market by cutting costs"). Adopting a somewhat playful investigative attitude toward such comments, I often replied, "So, who or what 15 the market?" Looking somewhat puzzled at first, my interviewees would usually respond by acknowledging that they, as members of the co-ops and as consumers, were also part of the very thing that they were linguistically placing "out there." The "externalizing" language used to discuss the market, not at all uncommon in the Basque Country as elsewhere, seemed to promote a sense of limited possibilities for action. That is, people seem to forget their own roles and possibilities for shaping the very market that they see themselves merely as responding to in a very reactive way. Of course, this comment raises the question of the reality versus the perception of market pressure in terms of the way an organization and its members "see" the environment, the way they contribute to it in various ways (see, e.g., Weick's I 19791 provocative discussion of this matter), and the way they construct and reconstruct it.

    Competitiveness has been a salient concern of the Mondragon co-ops, particularly in the 1990s. The cover of the April 1994 issue of the corporate house organ, Work and Union, depicts a young professional man running hurdles with the earth below him. In one article linked to the cover, written by one of the founders of the co-ops, this definition of competitiveness is offered as preferable to several others: "Competitiveness, in the macroeconomic context, is a characteristic of firms through which they assure their presence in the market and increase their participation in the same, in rivalry with other firms." Like many definitions, of course, this one has a somewhat circular or tautological quality about it. In a sense the definition says, "To be competitive, a firm must be competitive." (And it reminds me of Kohn's I 19861 insightful observation that in our society we treat competition simultaneously as something that is natural and as something that needs to be nurtured or promoted.) At the same time, however, the definition acknowledges that an organization becomes part of the market through its competitive posture. Much of the argumentation along these lines within the co-ops treats social solidarity (in various forms) as subordinate to economic competitiveness, understandably insisting that the very survival of the co-ops is more important than their strict adherence to certain values. (See also Cheney & Christensen, in press.)

    The issue of competitiveness is indeed questioned within the co-ops. A number of interviewees argued that the external pressures were being exaggerated and used as excuses for greater centralization and bureaucratization: for example, in a top-down move away from regional sectors to functional ones (see Kasmir, 1996). The larger point here, though, is that the need for competitiveness currently shapes and challenges a number of ideas about social solidarity.
 

NEGOTIATING AND RENEGOTIATING SOLIDARITY

    In the life and history of the Mondragon co-ops, "solidarity" has had several distinct and well-established meanings. As already explained, the term has a background of significance for Basque society. In this regard, the word is important for denoting camaraderie and interdependence. Within the coops themselves, solidarity is institutionalized in several ways. First, as captured in principle 6 (above), there is remunerative or wage solidarity. That is, the wage differential ratio from highest to lowest was statutorily set by the coops in 1956 at 3:1. Second, there is a strong emphasis on job security, with frequent use of lateral transfers and only rare recourse to layoffs or early retirements. Third, "intercooperation," or intercooperative solidarity, means that both benefits (or profits) and losses are socialized, that is, shared within a group of coops that form a single industrial sector (for example, automotive parts). Accordingly, poor financial performance by one of the coops in a group is directly compensated for by contributions from the profits of other coops in the same group. Finally, solidarity within the environment means both preservation of jobs in a locale and assistance to the wider community and to the world. Thus before even considering the impacts of recent trends on "solidarity" within the Mondragon coops, we find a number of different meanings for the term, varying in context and in level of specificity. The remainder of the case describes three recent events that bring into focus tensions over solidarity and that spotlight ways in which it is being (re)negotiated. "Solidarity is hard," as one socio lamented to me.

    First is the matter of wage solidarity today. Market pressures and the need to recruit highly paid professionals led over the years to a gradual widening of the wage differential index from 3:1 to 4.5:1 and then to 6:1, although it should be mentioned that when taxes are taken into account the third ratio actually looks more like 4:1. (As a point of contrast, the index in most large U.S. firms currently is between 200:1 and 300:1, and it shows no signs of narrowing.) Over the years, the arguments advanced in favor of these changes in the wage differential have essentially been appeals to the outside market, suggesting that wage solidarity can be 'modified' in practice based upon what is going on in the larger economy.

    Still, until a crucial December 1991 meeting of the Cooperative Congress, wages and salaries had never been tied to the market. At that assembly, the majority of representatives of individual coops voted to allow approximately 25 of the top officials' salaries to rise to 70% of the current market figure Thus a direct symbolic and financial link was established I between the cooperatives' pay scale and the market.

    As one worker-member of FAGOR, the appliance manufacturer, told me, "The change in policy over wages represents a break from the tradition of solidarity in the coops. Where's the solidarity in this? Our trust in one another is broken." The same employee-member, an activist in a budding informal union called "Cooperative Groups" (formal unions are prohibited by the charter of the coops on the grounds that they make no sense structurally or ideologically within the context of full employee ownership), maintained that the change in policy was a problem even if the select salaries did not rise to meet the 70% maximum level.

    In fact, as the then President of the Mondragon Cooperative Corporation, himself an elected official, explained to me, the 25 salaries were at only about 50% of the then current market rate. He expressed frustration about the mystery and suspicion surrounding the salaries of those 25 persons in the "cupula" (what many worker-members call the managerial superstructure), but he also believed that there was no effective way to ameliorate these concerns. In his view, the basic "foundation" of solidarity had been shaken not because of the 1991 policy change but because some worker-members were conceiving of solidarity too narrowly, too technically.

    In this instance of a market-oriented policy change, the symbolic power of the change in the minds of some organizational members seemed to overshadow the question of actual salaries. From their standpoint, the corporation had compromised an internal value, wage solidarity, in bowing to external market standards and had thereby undermined a distinctive characteristic of the coops. On the other hand, defenders of the change (such as the president) insist that some compromises are necessary for the sheer survival of the system (and by implication, its constitutive values). This instance is a reminder of how sometimes a single communication event (or "message") can deeply affect the climate and course of an organization.

    A second change, important to the discussion of solidarity in Mondragon, concerns the internal structure of the organization. As the cooperatives grew in the 1960s and '70s, they were clustered in separate valleys of the mountainous Basque country. During the 1990s, however, the Mondragon Cooperative Corporation has been moving away from its traditional, regional sectors toward reorganization on the basis of industrial sectors This development is rationalized principally on the basis of economic efficiency: specifically, in terms of grouping coops with similar product or service markets. Gradually, the 15 regional sectors are being supplanted by nine functional ones, including clusters concerned with machine tools, home appliances, auto parts, finance, education, and so on. This restructuring, which is developing unevenly across the coops because of the degree of autonomy maintained by "the base" (i.e., by individual cooperatives), has produced a strong negative reaction in at least two forms.

    One is that a group of coops in a valley neighboring that of Mondragon seceded from the larger corporation in 1992. As the then president and highest elected official of the breakaway group told me, ''we did not want our group to be divided, with one coop being linked to a sector based somewhere else. We derive our strength from one another [i.e., referring to each individual coop, and we share a commitment to the local community." In this way, both intercooperative and external solidarity were defined in very concrete ways, in terms of specific connections between and among coops and between the coops and the land and the people around them.

    Another negative response to reorganization was oriented more toward interpersonal relations among worker-members. One of the chief points of contention for the informal labor group mentioned earlier is what they see as the "violation" of the traditionally important regional groups of coops. Importantly, some of the most active members of this group are also employees of some of the oldest coops. They have a strong identification with the Mondragon Valley and with their local community They are not, however, well connected to or appreciated by the upper management of the corporation, and the group has not been well integrated into the corporation's planning for the future. The "Cooperative Groups" have taken an antagonistic stance toward the corporation. The same group sees local connection as central to the definition and functioning of the coops. They see solidarity especially in terms of worker members' commitments to one another, bonds that are much stronger when coop members are citizens of the same community. At the same time, this group emphasizes the coop's linkage to its host community. Thus any move toward reorganization along sectoral or functional lines is seen as a direct threat to solidarity. In one statement made at a general assembly meeting of one of the largest and the oldest coops in 1993, thc group warned, "In the interest of being more modern and more efficient, the cooperatives, under the name of the Mondragon Cooperative Corporation, are trying to dismantle the basic rights of the socio and undermining its most advanced social dimensions." The Cooperative Groups have thus taken the position that they, much more than the leadership of the corporation, embody the defining values of the Mondragon.

    For their part, many leaders within the coops define the reorganization as necessary "in order that we may compete." They also argue that those opposed to the changes should take a broader view of the welfare of the entire system, of the whole Corporation, its survival and growth. As explained in an issue of Work and Union devoted primarily to an analysis of the financial group of cooperatives: "The primary challenge is to know how structurally to unify the businesses to make them all profitable and to respond [to the market] appropriately with a single vision." This captures well the frequently articulated interest in reorganizing the coops according to their specific economic concerns and then allowing the corporation to speak with one voice to its relevant markets. Internal and external solidarity, as explained to me by one of the founders, are thus assigned wider roles and are not necessarily conceived of in the old, specific ways.

    A final issue with respect to solidarity bears mention here. While I was at Mondragon, I had extensive conversations with a Madrid-based consultant who was conducting retraining for machine maintenance employees in one of the largest coops. He was frustrated by what he saw as the use of the term "solidarity" to cover up laziness or incompetence. In particular, he heard appeals to the value of solidarity as means of deflecting criticism of members who were perhaps not performing up to expectations. As he related to me, "Solidarity: in this sense, has become stale and almost meaningless. It becomes for some cooperative members nothing but an excuse."

    This poignant and disturbing example of a rather surprising usage of "solidarity" raises the issue of the transformations of terms: of what new uses are made of them and of how they can become detached from their former moorings. Terms for values are perhaps especially vulnerable to this kind of "evolution" because of their abstract nature, their widespread use, and their emotional significance (see Bakhtin, 1981). In organizational as well as in political life, a potent term such as a democracy" or "freedom" can command intense emotional allegiance and yet over time be divorced from traditional substantive content (see Cheney, 1997). Here, a process-oriented perspective on organizations (an particularly on democratic ones) requires attention to how the organization changes over time, in terms of the meanings it "holds" and "manages."
 

EPILOGUE

    While no definitive answer can be (or should be) provided here for the question of how a value driven organization can maintain its substantive integrity, a few closing observations are helpful. First, all organizations need to be vigilant about the pursuit of their goals and of the possibility for goal displacement. This imperative, which was implicit in Weber's (1978) writings, is now underscored by a century of solid experience with bureaucracy in all sectors. This need is even more important in a value based organization, such as are many firms that are owned and governed by the workers. Second, both scholars and lay persons must be attuned to the ways value terms function in everyday talk as well as in formal discourse. Terms such as "equality" or "efficiency" or "service" can be used to bring together different ideas and different people, allowing them to coexist under the June banner, as in the mission statement of an organization (see, e.g., Cheney, 1991). Diverse perspectives and programs (e.g., about "employee participation") can be called the same thing (see, e.g., Stohl, 1993). Terms such as "teamwork" may mean substantially different things in different cultural contexts and in different organizations (Berggren, 1992). However, such ambiguities can also be used to conceal conflicting and even contradictory meanings or (intentionally or unintentionally) to manipulate situations and people (see, e.g., Eisenberg, 1984). For example, new models of grassroots democracy can be imposed on employees, benevolently done in the name of fortifying "social solidarity" (see, e.g., Stohl & Cheney, 1997). And at the same time, key terms or symbols can become empty slogans—almost devoid of specific or concrete meaning—even while maintaining emotional power (see, e.g., White, 1984). As an example, consider what has happened to the term "empowerment" in the scholarly and popular literatures on organizations and work.

    Third, in this age of the globalization of markets, we must ask ourselves what is reasonable and unreasonable about drives toward more intense competition, heightened efficiency, market determined responses, and increased speed of production and consumption. For example, some observers argue that the presumably democratic drive toward the globalization of free trade actually works in rather undemocratic ways, especially in that both its implementation and its results are being little debated (Mender & Goldsmith, 1996). Do these pursuits promote the values we care about most deeply; are they giving us what we really want? (See, e.g., Schmookler, 1993.) Is the system to which we often defer, often by saying, "That's the way it is?," truly rational in the sense of helping us as a people to maximize progress toward our most cherished goals and values? It's time to reflect carefully on what our organizations are doing for us and to us.
 

NOTES
I. This case study is part of a much larger project and it draws upon a 10day intensive tour of and 5 months of fieldwork at the Mondrag6n worker cooperatives in 1992 and 199d, respectively. The author gratefully acknowledges the assistance and counsel of numerous persons in and around Mondrag6n and elsewhere. I would like to mention specifically Pilar Abad of Cincinnati, Ohio, and Mac Johnson of Covington, Kentucky, who each offered me great deal of information and help, particularly through a tour of the co ops in 1992. I would also like to mention three people at the Otalora Training Center of the Mondragon Cooperative Corporation—lose Marla Larranaga, Mikel Lezamiz, and Itziar Bazanbide—who become both friends and collaborators. I would like to Offer the same expression of thanks to Jose Manuel Biain, Fernando Recalde, and lose Antonio Ugarte, of ULMA, a group of cooperatives in neighboring Ohati. Without the encouragement and efforts of all these people, my work would not have been possible. I am grateful to these observers of Mondragon for helpful conversations: Sue Eicher, Fred Freundlich, Sandra Harding, Sally Klingel, Mike Long. Terry Martin, Mike Miller, Sheila Turpin, and William Foote Whyte.

2. Interviews of two types were conducted. First, approximately 25 general information or background interviews were done with a variety of persons throughout the coops. Second, about 75 interviews were conducted with stratified random samples of the memberships of three diverse coops: One was a recent conversion from a traditional capitalist firm; the second was a well integrated and economically profitable part of the system; and the third had recently voted to leave the Mondragon Cooperative Corporation. Interviews lasted between 15 minutes and 2 hours; all were conducted in Spanish.
 

KEY TERMS
 

AMBIGUITY (IN Language): in the sense used here, a necessary, important, yet baf71ing aspect of all language, but especially of abstract, value laden terms. Burke ( 1950/1969), the literary and rhetorical critic, urges us to consider "the strategic points at which ambiguities necessarily arise" in trying to understand human relations.
 

BUREAUCRACY: a systematic, nonarbitrary, rational, and generalizable model of organizational activity. As Weber predicted, bureaucracy has significant advantages and disadvantages with "specs to other organizational forms. For example, while bureaucracy helps us to organize giant and far flung enterprises, it also tends to depersonalize relations in that it treats people as replaceable parts Or a system.

 
CENTRALIZATION (IN DECISION MAKING): an organizations effort to consolidate decision making control in one office or part of the organization, usually at the top of a hierarchy.

 
COMPETITION: in the sense used here, a presumed or actual zero sum relationship between and among organizations in the same arena or industry, where advancement or profit by one necessarily means the decline or loss by another organization. Competition has other meanings, however.

 
DEMOCRACY (IN THE WORKPLACE): in the context of this study, attempts to give "voice" to individuals' interests, beliefs, attitudes, and knowledge within their employing organizations. Put another way, workplace democracy means the "codetermination" by all members of an organization's basic goals and pursuits.
 

EMPLOYEE PARTICIPATION: used to denote specific work programs for increasing or enhancing employees' decision making power, usually with an interest in increasing overall organization productivity. Participative decision making (or PDM), total quality management (or TQM), and quality circles are just three examples of movements in the awe of employee participation.
 

GOAL DISPLACEMENT: as articulated by a variety of organizational theorists, an organization's tendency—especially over time—to substitute goals such as power. growth, and expediency for the stated original goals of the organization (such as making a quality product or providing valuable public service).
 

MONDRAGON COOPERATIVE CORPORATION: a system of over 150 employee owned and governed cooperatives, located in the Basque Country in Spain. It is the subject of this case study.

 
RATIONAL-LEGAL AUTHORITY: Max Weber's term for an organizational or social relationship that relies on common adherence to a prescribed system of rules. regulations, and means of assessment (as opposed to the personal qualities of a leader or the transmission of tradition). Bureaucracy is the organizational form that best exemplifies rational legal authority, according to Weber.
 

SOCIAL CHANGE: in general, the ways in which social structures are altered and sometimes completely transformed over time. Understanding how changes do occur, even in seemingly stable social arrangements, is one of the fundamental problems of social theory.

 

SOLIDARITY: one of the key terms of this study, not only because it is an important culturally held value for the organization in the case study but also because it has so many different but equally significant meanings (e.g., interpersonal solidarity, solidarity between and among organizations, solidarity with the community).
 

VALUES (IN ORGANIZATIONS): in the context of this study. relatively abstract points of reference that individuals and organizations use in guiding and in explaining their decisions. Examples of important organizational values here are democracy, solidarity, growth, equality, efficiency, and productivity.

 
WORKER COOPERATIVBS: an organization that is completely or largely employee owned, in that there is little or no outside stock or ownership of equity. Such an organization may also be completely or largely employee governed, in that each member may have a real voice in decision making. As with other categories of organizations, there is tremendous variety between and among organizations that are called "worker cooperatives" (and thc related organizational types of "collectives," employee stockownership programs," etc. ).

 

DISCUSSION QUESTIONS

1. Do you see cooperatives such as Mondragon as being viable in other societies? Why or why not?

2. What safeguards can a democratic organization employ to preserve its governance process?

3 When a value-driven organization drifts away from its founding principles, what should be done by its members? When should the mission of the organization be revised? When should the practices of the organization be brought back in line with its stated values? When should the organization be dissolved?

4. What values do you see as most important for an employing organization? To what extent do these values (and terms) have multiple and perhaps even connecting meanings?

5. How can an organizational mission statement be used to bring together diverse interests represented by the different members? How can an organization's employees participate effectively in the formulation of a mission?

6. How can a for-profit firm be humane for employees yet competitive in the market?

7. What do democracy and efficient mean to you? Be specific. In your view, can an organization be both efficient and democratic? Why or why not?
 

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