The article analyses governance difficulties at Fagor Electrodomésticos, for decades the world’s largest industrial cooperative, and sheds light on how the cooperative model and governance might have contributed to the firm’s bankruptcy. The case study examines how the cooperative model influenced the speed and quality of decision making. The roles of the main cooperative governing bodies (the General Assembly, Governing Council and Social Council) are evaluated and their limitations to effectively supervise and work with management to make difficult strategic decisions. Several governance improvement measures are proposed in order to help other large cooperatives combine democratic control and economically sound governance.
AlzolaIArandoSArenazaI (2015) The closure of Fagor Electrodomésticos: A source of learning for a cooperative decade. In: 5th CIRIEC International Research Conference on Social Economy, Lisbon, Portugal, 15–18 July 2015.
2.
Amankwah-AmoahJ (2016) An integrative process model of organisational failure. Journal of Business Research69(9): 3388–3397.
3.
ArandoSArenazaI (2018) Inter-cooperation mechanisms in Mondragon: Managing the crisis of Fagor Electrodomésticos. Advances in the Economic Analysis of Participatory and Labor-Managed Firms18: 7–35.
4.
ArandoSBengoaIA (2018) Inter-cooperation mechanisms in Mondragon: Managing the crisis of Fagor Electrodomésticos. In: BerryDKatoT (eds) Employee Ownership and Employee Involvement at Work: Case Studies. Bingley: Emerald Publishing, pp. 7–35.
5.
ArandoSGagoMJonesDCKatoT (2015). Efficiency in employee-owned enterprises: An econometric case study of Mondragon. ILR Review68(2): 398–425.
6.
ArregiAFreundlichFGagoM (2018) ULMA architectural solutions: A case from the Mondragon Cooperative Group. In: BerryDKatoT (eds) Employee Ownership and Employee Involvement at Work: Case Studies. Bingley: Emerald Publishing, pp. 37–75.
7.
BakaikoaBErrastiABegiristainA (2004) Governance of the Mondragon Corporacion Cooperativa. Annals of Public and Cooperative Economics75(1): 61–87.
8.
BasterretxeaIAlbizuE (2010) ¿Es posible resistir a la crisis? Un análisis desde la gestión de las políticas de formación y empleo en Mondragón. CIRIEC España67(1): 75–96.
9.
BasterretxeaIHeras-SaizarbitoriaILertxundiA (2019) Can employee ownership and HRM policies clash in worker cooperatives? Lessons from a defunct cooperative. Human Resource Management58(6): 585–601.
10.
Batataille-ChedotelFHuntzingerF (2004) Faces of governance of production cooperatives: An exploratory study of ten French cooperatives. Annals of Public and Cooperative Economics75(1): 89–111.
11.
BirchallJ (2014a) Innovation in the governance of large co-operative businesses: The alarming case of UK Co-operative Group. International Journal of Co-operative Management7(1): 22–28.
12.
BirchallJ (2014b) The Governance of Large Co-operative Businesses. Manchester: Co-operatives UK.
13.
BradleyKGelbA (1987) Cooperative labor relations. Mondragon response to recession. British Journal of Industrial Relations25(1): 77–97.
14.
BretosIErrastiAMarcuelloC (2019) Is there life after degeneration? The organizational life cycle of cooperatives under a ‘grow or die’ dichotomy. Annals of Public and Cooperative Economics. Epub ahead of print 16October2019. DOI: 10.1111/apce.12258
15.
ChavesRSolerFSajardoA (2008) Co-operative governance: The case of Spanish Credit Co-operatives. Journal of Co-Operative Studies41(2): 30–37.
16.
CheneyG (1999) Values at Work: Employee Participation Meets Market Pressure at Mondragón. Ithaca, NY: ILR Press.
17.
ClarkeT (2004) Theories of Corporate Governance: The Philosophical Foundations of Corporate Governance. London: Routledge.
18.
CornforthC (1995) Patterns of cooperative management: Beyond the degeneration thesis. Economic and Industrial Democracy16(4): 487–523.
19.
CornforthC (2004) The governance of cooperatives and mutual associations: A paradox perspective. Annals of Public and Cooperative Economics75(1): 11–32.
20.
CornforthC (2012) Nonprofit governance research: Limitations of the focus on boards and suggestions for new directions. Nonprofit and Voluntary Sector Quarterly41(6): 1117–1136.
21.
CornforthCThomasALewisRSpearR (1988) Developing Successful Working Co-operatives. London: Sage.
22.
CreswellJ (2003) Research Design: Qualitative Quantitative and Mixed Methods Approaches. Thousand Oaks, CA: Sage.
23.
DailyCMDaltonDR (1994) Corporate governance and the bankrupt firm: An empirical assessment. Strategic Management Journal15(8): 643–654.
24.
DavisP (2014) The loss of the Co-operative Bank: A symptom of the systemic misreading of co-operative history purpose philosophy and economic theory. Journal of Co-operative Studies47(2): 51–56.
25.
DenzinNKLincolnYS (2008) Introduction: The Discipline and Practice of Qualitative Research. Thousand Oaks, CA: Sage.
26.
DewN (2007) Abduction: A pre-condition for the intelligent design of strategy. Journal of Business Strategy28(4): 38–45.
27.
EllermanDP (1984) Entrepreneurship in the Mondragon cooperatives. Review of Social Economy42(3): 272–294.
28.
ErrastiABretosIEtxezarretaE (2016) What do Mondragon coopitalist multinationals look like? The rise and fall of Fagor Electrodomesticos S. Coop. and its European subsidiaries. Annals of Public and Cooperative Economics87(3): 433–456.
29.
ErrastiABretosINunezA (2017) The viability of cooperatives: The fall of the Mondragon cooperative Fagor. Review of Radical Political Economics49(2): 181–197.
30.
FultonMEHuethB (2009) Cooperative conversions failures and restructurings: An overview. Journal of Cooperatives23(1): 1–11.
31.
FultonMELarsonK (2009a) The restructuring of the Saskatchewan wheat pool: Overconfidence and agency. Journal of Cooperatives23(1): 1–19.
32.
FultonMLarsonK (2009b) Overconfidence and hubris: The demise of agricultural co-operatives in Western Canada. Journal of Rural Cooperation37(2): 166–200.
33.
GlesneC (2006) Becoming Qualitative Researchers: An Introduction. Boston: Pearson.
GreenwoodDJGonzálezJL (1989) Culturas de Fagor: Estudio antropológico de las cooperativas de Mondragón. Donostia/San Sebastian: Txertoa.
36.
HeathJNormanW (2004) Stakeholder theory, corporate governance and public management: What can the history of state-run enterprises teach us in the post-Enron era?Journal of Business Ethics53(3): 247–265.
37.
Heras-SaizarbitoriaI (2014) The ties that bind? Exploring the basic principles of worker-owned organizations in practice. Organization21(5): 645–665.
38.
Heras-SaizarbitoriaICillerueloEZamanilloI (2013) Adoption of ISO 9000 practices in manufacturing companies: The perspective of the shop-floor workers. Human Factors and Ergonomics in Manufacturing and Service Industries23(4): 311–321.
39.
HungH (1998) A typology or theories of the roles of governing board. Corporate Governance6(2): 101–111.
40.
IFA (Institut Français des Administrateurs) (2006) Coopératives et mutuelles: Un gouvernement d’entreprise original rapport du groupe de travail présidé par E. Pflimlin. Paris: IFA.
41.
Insolvency Administrator (2014) Informe de la administración concursal Fagor Electrodomésticos, S. Coop. Unpublished document. Donostia/San Sebastián.
42.
JensenMMecklingW (1976) Theory of the firm. Journal of Financial Economics3(4): 305–360.
43.
JohansonDØstergrenK (2010) The movement toward independent directors on boards: A comparative analysis of Sweden and the UK. Corporate Governance: An International Review18(6): 527–539.
44.
KasmirS (1996) The Myth of Mondragon: Cooperatives Politics and Working Class Life in a Basque Town. Albany: SUNY Press.
45.
KeaseyKThompsonSWrightM (1997) The corporate governance problem: Competing diagnoses and solutions. In: KeaseyKThompsonSWrightM (eds) Corporate Governance: Economic and Financial Issues. Oxford: Oxford University Press, pp. 1–16.
46.
LeesMVolkersR (1996) General trends findings and recommendations. Review of International Co-operation89(4): 37–49.
47.
McGovernT (2007) Why do successful companies fail? A case study of the decline of Dunlop. Business History49(6): 886–907.
48.
MellahiKWilkinsonA (2004) Organizational failure: A critique of recent research and a proposed integrative framework. International Journal of Management Reviews5(1): 21–41.
49.
MilesMBHubermanAMSaldanaJ (2014) Qualitative Data Analysis. Thousand Oaks, CA: Sage.
50.
MolinaF (2012) Fagor Electrodomésticos: The multinationalisation of a Basque co-operative 1955–2010. Business History54(6): 945–963.
MorrisD (1992) The Mondragon System: Cooperation at Work. Washington, DC: Ed. Institute for Local Self-Reliance.
53.
MorrisonEWMillikenFJ (2000) Organizational silence: A barrier to change and development in a pluralistic world. Academy of Management Review25(1): 706–725.
54.
MozasA (2004) La violación del modelo de gestión democrático en las cooperativas oleícolas. Ciriec-España48: 167–191.
55.
MuthMMDonaldsonL (1998) Stewardship theory and board structure: A contingency approach. Corporate Governance6(1): 5–28.
56.
MynersP (2014) The Co-operative Group: Report of the Independent Governance Review. Manchester: The Co-operative Group.
57.
NederhofAJ (1985) Methods of coping with social desirability bias: A review. European Journal of Social Psychology15(3): 263–280.
58.
NovkovicS (2008) Defining the co-operative difference. The Journal of Socio-Economics37(1): 2168–2177.
59.
OrtegaIUriarteL (2015) Retos y dilemas del cooperativismo de Mondragón tras la crisis de Fagor electrodomésticos. Arrasate, Spain: Lanki–Mondragon Unibertsitatea.
60.
O’SullivanNDiaconSR (2003) Board composition and performance in life insurance companies. British Journal of Management14(2): 115–129.
61.
PattonMQ (2002) Qualitative Research and Evaluation Methods. London: Sage.
62.
PencavelJ (2013) Worker cooperatives and democratic governance. In: GrandoriA (ed.) Handbook of Economic Organization: Integrating Economic and Organization Theory. Cheltenham: Edward Elgar, pp. 462–480.
63.
RocheOFreundlichFShipperFManzCC (2018) Mondragon’s amorphous network structure: ‘Making the whole truly greater than the sum of its parts’. Organizational Dynamics47(3): 155–164.
64.
SilvermanD (2006) Interpreting Qualitative Data: Methods for Analyzing Talk Text and Interaction. London: Sage.
65.
SinkovicsRRAlfoldiEA (2012) Progressive focusing and trustworthiness in qualitative research. Management International Review52(6): 817–845.
66.
SivertsenS (1996) Governance issues seen form a management perspective. Review of International Co-operation89(4): 34–36.
67.
SmithSC (2001) Blooming together or wilting alone? Network externalities and the Mondragon and La Lega cooperative networks. United Nations University/WIDER Discussion Paper No. 2001/27 Helsinki.
68.
SolomonJ (2007) Corporate Governance and Accountability. Chichester: John Wiley & Sons.
69.
SpearR (2004) Governance in democratic member-based organisations. Annals of Public and Cooperative Economics75(1): 33–60.
70.
StoreyJBasterretxeaISalamanG (2014) Managing and resisting ‘degeneration’ in employee-owned businesses: A comparative study of two large retailers in Spain and the United Kingdom. Organization21(5): 626–644.
71.
SundaramurthyCLewisM (2003) Control and collaboration: Paradoxes of governance. Academy of Management Review28(3): 397–415.
72.
TrickerB (2000) Editorial: Corporate governance – the subject whose time has come. Corporate Governance8(4): 289–296.
73.
WhyteWFWhyteKK (1988) Making Mondragon. Ithaca, NY: ILR Press.
