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D2 Cooperation with business in same field

A) Goal of the indicator

The Economy for the Common Good is based on systemic cooperation, cooperation among human beings and with nature. Solidarity with other businesses follows from this principle, it being a fundamental value for entrepreneurial action. The goal is to ensure viable behaviour which helps cushion the blow of crises through solidarity, not to generate them. We need each other. By perceiving the connectedness of everyone and the cooperation which follows from it, enterprises are better able to develop creativity, seize new possibilities and opportunities on the market and weather crises more effectively than they would in a competitive dog-eat-dog society. Companies are rewarded for cooperative behaviour and solidarity. By overcoming a competitive mindset, enterprises become a learning, developing and solidarity-based community.

B) Prompt questions

  • In which areas do we work together with other companies? In our own sector, in other sectors?
  • What does it mean for our company to deviate from prevailing competitiveness and think in terms of possible cooperation?
  • Which examples of solidarity-based action among competitors do we find in our own company? Where do we stand on the issue of cooperative crisis management?
  • Which possibilities for mutual financial support among competitors are practiced?
  • To what extent is financial and technical information disclosed and if so, in which form?
  • Which deliberations have been made concerning cooperative marketing with other companies?
  • In which areas is knowledge passed on to promote mutual learning?

C) Evaluation table

Sub-indicator

First Steps (10 %)

Advanced
(30 %)

Experienced
(60 %)

Exemplary

(100 %)

Disclosure of information + passing on of technology

 

Relevance: moderate

Disclosure of financial and technical information

Comprehensive disclosure of cost calculations, sources of supply and technology

In addition: passing on of individual technologies at no charge

Complete transparency and open-source principle

Transfer of personnel, passing on of contracts and financial resources; cooperative market participation

 

Relevance: high

Cooperation exclusively upon request

Cooperation in marginal areas of business

Cooperation in entire business field

Cooperation in entire business field + cooperative market participation
(sectoral round table) 

Cooperative marketing

 

Relevance: moderate

No discrediting of competitors

No mass-media advertising (TV, radio, billboards)

Co-establishment of a joint product information system (PIS)

Backing of sectoral initiative for ethical-cooperative marketing

The following actions are rewarded:

1) cooperative marketing, for ex. establishment of a joint production information system

2) disclosure of relevant information (for ex. cost calculations, supplier sources)

3) passing on of knowhow (open source principle)

4) transfer of employees in times of slow business

5) passing on of orders

6) support through cost-free loans

7) participation in cooperative crisis management (“sectoral round table”) 

D) Special aspects regarding the evaluation

This indicator applies for all sectors and sizes of companies; there is no further categorization.

When making an evaluation it is important to consider that the closer the sectoral connection of companies is and the closer they match each other in terms of products and prices, the harder it will be to implement these ideas. It makes a big difference whether a hotel sends guests to another hotel because her own is booked up (which could be regarded as good customer service) or whether a retailer sends his customers to the nearest similar retailer.

When it comes to passing on technology and knowhow, one must distinguish between technical knowhow and patents on the one hand, and soft skills on the other. It is easier to implement trainings in non-violent communication than to publish formulas for products or similar things. The latter can make a company very vulnerable, particularly during the transition from the prevailing business system to a culture with a genuine Common-Good orientation. This should be taken in account for the evaluation.

When it comes to passing orders on to other enterprises, commissions are sometimes paid to cover the incurred acquisition costs. Commissions of up to 10 % of the order volume in question are conceivable. One would get a lower rating for this than for passing on orders without charging a commission, however, because the former scenario would not result in the highest-quality producer/service provider getting the order.

Differentiation from other indicators

This indicator is connected to Indicator D1 (Ethical sales) – support of sectoral initiative for ethical-cooperative marketing.

E) Definitions + Background

In the current economic system, competition (in the sense of “mutually excluding goal attainment,” for ex. if a company increases its market shares, another company will inevitably have to relinquish some of its own) is one of the highest values. In the coalition contract of the German federal government (concluded in 2009) the word “Wettbewerb” (German for “competition”) appears 81 times, whereas the value of human dignity is mentioned a mere three times and the concept of solidarity only four times.[1]

The prevailing notion is that competition leads to higher performance, efficiency, innovation and prosperity. Numerous studies confirm the opposite, however. Working against each other is less efficient than cooperating. 87 % of the studies, almost 500 in number, which were evaluated in connection with this issue come to the conclusion that cooperation motivates people more strongly and results in higher performance than competition does (cf. KOHN, 205).

The strongest motivations in the framework of cooperation are appreciation, recognition and successful relationships, whereas in the framework of competition the strongest motivation is fear (cf. KOHN).

In the Economy for the Common Good, competition should by no means be eliminated. Everyone should be able to enter the market without any restriction and be equally free to exit it again. This would constitute an even more “liberal” market economy than the currently existing one, in which a) the enterprises which dominate the market use all kinds of tricks to keep start-ups from entering; and most of all b) banks and industrial operations categorized as “system-relevant” are not even allowed to exit the market. In the Economy for the Common Good, everyone would have the same freedom to enter and exit the market. The crucial difference would be that companies which exhibited aggressive, competitive behaviour aimed at damaging others or winning out over everyone else would be at a great disadvantage because of having points subtracted for negative criteria (for ex. hostile takeovers, dumping prices and blocking patents), thus running the risk of going bankrupt. In contrast,  those who helped each other and conducted themselves in a solidarity-based manner would be rewarded all the more. Whoever helped others would improve the results of his/her own Common Good Balance Sheet. 

F) Means for facilitating implementation

In general:

Every employee in a company should be offered the chance to acquire cooperation expertise and learn about the theoretical foundations of competition and cooperation. It would make sense to have a cooperation representative or, even better, a team in charge of cooperation and solidarity issues in the company, the sector, the supply chain and the economy as a whole.

Regarding individual aspects:

1) Advertising/marketing: the pioneer companies of the Economy for the Common Good could make a start and commission prototypes among the pioneers via the IT group and later the IT enterprises. These prototypes could be developed for all sectors and differentiated accordingly. It would even be conceivable to prepare a legal foundation; in any case, sectoral agreements could be drawn up.

2) Transparent cost calculations: all sources of supply and purchasing prices are to be disclosed.

3) Know-how: disclosure of source codes as well as technical foundations of innovations, including social technologies. Whoever was willing to train others by offering company tours and advanced in-sector trainings extending to such issues as nonviolent communication and sociocracy, would receive Common Good points.

4) Employees: depending on the order situation, friendly companies could let their employees work for each other. In this way, fellow businesses would also get to know each other better.

5) Orders: a simple example: imagine most of the hotels in a city are booked up. Instead of merely informing customers of this fact, the nearest hotel with a vacancy would be named. If companies did not want to hire additional employees on a short-term basis, they could always rest assured that a friendly company could take on the order instead or – to cite an example of “highest level” implementation – companies which could conceivably hire additional employees and grow would decide not to do so, because they had reached their “optimal size”. For this reason, they would pass additional orders on to fellow enterprises.

6) Financial means: in cases of seasonally fluctuating solvency, companies could support each other and balance out solvency over the year. In cases of continuously high solvency, interest-free loans could be granted to other enterprises or shareholders (without claiming entitlement to dividends), which would reduce their dependence on banks and stock exchanges as well as lowering capital costs.

7) Cooperative crisis management: when there is a slump on the market (decline in demand) or new suppliers suddenly appear (glut of supply), enterprises currently react by increasing competition. In the future they could gather together and sit down at a sectoral round table to search for mutual solutions such as: a) reduction in working hours of all employees, b) reduction in workplaces on all sides, c) solidarity-based vocational re-training measures for part of the workforce, d) solidarity-based specialization of enterprises, e) supported closure of enterprises, …

G) Good practices

1) Advertising/marketing: the Berlin bakery Märkisches Landbrot does not speak of competition but rather of bakery colleagues with whom they cooperate. They dispense with all types of classical advertising; marketing (about 3 % of their turnover) is limited to efforts to provide transparency.

2) Transparent cost calculations: Märkisches Landbrot participates in the product information system “Bio mit Gesicht,” providing transparent information and details on regional supply chains as well as on the origins of the ecological raw materials used. Information on suppliers is given and in this way, Märkisches Landbrot also discloses its sources of supply. The prices negotiated with farmers at the “Round Table for Grains” are posted on their website. The minutes of the “Round Table for Grains” are published here as well.

3) Knowhow: Open Source, free software and hardware, for ex. Firefox internet browser, Thunderbird email program, Ubuntu/Linux operating system, Wikipedia online encyclopaedia. Dr. Jonas, the developer of polio vaccinations, donated his patent to the UN. Rhomberg Bau GmbH in Vorarlberg released the patent for its wooden high-rises. The bakery Märkisches Landbrot puts its knowhow at the disposal of interested laypeople and others in their sector. This is done through company tours, annual bakers’ hikes together with other organic bakers on the task force “Good Bread,” at meetings of Demeter companies and of bakers who belong to “fair & regional,”  the business association of the March. Scientific findings are put at the disposal of others too. These include the results of a study conducted in collaboration with the Research Institute for Biological Agriculture ( (FibL) concerning methods for processing germings. Detailed methods for calculating the Product Carbon Footprint for the company’s own breads are made available as well; they have been published in a book. In its effort to exchange expertise and experience, Märkisches Landbrot welcomes guest bakers from other enterprises on a regular basis. In addition, their apprentices do stints at the confectioner’s enterprise on the same premises and vice versa. This gives the apprentices the opportunity to familiarize themselves with both the organic bakery and the organic confectioner.

4) Employees: in the Basque country, 21 enterprises in the NER Group (“Nuevo estilo de relaciones,” or “New relationship style” in English), teamed up in April 2012. They are assisting one another in Spain’s current financial crisis in diverse ways. The companies lend manpower to one another, avoiding the necessity to dismiss employees or putting themselves at financial risk as a result.

5) Orders: the six AAP architects process orders cooperatively. Märkisches Landbrot routinely recommends other ecological bakers in cases of transregional demand by customers whose businesses do not lie on their own routes. After all,  their entrepreneurial goal is to restrict themselves to regional distribution in Berlin-Brandenburg.

6) Financial means: some of the family businesses joined together by the “Blumau Manifest” practice liquidity equalization. The Waldviertler Schuhwerkstatt GEA sells lots of shoes in the winter, and Thoma Holz sells lots of wooden houses in the summer; each boosts the other’s liquidity during off-season. Märkisches Landbrot grants farmers from the fair&regional group interest-free loans in times of need, for ex. in cases of crop failure. In addition, low-interest loans have been granted to friendly enterprises such as the carter and the electrician. Another baker received an interest-free loan so he could purchase a baking oven.

7) Cooperative crisis management: at Mondragón, the world’s largest cooperative, part of the surpluses yielded in “fat years” are paid into a crisis fund which helps out companies in distress.

H) Bibliography/Links/Experts

Basic reading:

  • Alfie Kohn: “No Contest. The Case against Competition. Why we lose in our race to win,” Houghton Mifflin Company, Boston/New York.
  • Joachim Bauer: “Das Prinzip Menschlichkeit,” Hoffmann und Campe, Hamburg.
  • Joachim Bauer (2008): “Das kooperative Gen. Abschied vom Darwinismus,” Hoffmann und Campe, Hamburg.
  • Gerald Hüther (2009): “Was wir sind und was wir sein könnten,” S. Fischer, Frankfurt a. Main.
  • Richard Sennett (2012): “Zusammenarbeit: Was unsere Gesellschaft zusammenhält,” Carl Hanser Verlag, Munich

Books on solidarity-based economy:

  • Sven Giegold/Dagmar Embshoff (eds.) (2009): “Solidarische Ökonomie im globalisierten Kapitalismus,” VSA, Hamburg. 
  • Elisabeth Voß/Netz für Selbstverwaltung und Selbstorganisation (ed.) (2010): “Wegweiser Solidarische Ökonomie. Anders Wirtschaften ist möglich,” AG Spak, Wasserburg.

Links:

Editor: Eva Nagl-Pölzer consulting@nagl-poelzer.com (based on preliminary work by Christian Felber). Experts: Elisabeth Voß, Dagmar Embshoff, Sven Giegold, Paul Singer

N4: Hostile takeovers (minus 200 points)

The global market is dominated by a “dog-eat-dog” mentality. Stock companies, for example, can experience a “hostile takeover” against the will of a company’s executive and its employees. In the Economy for the Common Good, the strong should not devour the weak. If a takeover is to be made, both management and the workforce must give their consent. If this is not the case, the takeover will be viewed as hostile.

Regarding terminology also see: http://de.wikipedia.org/wiki/Feindliche_%C3%9Cbernahme

Editor: Eva Nagl-Pölzer + consulting@nagl-poelzer.com (based on the article by Christian Felber)

N5: Blocking patents (minus 100 points)

Many enterprises register patents for a lot more innovations than they have any commercial use for, their goal being to block research in the “vicinity” of their patent. The most blatant examples are automobile manufacturers whose patents for fuel-efficient or solar automobiles are valid but have remained unused for years, because this would introduce a change in paradigm from the fossil to the post-fossil era and destabilize existing power structures. Most cases are less spectacular; the patents in question merely give one company a competitive edge over the competition. The effects are blockage of innovation and detriment to other companies. We currently know of no methods which are able to detect blocking patents and for this reason we want to start out by raising awareness of this very uncooperative practice.

Regarding terminology also see: http://de.wikipedia.org/wiki/Sperrpatent

Editor: Eva Nagl-Pölzer + consulting@nagl-poelzer.com (based on the article by Christian Felber)

N6: Dumping prices (minus 200 points)

Some companies offer products on markets which are new for them at prices which lie below production costs so as to acquire market shares. This contradicts true-cost pricing and fair competition. Dumping prices can be detected by comparing the prices of identical products at various locations or urging companies to reveal their cost calculations.

Regarding terminology also see: http://de.wikipedia.org/wiki/Dumpingpreis

Editor: Eva Nagl-Pölzer + consulting@nagl-poelzer.com (based on the article by Christian Felber)