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En el marco del congreso internacional de economía social celebrado en EOI Sevilla y en colaboración con Goldsmiths College, Saioa Arando Lasagabaster y Mónica Gago García, MIK, S.Coop. & Mondragon Unibertsitatea-Enpresagintza, presentan su estudio que prueba que las cooperativas son las formas jurídicas más rentables. 27_05_2010
Citation preview
1
Efficiency in the Mondragon Cooperatives: Evidence from an Econometric case study
For Presentation at the CONGRESO INTERNACIONAL DE ECONOMIA SOCIAL (EOI)
Saioa Arando (MIK, S.Coop. & MU-Enpresagintza)Monica Gago (MIK, S.Coop. & MU-Enpresagintza)
Derek C. Jones (Hamilton College)Takao Kato (Colgate University)
2
Mondragon Group The case: EROSKI Data Insider econometric evidence Conclusions
INDEX
3
MONDRAGON GROUP
MONDRAGONHUMANITY AT WORK
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Mondragon Group
The Mondragon Group: often considered the most successful example of employee-owned enterprise in the world.
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Mondragon Group
250+ organizations, 92,773 employees 3 BUSINESS GROUPS:
FINANCIAL INDUSTRIAL – 12 DIVISIONS RETAIL & ALLIED
KNOWLEGDE AREA UNIVERSITY – 3 Faculties / Schools... Engineering –
Business – Humanities & Ed R&D CENTERS (11) MANAGEMENT & COOPERATIVE TRAINING CENTER
.
Group Structure
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Group Structure
Mondragon Group
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Sales, 2008
Industrial Group6,511
Retail Group9,073
TOTAL SALES15,584 M€
Mondragon Group
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Work force Geographic Distribution, 2008
Mondragon Group
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Work force Industrial Distribution, 2008
Mondragon Group
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Mondragon in the world, 2008
Mondragon Group
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Cooperative Structure
Mondragon Group
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The case: EROSKI
EROSKI GROUP
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Group Structure
Mondragon Group
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Distribution Area
Agro-food
Eroski
Retail
Hypermarkets
Supermarkets
Dapargel
The case: EROSKI
Forum Sport
Eroski Travel
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Why Eroski?
Retail & Allied Group, Sales History, 1988-2008
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The Case: Core Businesses
Eroski Chain
One of the largest and rapidly growing members of Mondragon Group
Core businesses=supermarkets (705) and hypermarkets (109)=the focus of our investigation.
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The Case: Third largest retail chain in Spain
Eroski Chain
Total employment ~ 50, 600 Eroski the third largest retail chain in Spain. Eroski is among the ten best spanish
brands (Branding Global y Brand Finance).
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Research Questions
RQ1: Is the legal structure important to explain firm productivity?
H1: Cooperatives are more productive than others.
RQ2: Which legal structure is nearest to the HPWS?
H2: Cooperatives are more likely to perform as a HPWS
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The Case: THREE OWNERSHIP STRUCTURES
COOP stores GESPA stores Capitalist stores
Members COOP Members GESPA Members
None.
Non-members
COOP non-members (prospective members on probation and temporary contract workers)
GESPA non-members (regular workers opting not to join and temporary contract workers)
Regular and temporary contract workers.
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The Case: THREE OWNERSHIP STRUCTURES
COOP GESPA CONVENTIONAL
Ownership Participation High Moderate Null
Decision-making Participation High Moderate Null
Job securityYes for
membersYes for
members No
Wage premiaYes for
members Minimum No
% members among workers very high reduced Null
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COOP as High Performance Work System
Ability/skillIncentive
Goal AlignmentJob Security
Opportunity
High Performance Work System
•for teamwork;•to produce and share valuable local
knowledge;•to respond to local shocks quickly;•to accumulate firm-specific human
capital;
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COOP as High Performance Work System
COOP vs. GESPA Much more limited participation in decision
making in GESPA than in COOP. GESPA membership widely regarded as a
“second class” form of membership. More limited opportunities in GESPA than in
COOP.
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COOP as High Performance Work System
COOP vs. GESPA Membership in GESPA involves a capital
stake that is about half as large as in a COOP (3,000 vs. 6,000 euros).
Average stake of GESPA members: less than one tenth of that of COOP members
%members: 61% in GESPA vs. 76% in COOP
Weaker incentives in GESPA than in COOP. In sum, COOP more likely to be HPWS than
GESPA.
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COOP as High Performance Work System
COOP vs. Capitalist Capitalist lacks:
1. Whatever GESPA lacks as compared to COOP;
2. Job security;
3. Efficiency wage enjoyed by COOP members (about 20%);
COOP more likely to be HPWS than Capitalist.
25
COOP as High Performance Work System
GESPA vs. Capitalist As compared to GESPA, Capitalist lacks:
1. Job security;
2. Efficiency wage enjoyed by GESPA members (about 20%);
GESPA’s advantages in opportunities and incentives over Capitalist are much more modest.
Neither GESPA nor Capitalist is close to HPWS.
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Key performance & financial panel data for:
435 supermarkets (142 coop, 26 Gespa, 267 conventional) and 80 hypermarkets (25 Coop, 55 Gespa).
Monthly data (feb-06/may-08)
10.000 observations for supermarkets and 2.150 observations for hypermarkets.
Data
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it
it6
it5it4it3
it2it1it
Udummies monthdummies year
Yearopened
MarketGespaCoop
KlnLlnAlnQln
First difference model
Insider econometrics evidence
(2)
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Insider econometrics evidence
Δ indicates the first difference between month t and t-1;
Qit = output (real sales) in store i in month t;
Lit = employment (measured by the number of full-time equivalent workers) in store i in month t;
COOPi = 1 if store i is a coop store, 0 otherwise;
GESPAi = 1 if store i is a GESPA store, 0 otherwise.
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
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Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590)(0.1692
) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974)(0.0615
) (0.0874) (0.1390) (0.1024)
N 675 1420 4747 703 8001 967 321
30
Insider econometrics evidence
In addition to labor (L), store space often considered crucial capital input (K) in retail service production.
For all Eroski stores during the time period under study, however, month to month variations of store space are zero and hence in our first-difference model,
lnKit = 0.
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
31
Insider econometrics evidence
Control variables A store located in a rapidly growing market
with rising population and average household income will naturally grow its sales faster.
To control for such differences in each store’s market condition,
MARKETit where MARKETit = monthly market index in month t for the area which store i serves.
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
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Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590) (0.1692) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974) (0.0615) (0.0874) (0.1390) (0.1024)
MARKETit 0.0034 0.0035 0.0029 0.0036 0.0038 0.0029 0.0012
(0.1152) (0.1071) (0.1129)(0.0967
) (0.1048) (0.1156) (0.0999)
N 675 1420 4747 703 8001 967 321
33
Insider econometrics evidence
Due to the standard lifecycle model of retail stores, younger stores tend to grow faster than older stores. To control for such a lifecycle effect, we also include
YEAROPENEDi = the year store i was opened.
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
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Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590) (0.1692) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974) (0.0615) (0.0874) (0.1390) (0.1024)
MARKETit 0.0034 0.0035 0.0029 0.0036 0.0038 0.0029 0.0012
(0.1152) (0.1071) (0.1129) (0.0967) (0.1048) (0.1156) (0.0999)
YEAROPENEDi 1995.48 1999.90 1998.41 2000.63 1999.36 2000.18 2002.05
(5.4675) (4.4902) (4.7485)(2.7747
) (4.9424) (2.5270) (1.8423)
N 675 1420 4747 703 8001 967 321
35
Insider econometrics evidence
constant (to capture an Eroski-wide time trend which is common to all Eroski stores regardless of its ownership types),
monthly dummy variables (to capture seasonality of retail sales), and
year dummy variables (to control for year time effects)
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
36
Insider econometrics evidence
The first-difference model adopted for two reasons.
1. Field research at Eroski sales growth a primary business goal,
2. First-difference models control for all time-invariant unobserved heterogeneity of stores that affects the level of sales.
itit6it5it4it3it2it1it Udummies monthdummies yearYearopenedMarketGespaCoopKlnLlnAlnQln
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Sales Growth and Ownership Types: Insider Econometric Evidence Dependent variable=lnQit
Hypermarket Supermarket SupermarketCity only
lnLit 0.552***[6.57]
0.265***[4.96]
0.292**[2.03]
MARKETit 0.645***[9.92]
0.815***[19.39]
1.165***[5.90]
YEAROPENEDi 0.00016*[1.87]
0.0004**[2.36]
0.0002[0.29]
COOPi 0.0022**[2.94]
-0.0003[-0.32]
0.0074**[2.63]
GESPAi -0.0001[-0.10]
N 2070 10994 1195
R-squared 0.852 0.404 0.311
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Insider econometrics evidence: additional analysis
1. The extent of “Opportunity” measured by: INVOLVEi = proportion of scheduled work
hours spent on joint labor-management meetings (monthly average of store i during the time period under study).
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Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590) (0.1692) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974) (0.0615) (0.0874) (0.1390) (0.1024)
MARKETit 0.0034 0.0035 0.0029 0.0036 0.0038 0.0029 0.0012
(0.1152) (0.1071) (0.1129) (0.0967) (0.1048) (0.1156) (0.0999)
YEAROPENEDi 1995.48 1999.90 1998.41 2000.63 1999.36 2000.18 2002.05
(5.4675) (4.4902) (4.7485) (2.7747) (4.9424) (2.5270) (1.8423)
INVOLVEi 0.0024 0.0002 0.0033 0.0012 0.0000 0.0044 0.0000
(0.0048) (0.0007) (0.0057)(0.0034
) (0.0001) (0.0084) (0.0003)
N 675 1420 4747 703 8001 967 321
40
Insider econometrics evidence: additional analysis
2. The strength of “Incentive” gauged by:a) STAKEi = average stake of employee
owners (monthly average of store i during the time period under study).
b) MEMBERi= proportion of workers who are COOP or GESPA members (monthly average of store i during the time period under study).
41
Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590) (0.1692) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974) (0.0615) (0.0874) (0.1390) (0.1024)
MARKETit 0.0034 0.0035 0.0029 0.0036 0.0038 0.0029 0.0012
(0.1152) (0.1071) (0.1129) (0.0967) (0.1048) (0.1156) (0.0999)
YEAROPENEDi 1995.48 1999.90 1998.41 2000.63 1999.36 2000.18 2002.05
(5.4675) (4.4902) (4.7485) (2.7747) (4.9424) (2.5270) (1.8423)
INVOLVEi 0.0024 0.0002 0.0033 0.0012 0.0000 0.0044 0.0000
(0.0048) (0.0007) (0.0057) (0.0034) (0.0001) (0.0084) (0.0003)
STAKEi 33295.79 2511.33 26270.68 865.63 1.40 23030.07 0.00
(8847.05)
(1010.40)
(8175.98)
(201.35) (23.56)
(10545.04) 0.00
MEMBERi 0.7590 0.6076 0.7289 0.5181 0.0000 0.6443 0.0000
(0.0739) (0.1352) (0.1186)(0.1532
) 0.0000 (0.1549) 0.0000
N 675 1420 4747 703 8001 967 321
42
Insider econometrics evidence: additional analysis
3. The extent of “skill/ability” measured by:• TRAININGi = proportion of scheduled hours
spent on training in general (crude).
43
Hypermarket
Supermarket
All stores City
COOP GESPA COOP GESPA Conventional COOP Conventional
lnQit 0.0021 0.0004 0.0042 0.0061 0.0053 0.0105 0.0020
(0.1663) (0.2345) (0.1590) (0.1692) (0.1749) (0.1826) (0.1162)
lnLit 0.0004 0.0016 0.0024 0.0039 0.0025 0.0069 0.0022
(0.0434) (0.0669) (0.0974) (0.0615) (0.0874) (0.1390) (0.1024)
MARKETit 0.0034 0.0035 0.0029 0.0036 0.0038 0.0029 0.0012
(0.1152) (0.1071) (0.1129) (0.0967) (0.1048) (0.1156) (0.0999)
YEAROPENEDi 1995.48 1999.90 1998.41 2000.63 1999.36 2000.18 2002.05
(5.4675) (4.4902) (4.7485) (2.7747) (4.9424) (2.5270) (1.8423)
INVOLVEi 0.0024 0.0002 0.0033 0.0012 0.0000 0.0044 0.0000
(0.0048) (0.0007) (0.0057) (0.0034) (0.0001) (0.0084) (0.0003)
STAKEi 33295.79 2511.33 26270.68 865.63 1.40 23030.07 0.00
(8847.05) (1010.40) (8175.98) (201.35) (23.56) (10545.04) 0.00
MEMBERi 0.7590 0.6076 0.7289 0.5181 0.0000 0.6443 0.0000
(0.0739) (0.1352) (0.1186) (0.1532) 0.0000 (0.1549) 0.0000
TRAININGi 0.0074 0.0081 0.0139 0.0103 0.0062 0.0108 0.0059
(0.0130) (0.0152) (0.0386)(0.0215
) (0.0534) (0.0415) (0.0129)
N 675 1420 4747 703 8001 967 321
44
it
it5
it4it3
it2it1it
Udummies monthdummies year
HPWS
YearopenedMarket
KlnLlnAlnQln
New model:
Insider econometrics evidence: additional analysis
(3)
45
Sales Growth and HRM for Hypermarket:
Dependent variable=lnQit
(i) (iii) (v) (ii)
lnLit 0.552***[6.57]
0.576***[6.53]
0.552***[6.57]
0.552***[6.57]
MARKETit 0.645***[9.92]
0.653***[9.51]
0.645***[9.92]
0.645***[9.92]
YEAROPENEDi 0.00014[1.61]
0.0002***[2.71]
0.0001[1.16]
0.00007[0.87]
INVOLVEi 0.558***[2.84]
STAKEi 6.2x10-8***[2.74]
MEMBERi 0.0037[1.01]
TRAININGi 0.255[1.15]
N 2070 1889 2070 2070
R-squared 0.852 0.847 0.852 0.852
46
Sales Growth and HRM for Supermarket (City only)
Dependent variable=lnQit
(i) (iii) (v) (ii)
lnLit 0.292**[2.03]
0.292**[2.03]
0.292**[2.03]
0.292**[2.03]
MARKETit 1.165***[5.90]
1.165***[5.90]
1.165***[5.90]
1.165***[5.90]
YEAROPENEDi -0.0002[-0.36]
-0.0002[-0.27]
0.00003[0.004]
-0.0002[-0.29]
INVOLVEi 0.151[0.48]
STAKEi 2.26x10-8
[0.29]
MEMBERi 0.0069[1.51]
TRAININGi -0.047[-0.67]
N 1195 1195 1195 1195
R-squared 0.311 0.311 0.311 0.311
47
Insider econometrics evidence: additional analysis
We also estimated a fully nested version of Eq. (3) with all four HPWP variables considered simultaneously.
The results turned out to be quite robust to the use of such a fully nested specification although the estimates are slightly less precise due to multicollinearily as expected.
48
RQ1: Is the legal structure important to explain firm productivity? H1: Cooperatives are more productive than others.
Hypermarket stores with cooperative ownership grow sales significantly faster than do Gespa stores.
City supermarket: coop ownership stores are more productive than conventionally owned stores.
However for Center supermarkets we find that conventional owned stores grow faster than both coops and Gespa.
Conclusions
49
RQ2: Which legal structure is nearest to the HPWS? H2: Cooperatives are more likely to perform as a
HPWS Consistence with those who argue for the existence
of powerful incentive mechanisms for coop members who work under institutional arrangements that differ from those facing workers in other firms: a large financial stake in the firm; substantial employee involvement; unusual job security; and working in firms with earnings differences that are
substantially more compressed.
Conclusions
50
Thank you!