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SU Faculty Publish Study of Eroski in 'The CASE Journal'

SALISBURY, MD--- Eroski is a large grocery store chain in Spain that is employee-owned, employee-governed, employee-energized. Such enterprises have attracted tremendous attention since the 2008 Great Recession.

Mounting evidence has found that these companies are resilient, outperform their competitors, and reduce the wage and wealth gaps. In 2021, Harvard Business Review, in its Big Ideas Series, concluded the benefits of such enterprises “… are proven; unlike new policy proposals or novel ESG (Environmental, Social, and Governance) models, decades of evidence back them up.” Faculty in the Management Department of Salisbury University's Franklin P. Perdue School of Business have been teaching, researching and publishing about such enterprises domestically and internationally since 1991.

Eroski is an atypical example as it is a worker-consumer hybrid. As such both the workers and consumers share in its profits. governance, and progress. In addition, it has built communication channels and trust with multiple stakeholders. Working collaboratively during the COVID-19 pandemic, Eroski grew its online presence at a phenomenal rate off setting decreases of in store sales.  Can its alternative business model continue to stimulate company growth in a post-COVID-19 world?

That’s the question researchers from Salisbury University, Rutgers University and the Asian Institute of Management (Philippines) sought to present in their case study “Eroski, a Mondragon Co-Op: Overcoming Challenges and Facing a New One,” recently published in The CASE Journal.

Drs. Thomas Calo, professor of management in SU’s Franklin P. Perdue School of Business and Frank Shipper, SU professor emeritus of management, joined Drs. Olivier Roche of the Asian Institute (formerly of SU) and Adria Scharf of Rutgers in researching Eroski’s employee ownership model. Additionally, they found that it stressed customer service, healthy lifestyles, and democratic decision-making at the local and corporate levels. In 2020, Eroski attained €252 million in operating profits. This represented its best performance since the 2008 Great Recession.

Much of this success was based on Eroski’s building rapidly its online presence, making quick adjustments to customers changing shopping patterns, while increasing emphasis and access to healthy food, and adding more than 3,000 non-food products to make Eroski a one-stop online shop.

The company was able to do this due to its long-term approach that stressed creating a loyal customer base, collaborating with local suppliers, working with multinational supermarket co-operatives to increase buying power, signing franchising agreements with competitors to access capitol for expansion, and providing job security and personal development opportunities for Eroski’s members (as workers are referred to internally).

Eroski’s alternative approach to doing business has been questioned by some. Whereas the authors and other widely respected researchers and practitioners have concluded that the traditional hierarchical bureaucratic model that now dominates business is incapable of creating and developing enterprises capable of being competitive in a globally environment. Over a million copies of their prior publications are in print and have been accessed internationally. As such, their publications expose students, academics, and practitioners to what has become to be recognized as a better way to work.

The full article is available online.

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