An Ethical Revision of the Status Quo: The Modified Mondragon Corporation

As currently designed, the business corporation is primarily designed for one simple purpose: the enrichment of stockholders. Considering the immense size and wealth of many modern corporations, however, this prioritized focus has deleterious ethical consequences, including a burgeoning wealth gap between those who own or manage the corporation and employees. Several individuals and organizations are calling for a redesign of the business corporation to benefit those affected by business organizations, such as employees and communities. One such design, developed in the village of Mondragon in the Basque region of Spain, is employee-owned with extensive profit sharing, employee training, limits on executive compensation, and financial support for the surrounding community. To examine the differences between the status quo corporation and a modified Mondragon model, an analysis was performed of the financial, employee compensation, and stock information of a sample of corporations of the Fortune 500 under both systems. While aggregate financial position and profitability did not differ significantly between the two models for the tested corporations and time period, the employee compensation, financial commitment to training and education, community financial support, and ethics of the two models have profound differences.