Policy makers around the world are seeking to harness the power of the social economy to deliver an alternative economic model: one that places sustainability and inclusion at its core. Yet, while they have a powerful collective impact, many social economy entities are content to operate locally. How can they scale up and go international?
From small co-operative to global powerhouse
Take, for instance, the MONDRAGON Corporation, a federation of worker co-operatives based in Spain’s Basque Country. From its founding by a young Catholic priest 80 years ago, MONDRAGON has grown to be among the ten largest companies in Spain. Now present on five continents with 70 000 people, MONDRAGON has sales in more than 150 countries with more than 100 production facilities in 37 countries. While it started as a school for professional skills development, it now encompasses different sectors in industry, distribution, and banking, in addition to its primary, secondary and professional schools. It even boasts its own university—the world’s first co-operative university – and 14 research and development centres that bring together over 2 000 researchers.
Broadening the offer
Social economy entities (co-operatives, social enterprises, etc.) often focus on a particular product or service, whether it is education, health, social care, agriculture or banking. One way to scale up activity is to broaden the offer into other sectors. Diversification can help achieve greater social impact through both the nature of the activities and growth, but also help boost resilience in a competitive international market. MONDRAGON’s story illustrates how diversification is possible.
Co-operatives can also scale up by joining together – either through formal mergers or by creating common tools like investment funds, consortia, and associations. An important and distinctive aspect of social economy entities is that this collaborative approach is not based on profit maximisation, but on social impact and the generation of a more equal and sustainable society. This is why co-operatives are recognised by the United Nations as a means of achieving the Sustainable Development Goals of the 2030 Agenda.
Reaping local benefits
While the mission of co-operatives is rooted in the local communities in which they were founded, venturing into international markets can often help them expand their impact locally as well in new countries. Co-operatives, like all
enterprises, must remain competitive to survive and continue benefiting their communities. Internationalisation helps them to improve their competitiveness and become more resilient.
MONDRAGON’s internationalisation process picked up pace in the last three decades. It wanted to restore co-operative employment and stability to the community where it started in the Basque Country, which, like other communities, was threatened by rapid globalisation. Through exports and imports as well as international investments and global sourcing, MONDRAGON managed to expand its reach around the world and now 75% of its sales are produced abroad, employing more than 10 000 people outside Spain.
And as a result, back home, Guipizkoa in the Basque Country has one of the lowest levels of inequality, substantially better than the Spanish and European averages.
Guipizkoa in the Basque Country has one of the lowest levels of inequality, substantially better than the Spanish and European averages.
To internationalise while remaining people-centred, MONDRAGON made use of conventional capital, such as investments and loans, like other businesses, to remain competitive on a global scale. It started out by first internationalising its industry division in countries with the same language in the Americas. Building a powerful industry network, it continued to internationalise activities through inter-cooperative funds to support investment.
All the while, its most important asset has been its people, with deep knowledge on the markets and a strong co-operative culture. MONDRAGON flourished using local knowledge and new technologies, as well as strong alliances with key customers around the world. All this growth was made possible by keeping an open mind about what went wrong to learn for the future and increase business innovation.
Internationalisation can have positive impacts on local employment, if done in the right way. Here, it is essential to distinguish internationalisation from offshoring. Offshoring involves closing a domestic operation to start a similar one in another country with lower labour costs, often at the expense of local jobs.
By contrast, MONDRAGON has pursued a model of “multi-localisation:” a creative, expansionist strategy that creates local jobs rather than destroying them. A comparative study among its own co-operatives confirmed these effects, showing that co-operatives with production plans abroad created many more jobs in their parent companies than those that did not.
All this growth was made possible by keeping an open mind about what went wrong to learn for the future and increase business innovation.
Helping the social economy to go global
While there are benefits of internationalisation for those seeking that path, it is not without its challenges. There are practical barriers, including cultural, language, and institutional differences. And these barriers can vary widely across sectors, businesses, and countries. There are also challenges in raising finance for expansion in these kinds of firms that don’t fit the template of traditional profit-orientated businesses that financiers are used to.
However, arguably the biggest challenge is in changing perceptions. Many policy makers, businesses and social entrepreneurs themselves still believe that co-operatives are incompatible with global expansion. Large private companies are not the only ones who can internationalise. We need to break down this mental barrier and encourage social economy entities to explore other markets and opportunities.
While the journey may not be easy, it is both exciting and enriching, benefiting not only the businesses but also the people—our most valuable assets. MONDRAGON is one inspiring example, but many social economy entities are increasing their international footprint successfully such, as CoopCycle from France, Equal Exchange from the United States or Loomio from New Zealand.
In the social economy – even more than in for-profit enterprises – there are many ways to succeed. Internationalisation can help them, and good policy can help get there faster.
Learn more about OECD work on internationalisation of social economy
This blog is also available in Spanish.
Iñigo Albizuri is a 6 years degree industrial engineer of business management. He has spent his all working life in different cooperatives of MONDRAGON Corporation around the world (Spain, Italy, México, United States and China).
He owns multiple patents as the result of his work.
He is also the president of MUNDUKIDE, the NGO of MONDRAGON cooperatives, that works setting up new cooperatives in developing countries like Mozambique, Colombia, Ethiopia or Brazil.
He is the president of CICOPA the worldwide organization of Industrial and Service Cooperatives. CICOPA gathers 51 members from 35 countries, who affiliate 65,000 enterprises employing 4 million people across the world. CICOPA is a sector organization of the International Cooperative Alliance (ICA) since 1947 and has three regional organizations: CECOP (CICOPA Europe), CICOPA Américas, and CICOPA Asia-Pacific.
Mr. Albizuri has also been honored with the prize “Fair Saturday” for his work in the cultural field.