The Mondragon Corporation, located in the Basque Country of Spain, has long been a standout example of a successful cooperative model that has not only withstood economic challenges but thrived through a combination of innovation, worker ownership, and regional economic autonomy.
Mondragon's transformation from a small cooperative in the 1950s to a global business conglomerate is both inspirational and instructive, especially when examining its relevance for other regions seeking economic renewal. This briefing note explores how the Mondragon model has been successfully adapted in different countries and regions, with a particular focus on how its principles could be applied to Wales to drive economic growth, prosperity, and social equity.
Mondragon's story begins in the 1950s1 in the Basque region, a period when many of Spain's industrial areas were facing severe economic decline. Founded by Father José María Arizmendiarrieta, Mondragon was built on the principle of worker ownership and cooperative governance, where employees collectively owned the businesses they worked for, participated in decision-making, and shared in the profits. Today, Mondragon is a federation of 92 cooperatives spanning multiple sectors2, including manufacturing, retail, finance, and education, with a workforce of more than 70,000 people.
Worker-owned co-operatives are often dismissed as inefficient or limited to niche sectors such as organic grocery stores and artisan bakeries. At a 2019 conference, economist Larry Summers argued that co-operatives are inherently slow-growing, stating: "When you put workers in charge of firms and you give them substantial control over the firms, the one thing you do not get is expansion."
Mondragon proves otherwise. In addition to manufacturing, its businesses include schools, a large grocery chain, a catering company and 7 technology R&D centres, generating over €11 billion in revenue in 2023. The collective enforces nearly 400 patents and employs 2,400 full-time researchers. With its subsidiaries in China, Germany, and Mexico, Mondragon competes globally, securing contracts with companies like General Electric and Blue Origin.
Far from being a small-scale experiment, Mondragon demonstrates that co-operatives can scale, innovate, and thrive in competitive markets.
The success of Mondragon has inspired similar initiatives worldwide, with varying degrees of success. These adaptations offer valuable insights into how the cooperative model can be implemented in different contexts, each with its own unique economic, political, and social conditions.
Inspired by Mondragon's model, the Evergreen Cooperatives were established in Cleveland with the goal of revitalising economically distressed communities through worker-owned businesses. Evergreen operates businesses in green energy, urban agriculture, and green laundry services, all of which are focused on providing stable jobs for low-income workers while providing their services to anchor institutions such as universities and hospitals.
Lesson for Wales: Like Cleveland, Wales has large anchor institutions, such as universities and hospitals, which could serve as stable customers for worker-owned businesses. Establishing a network of worker cooperatives catering to these institutions could provide a sustainable path for economic regeneration in Wales' more deprived areas.
The Emilia-Romagna region of Italy is known for its vibrant cooperative sector, which includes both worker and consumer cooperatives. There are around 4,000 cooperatives in the region that employ 250,000 people5. The region has developed a robust network of small- and medium-sized cooperatives that contribute significantly to its local economy.
Lesson for Wales: The success of Emilia-Romagna highlights the importance of government policies that support cooperative enterprises. Wales could consider developing policies similar to Italy's Marcora Law to facilitate worker buyouts and the creation of new cooperatives, particularly in industries facing decline.
Quebec's cooperative sector is well-established, led by the Desjardins Group in finance6 and extending into agriculture and retail.
Lesson for Wales: Wales, with its strong sense of community and shared identity, could benefit from fostering a culture of cooperation. Moreover, establishing a financial cooperative to support worker-owned businesses could provide the capital needed for growth and sustainability.
Integrating worker-owned cooperatives into the Welsh business landscape offers substantial commercial benefits. In times of economic uncertainty, employee ownership enhances financial resilience, boosts employee retention, and promotes long-term sustainability. Research indicates that worker-owned companies often outperform their non-worker-owned counterparts in areas such as productivity, pay, job stability, and firm survival7.
For Welsh SMEs, adopting cooperative principles could:
Moreover, there is a growing opportunity for professional services firms—including accountants, business advisors, and legal consultants—to support this transition. Specialist guidance in cooperative governance, tax structuring, and financing will be crucial to helping businesses successfully adopt this model.
Wales, with its challenges of economic inequality, rural poverty, and reliance on traditional industries, could benefit significantly from adopting elements of the Mondragon model. Several key factors make the Welsh context conducive to cooperative development:
The Welsh Government has long prioritised economic resilience, community wealth building, and sustainable development, as reflected in policies such as the Well-being of Future Generations Act (2015) and the Foundational Economy initiative. A Mondragon-style cooperative model aligns strongly with these objectives by promoting long-term local ownership, reducing economic leakage, and fostering regional self-sufficiency.
Additionally, cooperatives offer a mechanism for preserving key industries, particularly in communities facing economic decline. A structured approach to worker buyouts—similar to Italy's Marcora Law—could enable employees to take control of failing businesses, preventing job losses and ensuring local economic stability.
Cooperatives can also play a key role in Wales's decarbonisation strategy, particularly in the renewable energy sector. Community-owned wind and tidal energy projects could generate local jobs, reinvest profits into Welsh communities, and help achieve Net Zero targets by 2050.
For these reasons, a comprehensive cooperative development strategy should be a key pillar of Wales's economic policy, particularly in sectors such as energy, local manufacturing, and social care.
The Mondragon model offers valuable lessons for Wales in its quest for economic transformation. By fostering worker ownership, cooperative governance, and regional economic autonomy, Wales could create a more resilient and equitable economy. The successful adaptation of Mondragon's principles in regions such as Cleveland, Emilia-Romagna, and Quebec demonstrates that this model can thrive in diverse contexts, providing a compelling blueprint for Wales to follow. With the right policies, infrastructure, and cultural support, Wales could harness the power of cooperatives to revitalise its economy, reduce inequality, and ensure sustainable growth for future generations.
1 Mondragon Corporation
2 Mondragon: Annual Report 2023
3 The New Yorker: How Mondragon Became the World's Largest Co-op
4 Capital Institute: Evergreen Cooperatives Field Study
5 LowImpact.org: Why is the co-operative movement so successful in Emilia Romagna?
6 Desjardins: 2023 Social and Cooperative Responsibility Report
7 Ownership at Work: People Powered Growth Report
8 Better Social Capital: Investment into UK social impact exceeds £9 billion despite economic gloom