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Blooming Together or Wilting Alone? Organizational Comparative Advantage, Network Externalities, and Mondragon and La Lega Cooperative Networks Open Access

This paper examines strategies developed by Mondragón Co-operative Corporation in the Basque Region of Spain, and La Lega co-operative network in Italy, to mitigate disadvantages of the typical co-operative organizational structure and market position but without losing its critical advantages and attractive features. A detailed institutional overview of these most prominent examples of successful co-operative clusters is presented. The paper argues that there are network externalities in co-op formation and survival, that imply that even if other barriers to entry are overcome and a co-op is established it may not survive, not because of intrinsic inefficiencies, but simply because of the lack of other co-operative entry, and to some extent also because of a lack of coordination among co-ops that do enter the market.

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