Abstract Given the far-reaching impact of digitization on work organization and workers, calls for a more inclusive, participatory approach to technological innovation have become commonplace in recent years. This paper contributes to the debate on more participatory innovation regimes by looking beyond the boundaries of classical capitalist firms. It discusses how the cooperatives of the Mondragon Corporation (Mondragon), the world’s largest cooperative group, balance democratic governance with economic efficiency in their approach to technological innovation. It reconstructs a dual structure that integrates both democratic governance as well as a functional differentiation, with workers exercising democratic control over strategic decisions, while operational decisions are made by professional managers and technical experts. We will argue that this separation minimizes the costs of democratic deliberation while leveraging workers’ expertise in innovation processes, highlighting the importance of participatory bodies that help channel shop-floor knowledge towards decision-makers. We will show how this governance model promotes both the cooperatives‘ economic competitiveness and a high level of job security for the cooperative members, leading to a focus on incremental innovation pathways, continuous skill development, and reconciling a strong focus on technological innovation with social sustainability. The study is based on qualitative interviews conducted with representatives from different production cooperatives and research institutions within Mondragon, contrasting smaller, knowledge-intensive organizations with larger, more hierarchical ones. Our findings suggest that the Mondragon model successfully reconciles democratic governance and entrepreneurial efficiency, but also sheds light on convergences in both technology use and labor organization that result from the competitive pressures of capitalist markets and thus the limitations of alternative innovation regimes. Nevertheless, we find that democratic participation in technological governance can enhance innovation efficiency, economic performance and social sustainability.
Frey et al. (Mon,) studied this question.