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Case Study: Innovations in Corporate Governance: The Mondragón experience

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  • Shann Turnbull

Abstract

The stakeholder co‐operatives formed around the town of Mondragón in the Basque region of Spain have been outstandingly successful on a number of measures in comparison with other forms of firms. The control architecture within and between Mondragón firms contains a number of innovations and lessons for developing the theory and practice of corporate governance. This paper outlines the 38 year evolution of Mondragón structures. The control and incentive architecture of Mondragón firms was custom designed according to the nature of both their activities and their principal stakeholders. The resulting unique control arrangements and outstanding performance supports the hypothesis that the structure of governance is a determinant of sustainable competitive advantages. The evolution of Mondragón firms also illustrates the need to consider corporate architecture as a variable at any one time or over time. The Mondragón experience illustrates how the social research approach of ‘action science’ can be used to create competitive enterprises. The paper recommends this approach for developing the theory and practice of corporate governance.

Suggested Citation

  • Shann Turnbull, 1995. "Case Study: Innovations in Corporate Governance: The Mondragón experience," Corporate Governance: An International Review, Wiley Blackwell, vol. 3(3), pages 167-180, July.
    • Handle: RePEc:bla:corgov:v:3:y:1995:i:3:p:167-180
    DOI: 10.1111/j.1467-8683.1995.tb00112.x
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    References listed on IDEAS

    as
    1. W. Carl Kester, 1991. "Japanese Corporate Governance And The Conservation Of Value In Financial Distress," Journal of Applied Corporate Finance, Morgan Stanley, vol. 4(2), pages 98-105, June.
    2. Walter Skowronski & John Pound, 1993. "Building Relationships With Major Shareholders: A Case Study Of Lockheed," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(2), pages 39-47, June.
    3. Turnbull, Shann, 1994. "Stakeholder democracy: Redesigning the governance of firms and bureaucracies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 23(3), pages 321-360.
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    Cited by:

    1. Gift Dafuleya, 2014. "Social Value Creation and Institution-Entrepreneurial Dynamics in a Three Sector Economy," Journal of Economics and Behavioral Studies, AMH International, vol. 6(10), pages 795-809.
    2. Shann Turnbull, 2017. "Grounding a Theory of Firms in the Natural Sciences," Humanistic Management Journal, Springer, vol. 1(2), pages 159-186, April.

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