Abstract  

Cooperatives promise solidarity and democracy as alternatives to capitalist exploitation, but how do they sustain these ideals in competitive markets? This study, recently publihsed in the Journal of Management Studies dissects Mondragon’s paradoxes—balancing equality with globalization, democratic governance with efficiency, and solidarity with market pressures. Adopting a Marxian lens, the authors reveal how cooperatives navigate tensions between principles and survival. By offering strategic insights, they challenge simplistic views of cooperatives, advocating for nuanced approaches to align transformative ideals with economic realities. A must-read for academics, managers, and policymakers seeking systemic change. 

Are cooperatives suitable to tackle systemic problems? 

Management scholarship increasingly focuses on solutions to pressing societal issues such as ecological destruction, economic inequality, and mass migrations. Cooperative firms, with their foundations in democratic governance and solidarity, are often positioned as beacons of hope—‘real utopias’ capable of offering practical alternatives to capitalism’s exploitative and destructive tendencies. Their values challenge the status quo, and try to show how economic efficiency and community well-being need not be in conflict. 

Yet, the story is far more complex. Cooperatives must navigate a tension-filled terrain where their principles of solidarity and equality are tested by the realities of market competition. Our research takes a step back to critically examine this duality. Are cooperatives truly transformative organizations? Or do their inherent contradictions limit their ability to tackle the grand challenges of our time? To answer these questions, we developed a Marxian-inspired framework that allows us to situate these contradictions within broader systemic and historical contexts. 

We have illustrated our argument by focusing on Mondragon, the world’s largest industrial cooperative network, widely regarded as a global example of cooperative success. Through its experience, we uncover key tensions that arise when cooperatives attempt to reconcile their idealistic values with the demands of operating in a capitalist economy. This study not only sheds light on the contradictions inherent in cooperatives but also offers lessons for how these organizations can navigate their challenges while remaining relevant. 

A Dialectical Approach to Understanding Cooperatives 

To explore the paradoxical nature of cooperatives, we used a three-step approach. First, we laid a theoretical foundation, critically engaging with scholarship on organizational paradoxes. Second, we applied a systemic critique of cooperatives operating within capitalist structures, emphasizing the interplay between historical forces and organizational realities. Finally, we tested these ideas through the case study of Mondragon. 

Mondragon offers a compelling lens through which to examine cooperative paradoxes. On the one hand, it embodies the principles of solidarity and equality in an extensive and profound way, demonstrating the potential of cooperative governance to challenge exploitative economic models. On the other, Mondragon’s need to survive and grow in competitive global markets introduces multiple contradictions that threaten its ‘cooperative identity’. This persistent duality forms the core of our analysis. 

Central to our study is the concept of ‘paradoxical consciousness’ since cooperative workers must navigate a dual role: as wage laborers striving for solidarity and as self-managers ensuring financial sustainability. This duality creates a constant tension, one that reflects broader contradictions inherent in cooperatives. For example, workers’ democratic control over their workplace can be at odds with market demands that prioritize efficiency and profit. These contradictions do not merely exist in isolation but they are historically and contextually contingent, informed by the systemic forces they must navigate. 

The Five Paradoxes of Mondragon 

Mondragon’s experience illustrates five major paradoxes that cooperatives may face as they try to balance solidarity and competition: 

1. Workforce Composition: Originally composed of member-owners who participated in democratic governance, Mondragon now employs a growing number of wageworkers in joint-stock subsidiaries. This shift dilutes cooperative identity, as wageworkers often lack the same decision-making rights, raising questions about participation and ownership. 

2. HR Practices: To remain competitive, Mondragon has adopted corporate-style HR practices, such as performance-based evaluations and increased workloads. While these measures enhance efficiency, they can undermine the cooperative’s commitment to worker well-being and solidarity, creating a tension between market-driven policies and cooperative values. 

3. Pay Egalitarianism: Mondragon has long maintained pay solidarity by limiting wage disparities within its cooperatives. However, globalization has put pressure on these practices, as the need to attract skilled workers and managers has led to a widening of wage ratios. This tension highlights the challenges of maintaining egalitarian principles in a globalized economy. 

4. Inter-Cooperative Solidarity: Mondragon’s cooperatives are interconnected through mechanisms like profit-pooling and worker relocation, designed to support struggling member cooperatives. Yet, the need for individual cooperatives to remain sustainable can strain these mechanisms, as not all cooperatives are equally willing to share resources unlimitedly because this can undermine their own financial structure. 

5. External Solidarity: As Mondragon expands its presence in international markets, it has recurrently faced the challenge of aligning its cooperative values with the demands of augmenting their productivity and profitability rates. This raises difficult questions about the balance between preserving or extending solidarity among cooperatives and the need to escalate competitiveness with respect to external actors. 

These five paradoxes are not merely abstract, they have real-world implications for how cooperatives function, adapt, and evolve. The different ways in which different cooperatives respond to these paradoxes or others illustrates the concrete way in which cooperative ideals become real. Understanding these tensions is crucial for scholars, practitioners, and activists who see cooperatives as vehicles for systemic transformation. Our research challenges essentialist views of cooperatives as either wholly radical or fully co-opted by capitalism. Instead, we argue that their contradictions are dynamic and context-sensitive, shaped by the interplay of historical forces and organizational realities. 

By situating these tensions within their broader systemic context, we provide a more nuanced perspective on the role of cooperatives. Rather than viewing organizational paradoxes as timeless and insurmountable, we argue they are contingent phenomena that can evolve over time. This insight is particularly valuable for those seeking to strengthen the transformative potential of cooperatives while acknowledging the constraints they face, because locating paradoxes within concrete organisational framings alleviates critical managers from uncritically pursuing ‘abstract ideals’ that hollow the contradictory reality they experience. 

Rethinking Strategies for Cooperatives 

Our findings suggest that cooperatives cannot obviate engaging actively with their paradoxes if they are not resolved from the outright. This requires a strategic approach that grasps solidarity and financial viability as two inseparable sides of the same coin. For Mondragon, this has meant navigating difficult trade-offs: adopting competitive practices while trying to preserve democratic governance, expanding into global markets while maintaining cooperative identity, and fostering solidarity while ensuring economic sustainability. These challenges offer important lessons for other cooperatives. To remain relevant, cooperatives must continually adapt their strategies to align their principles with changing external conditions. This is not an easy task, but it is a necessary one for those committed to building a more equitable and sustainable economic model. 

Overall, our study is not only a critique but also an invitation to rethink the role of cooperatives in addressing ‘grand societal challenges’ or ‘the management of systemic transformation’. Scholars can use our framework to deepen their understanding of organizational paradoxes, while practitioners can draw on our findings to inform their solidarity strategies. Policymakers, too, have much to learn from Mondragon’s experience, particularly as they seek alternatives to traditional capitalist enterprises and the potential problems emerging from them. For those interested in a deeper exploration of these themes, our full article provides a comprehensive analysis that synthesizes theory and practice: it presents a set of challenging questions for anyone committed to understanding the complexities of cooperative organizations and their potential to drive systemic change in an increasingly unequal and volatile world.