This document summarizes and compares different models of social enterprises and cooperatives. It discusses theories that socialize either the tasks or power structures of enterprises. It also provides examples of the historical role of cooperatives in the UK and compares the Mondragon cooperative model to traditional corporate models, noting higher staff voice, efficiency and social investment in Mondragon.

1. Presentation for Northampton University Advancing Social Enterprise Education The place of employee-owned and cooperative enterprises in the social enterprise movement Dr Rory Ridley-Duff, Sheffield Business School (email [email_address] ) Course Leader - MSc Co-operative and Social Enterprise Management UnLtd/HEFCE Ambassador for Social Enterprise 25 th March 2011

5. Theorising ‘social’ in social enterprise

6. What is mutuality? “ The essential characteristic of a mutual business is that those who contribute to a common fund as part of a scheme for their mutual benefit must be the same persons as those who are entitled to participate in any surplus that arises from the operation of the scheme.” HM Revenue and Customs: http://www.hmrc.gov.uk/manuals/gimanual/gim9010.htm “ Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.” ICA, Third Cooperative Principle Source: http://www.scottish.parliament.uk/s3/committees/eet/inquiries/banking/CooperationandMutualityScotland.pdf

10. Typology of Worker Co-operatives Ridley-Duff, R. J. (2009) Co-operative Social Enterprises, Social Enterprise Journal , 5(1): 50-68. Table 1. Common Ownership Workers do not share in the assets of the company Individual / Collective Ownership Workers and stakeholder groups share the assets of the company Non-Equity Common ownerships. Limited profit distribution in equal proportions. Reserves and assets belong to the organisation, not members. Mondragon style co-ops and co-operative societies that provide for internal capital accounts that are re-valued as fixed assets vary in value. A proportion of profit accrues to their account (and is owned by the individual member). Interest is paid on the full balance each year. Reserves and assets belong to members collectively. Equity-based Common ownerships that allow equity that does not rise/fall in line with market values (par value shares). Limited profit distribution according to equity holdings. Reserves and assets commonly owned, not member-owned. CLSs combined with EBTs / ESOPs in the UK/US and elsewhere or Labour Companies (Sociedad Anonima Laboral) in Spain that support majority employee‑ownership. Equity rises and falls in line with market values and dividends are allocated member accounts. Share values reflect the market worth of the company. Reserves and assets belong to members.

13. Social and Private Enterprise Compared Mondragon Cooperative Corporation US Multinational Corporations Shareholders Now over 100,000 co-operative owners (about 80% of workforce). Owners are all workers and/or consumers. Supporting organisations can have a voice in ‘secondary’ cooperatives. Open membership system (not limited by ability to pay as contribution is linked to starting salary, and ‘people’s bank’ provides loan finance). Capital owners typically managers and/or institutional investors (limited only by ability to pay). Since the 1950s, substantial interest in employee-ownership (usually without voting rights). Leadership President elected by members for four-year term (maximum two terms). Governing council comprised of 7, 9 or 12 workers/consumers. Social council(s) elected from the workforce in each department. Elections rare (if at all). CEO appointed by directors. Directors appointed/elected by shareholders (one share, one vote). Rarely includes consumer or worker representatives, and leadership role for trade unions. Ratio of highest to lowest paid Typically 5:1 (maximum 9:1) – stable (highest to lowest paid worker). Source: “Wage Regulation”, http://en.wikipedia.org/wiki/Mondragon_Corporation , accessed 1 st December 2010. Increased from 85:1 to 419:1 throughout the 1990s (highest to average employee). Source: Aslam (1999), US Labor Statistics.

14. Cooperative Values at Mondragon Source: http://www.mondragon-corporation.com/mcc_dotnetnuke/Portals/0/documentos/eng/management-model/mgc.swf