Collective Capabilities for Organizational Democracy: The Case of Mutual Social Enterprises

Abstract Democratic forms of enterprise and economic governance are needed to help address urgent societal challenges where hierarchical decision‐making and governance approaches are clearly failing. There is insufficient understanding, however, of the capabilities needed by enterprises to implement and sustain organizational democracy in pressurized operational contexts. We focus on the role of collective capabilities, which arise from interactions between individuals to create collaboration and collective benefits. Interview evidence from 12 mutual social enterprises – organizations that trade with a social purpose – is used to explore the learning processes that underpin the generation of collective capabilities for organizational democracy. The analysis leads us to a theoretical model of collective capabilities development that responds to three fundamental areas of challenge: (i) Adaptive design of governance structures and processes , to balance ‘bottom‐up’ democracy with ‘top‐down’ stewardship control; (ii) Embedding, extending and revitalizing democracy , by supporting the voice, capabilities and confidence of workers and users to participate in collaborative governance; and (iii) Fostering deliberative learning , to navigate tensions and conflict between plural perspectives and achieve collective aims. In concluding, we reflect on some institutional and cultural barriers to organizational democracy and the case for more concerted policy action to realize its potential as a crucial component of economic democracy.