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An exploratory case study on the social viability of Alvarado Street Bakery’s employee-owned cooperative model

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An exploratory case study on the social viability of Alvarado Street Bakery’s employee-owned cooperative model

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Content Running head: SOCIAL VIABILITY OF ALVARADO STREET BAKERY

An Exploratory Case Study on the Social Viability of Alvarado Street
Bakery’s Employee-owned Cooperative Model
Alaina Jackson

University of Southern California

The degree conferral date is December 2015
The degree being conferred is the Doctorate of Policy, Planning, and Development
(POLICY, PLANNING, AND DEVELOPMENT)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 1
Dedication

This study is dedicated to my grandma, Jessie Green Hubbard, who loved me more than I’ll
probably ever know.

Acknowledgements
I would like to thank my parents, Frank W. Jackson Esq. and Dr. Frances Jackson, better known as Daddy
and Mommy. Thank you isn’t a big enough sentiment to convey my gratitude for your never-ending love,
support, and encouragement. I believe I can because you say I can. I would like to thank my husband,
Carlos Patricio Salcedo Maldonado. You loved me enough to walk away from all you ever knew so that I
might come home and go to school. Thank you for your love and your sacrifice. Finally, I’d like to thank
Fiona McCargo, who volunteered her copy-editing skills for nothing but a thank you and a smile.
I would also like to thank my committee:
Dr. Elizabeth Currid-Halkett
Dr. Tridib Banerjee
Dr. Grace Dyrness
Professor Adlai Wertman
Professor Leonard Mitchell
Professors, thank you for investing in me, teaching me, and guiding me. You inspire me to never stop
asking questions, and to never stop seeking answers.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 2
Contents
Dedication ..................................................................................................................................................... 1
Acknowledgements ....................................................................................................................................... 1
Abstract ......................................................................................................................................................... 6
Chapter 1: Introduction ................................................................................................................................. 7
Theoretical Framework: Ecological Paradigm ....................................................................................... 11
Ecological governance is collaborative governance. .......................................................................... 13
Need for Study ........................................................................................................................................ 19
Approaching globalization from the perspective of the ecological paradigm. ................................... 19
Complexity misinterpreted as progress and the hierarchical culture of capitalism. ............................ 22
Conclusion. ......................................................................................................................................... 23
Research Questions ................................................................................................................................. 25
Research Purpose .................................................................................................................................... 26
Chapter 2: Literature Review ...................................................................................................................... 28
Introduction ............................................................................................................................................. 28
Restructured manufacturing sector: from brawn to brains. ................................................................. 28
Jobless growth in the new economy. .................................................................................................. 29
The new economy is a global economy. ............................................................................................. 30
A Local Approach to Economic Development ....................................................................................... 33
Why a local approach is still needed. .................................................................................................. 33
The competitive advantage in a global economy lies in local assets. ................................................. 34
Developing a local approach. .............................................................................................................. 35
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 3
Globalization from Below: Social Enterprises as an Alternative to Shareholder Primacy in a Global
Economy ................................................................................................................................................. 38
Social businesses and social entrepreneurship. ................................................................................... 38
Minimal requirements for successful social enterprise business models. ........................................... 39
Cooperatives as a social enterprise business model. ........................................................................... 41
Cooperatives as a placed-based strategy. ............................................................................................ 42
How worker-owned cooperatives function. ........................................................................................ 43
Proponents make a case for the worker-owned cooperative model. ................................................... 45
Mondragon: An International Cooperative Success Story ...................................................................... 47
Organizational design. ........................................................................................................................ 47
Financing............................................................................................................................................. 49
Conclusion .............................................................................................................................................. 50
Chapter 3: Methods ..................................................................................................................................... 53
Research Design...................................................................................................................................... 53
Case study. .......................................................................................................................................... 53
Interviews. ........................................................................................................................................... 53
Surveys. ............................................................................................................................................... 54
Why studying Alvarado is important. ................................................................................................. 55
Case Description ..................................................................................................................................... 56
Alvarado’s origins. .............................................................................................................................. 56
Alvarado as a worker-owned cooperative. .......................................................................................... 57
Alvarado’s management structure. ..................................................................................................... 60
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 4
Alvarado’s governance structure. ....................................................................................................... 63
Chapter 4: Findings ..................................................................................................................................... 66
Research Question 1: How does Alvarado define success? .................................................................... 67
Success as defined by profits. ............................................................................................................. 67
Success as defined by safety. .............................................................................................................. 72
Success as defined by health and wellness. ........................................................................................ 76
Research Question 2: What socio-cultural attributes are required to sustain the areas of success? Where
are those attributes reflected within their organization, and how are they nurtured? ............................. 78
Accountability. .................................................................................................................................... 78
Trust. ................................................................................................................................................... 83
Empowerment. .................................................................................................................................... 84
Cultural compatibility. ........................................................................................................................ 89
Chapter 5: Conclusion ................................................................................................................................. 92
Summary of Findings .............................................................................................................................. 92
Comparison to Ecological Paradigm and Collaborative Governance Model ......................................... 95
Ecological paradigm 3 orientations. .................................................................................................... 95
Characteristics of ecological paradigm. .............................................................................................. 97
Ecological governance. ....................................................................................................................... 98
Implications for Future Practice and Future Research .......................................................................... 102
Implications for future practice and policy. ...................................................................................... 102
Implications for future research. ....................................................................................................... 113
Lessons Learned.................................................................................................................................... 114
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 5
Limitations ............................................................................................................................................ 115
Limitations with the project’s design. ............................................................................................... 115
Limitations with the sample. ............................................................................................................. 116
Conclusion ................................................................................................................................................ 117
References ................................................................................................................................................. 120
Appendices ................................................................................................................................................ 126
Appendix 1: Descriptive Statistics ........................................................................................................ 126
Appendix 2: IRB Approval ................................................................................................................... 127
Appendix 3: Worker-owner Surveys .................................................................................................... 128
English worker-owner survey. .......................................................................................................... 128
Spanish worker-owner survey. .......................................................................................................... 131
Appendix 4: Semi-standard Interview Questions ................................................................................. 135

Table of Figures
Figure 1: ASB Sign (Alvarado Street Bakery, 2015) .................................................................................. 56
Figure 2: ASB Company Photo (Alvarado Street Bakery, 2015) ............................................................... 58
Figure 3: ASB Environmental Award (Alvarado Street Bakery, 2015) ..................................................... 63
Figure 4: Petaluma, CA Figure 5: Petaluma in reference to Northern California ................................. 66

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 6
Abstract
Alvarado Street Bakery is an organic sprouted wheat wholesale bakery that has been in
business over 35 years, annually grosses over $30 million dollars, and is run as an employee-
owned cooperative. The purpose of this case study is to understand how Alvarado defines
success, and determine the socio-cultural attributes necessary to support its success; to
understand how Alvarado’s organizational structure nurtures the socio-culture attributes
necessary to support its success; to understand how Alvarado has engaged the economically
disenfranchised into a successful cooperative business; and to consider how these lessons learned
might be useful to practitioners. The research questions are: 1) How does Alvarado define
success? 2) What socio-cultural attributes are required to sustain their success? 3) Where are
those attributes reflected within Alvarado’s organization, and how are they nurtured? This is an
exploratory and descriptive single-case qualitative case study, reliant upon semi-structured
interviews, an unsolicited written survey, and descriptive statistics. My project yielded three
findings. First, Alvarado measures its success by social metrics in addition to financial metrics.
Those social indicators are improving safety, creating an exploitation-free product, and
improving the health and wellness of its membership. Second, the social capital necessary to
support its success are accountability, transparency, trust, empowerment, and cultural
compatibility. Third, various governance and management tools have been implemented to
nurture the social capital required to be successful, including opportunities for effective
communication, a democratic and collaborative governance structure, a hierarchical management
structure, monthly workgroup and quarterly membership meetings, and a coworker vetting
process.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 7
Chapter 1: Introduction
Across the United States, the economically disenfranchised are being excluded as their
cities’ continue to struggle with the transition from manufacturing-based economies of the 19
th

and 20
th
centuries to the high-tech and service economies of today. Cities have adopted various
models to usher communities through this shift in economic bases. Examples include the new
economy model, which consisted of generalized upgrades of jobs and wages, and which was led
by the high-tech sector, and the global cities model, which consisted of job and wage
polarization, and which was led by producer services. However, these economic development
models rely heavily on inter-city competition and are not inclusive of all types of human capital.
These approaches to economic development intend to attract large employers to a community,
via tax relief and infrastructure accommodations (Sperry, Seekins, & Brusin, 2001). However,
doing so can turn out to be a false development strategy, leading to negative long-term impacts
on local economic stability. Heavy dependence on a few large employers may have severe
impacts should an employer relocate or close, especially for those who are already on the fringes
of their local economies due to a lack of education or job skills, and prejudices associated with
race, ethnicity, gender, and nationality. These economic development strategies are not the only
viable responses to guide communities through their transition into a globally competitive
environment.
There are alternative, local asset-based strategies, which encourage social enterprise
growth, and which recognize diverse forms of capital such as human and social capitals, and
which seek to incorporate all community members into the economic development process.
Popular smokestack chasing economic development models do not place the same value on these
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 8
types of community assets, and do not traditionally include roles for community mobilization
and community building.
Having grown up in the Rust Belt, a region well known for its economic and industrial
fall from grace, this study is of personal interest to me. I have witnessed the steady decline in the
economic standing of states collectively known as the Rust Belt. Since the early 1980s, there has
been a high rate of steel and automotive capital flight from the region. In its place, the service
industry has invested in select cities throughout the region. However, the job creation generated
from that growth has not stemmed the job loss from the shrinking automotive industry, but and
has contributed to a growing income disparity in the region (Doussard, Peck, & Theodore, 2009).
As a region, the Rust Belt has been largely excluded from the transition from brawn (steel and
automotive related manufacturing) to brains (high-tech manufacturing). The result of this
industrial restructuring has been described as painful— “…dominant mode of urban-economic
development and the beginning of a painful shift toward a new pattern of unequal and unstable
growth” (Doussard et al., 2009, 185). As the trend toward high-tech manufacturing continues, the
Rust Belt states must find a way to connect their local economies to this larger industrial
movement. By not doing so, the Rust Belt will become increasingly economically isolated and
depressed. Rust Belt cities have been experiencing steady economic decline, in the form of
manufacturing industry shrinkage, high unemployment relative to the rest of the country, capital
divestment, and population flights since the 1980s. As a result, the region has become less
economically competitive and less influential in today’s global economy. While manufacturing
began the long-run decline in employment and production, the service industry began
experiencing what Doussard, Peck, and Theodore described as secular growth (Doussard et al.,
2009). However, the service industry’s growth neither occurred at the same rate as
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 9
manufacturing’s decline, nor in the same sector as the shrinking employment base (Doussard et
al., 2009).
Johnson (2000), Lichtenstein (2007), and Walters (2010) agreed on the Rust Belt’s
location as the primary reason for its past corporate attractiveness. The states’ location near the
center of the country strengthened their value as regional and coastal distribution centers, for
example. To be from a city like Detroit which, in addition to having an advantageous locale
(Detroit is in close proximity to water transportation and railroads), also had natural and
infrastructural capital which served to elevate the city’s attractiveness, and contributed to what
eventually became automotive and steel industrial clusters throughout the region. Walters stated
that these assets were augmented by a strategic combination of low-cost access to nearby
hardwood forests and mineral deposits that fueled the growth of carriage-makers, tool works, and
other manufacturing enterprises (Walters, 2010), and “…not just a happy, accidental result of the
fact that many of this industry’s founding figures had grown up or begun careers nearby…”
(Walters, 2010, p. 19). At the time of Walters’ research, Detroit’s “…median household income,
once 29 percent above the national figure, is now 44 percent below it; its poverty and crime rates
are over three times the nation’s” (Walters, 2010, p. 130). Inasmuch as Detroit tends to be
portrayed as the poster child for shrinking cities experiencing economic decline, it has not
suffered alone. Walters found that “Since 1950, St. Louis, Pittsburgh, Buffalo, and Cleveland all
have suffered population declines greater than or equal to Detroit’s 50 percent; Newark,
Cincinnati, Baltimore, and Philadelphia have lost roughly a third of their populations” (Walters,
2010, p. 130).
With such dramatic stories of loss, promoting the idea of possibilities can be a difficult
task among those left behind. Pessimism is understandably rampant, and difficult to counter. As
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 10
a longtime resident of Detroit, I empathize with the growing spirit of pessimism, but I also see
beneath it. Underneath that layer of pessimism is an indomitable blue collar spirit, which
motivates me to regularly seek out opportunities for positive change. As such, it is important to
note, that the recent decades of Rust Belt deindustrialization, despite its stark consequences has
not signaled the end of the Rust Belt’s industrial economy. Rather, it has triggered what
Doussard et al. (2009) and Walters (2010) optimistically described as a new cycle of economic
transformation. If their optimism is well-founded, then there is potential for the Rust Belt to find
success amid its history of deindustrialization. The present challenge is to harness that optimism
at the local level, to determine the best direction for development and for success. Social
enterprises, such as worker-owned cooperatives like Alvarado Street Bakery, have the potential
to be partners in Detroit’s economic transformation. Such endeavors exhibit how harnessing
social capital, leveraging social assets against technical expertise, and reinvesting in one’s local
community may support a living wage business model.
Alvarado Street Bakery is an organic sprouted wheat wholesale bakery that has been in
business over 35 years, and annually grosses over $30 million dollars. Named #23 (out of 100),
in October 2013, by FORTUNE Magazine in its annual Best Small & Medium Workplaces in the
USA (Alvarado Street Bakery, 2015), it is a place where even production workers can make
$60,000 a year (Great Place To Work, 2015). Its mission is to
…give superior service in providing the finest quality baked goods to its valued
customers nationwide by utilizing a worker owned and managed cooperative business
structure and to strive to use whole grain and organic ingredients, wherever possible, to
support sustainable agricultural practices and healthy living. (Alvarado Street Bakery,
2015)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 11
The Alvarado Street Bakery, using a worker-owned cooperative business model, has found a
way to contribute towards its local economy, by investing in local residents that are typically left
out of their local economies. Alvarado Street Bakery’s cooperative model is an example of an
inclusive local asset-based strategy from which urban planners and academicians may learn.
In this paper, I describe how Alvarado, as an employee-owned cooperative, defines and
measures its success, and the social capital Alvarado’s worker-owners believe is necessary to be
successful. I then reflect on the extent to which Alvarado’s processes and policies nurture what
its worker-owners define to be the requisite social capital. I also reflect on the integral role social
capital plays in cooperative economic ventures, such as social enterprises. Based on those results,
I argue that worker-owned cooperatives may be used to provide living wages for economically
disenfranchised populations, and I conclude that deliberately supporting social enterprises may
have transformative results for communities. Finally, I assert that communities under economic
duress, who may be ill-equipped to compete for large externally funded development projects,
and who have a sizeable semi-skilled and skilled labor population, should consider deliberately
nurturing social capital within their community as part of a larger plan to support employee-
owned social enterprise growth.
Theoretical Framework: Ecological Paradigm
The Bruntdland Commission, as quoted by Mirchandani and Ikerd, defined sustainability as
“development that meets the needs of the present without compromising the ability of future
generations to meet their own needs” (Mirchandani & Ikerd, 2008, p. 40). Mirchandani and Ikerd
are not alone is their assessment of industrialism’s strain on the world’s resources, or in their
belief in the need for increased corporate responsibility and accountability in their management
of the global economy’s systems— “…corporations that currently determine the flow of global
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 12
economic resources to advance into a position of sustainable post-industrial prosperity”
(Mirchandani & Ikerd, 2008, p. 40). To the extent that sustainable development is a goal, it will
need to be proactively pursued beyond the pollution prevention and product stewardship methods
characterized by post-industrial organizations of the late 20
th
Century. A theoretical paradigm
which supports systems, relationships, and tools that are compatible with sustainability goals,
should also be pursued. The Ecological Paradigm provides a framework through which one
might understand and evaluate social business models and their socio-economic goals. Several
authors (Cleveland, 2000; Landau, 1991; Robertson, 2006; Vigoda, 2002) described the
Ecological Paradigm, as the appropriate system of values upon which to base theories and
practices intended to create sustainable organizations, maintain sustainable relationships, and
achieve sustainable goals. When describing the Ecological Paradigm, Robertson (2006) used the
following 3 orientations:
 An emphasis on interconnectedness, which recognizes that any part of the system can
only be understood in terms of its relationship with the other parts of that system
 A self-organizing capacity which acknowledges that guidelines for healthy functioning
are intrinsic to the system, and explains that ecological systems are self- managing, self-
regulating, and dynamic
 Every organization is intended to “…add value to the larger system(s) of which it is a
part, while maintaining its own health and vitality” (Robertson, 2006, p. 10)
Such a model places greater emphasis on synthesis, and on the pursuit of purposeful and
empowering relationships, instead of on consumption and patriarchal relationships. Ken Wilber
(Wilber, 2001) characterized this model by its promotion of:
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 13
 Connectivism— The result of collectivism merging with individualism, connectivism is
the starting premise that everything is connected. Therein is the acknowledgement that
one city’s economic downfall affects a region’s economic stability, and likely puts
pressure on nearby adjacent cities. While this concept does not reject the usefulness of
competition, it acknowledges the cost of zero-sum competition where even the winners
are affected by the loser’s losses. A company may move from city A to city B, and
instigate a migration from city A to city B, but what if city B does not have enough
housing and jobs to absorb the influx? The rational model, when measuring the success
of such a transaction, would stop at city A’s loss and city B’s gain of a company. The
Ecological model goes further by looking at the entire transaction, and assessing total
impact.
 Integralism— the integration of religion and scientism, integralism validates the roles
both religion and science play in our cultures and systems (i.e. political, economic, social,
etc.), and in their ability to influence decisions and outcomes within those systems
 Creativity— acknowledging that the use and usefulness of both intuition and rationality
allows for the creation of systems of learning and adaptability, instead of solely investing
in the creation of top-down and rigid systems and organizations
 Partnership— combining egalitarian and patriarchal systems, to create partnerships,
acknowledges the different roles groups may play within a community, without the
prospect of domination
Ecological governance is collaborative governance. Ott (as cited in Vigoda, 2002)
questioned the legitimacy and usefulness of today’s traditional bureaucracy in responding to the
non-traditional challenges now associated with globalization and a global economy— “…the
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 14
questions now are not whether government bureaucracies should be reformed but whether it is
possible to govern through traditional bureaucratic government structures…” (Vigoda, 2002, p.
537). Norberg-Hodge’s (1996), Robertson (2006), and Vigoda (2002) believed governance
reform to be a necessary evolutionary step towards succeeding in this new economy. They
believed that this reform would result in a governance model that is flexible, responsive,
collaborative, and owned by citizens, what Vigoda described as a collaborative governance
model. Within an Ecological Paradigm, governance models will become increasingly
collaborative and participatory, and less prescriptive, self-absorbed, and hierarchical— “In an
ecological governance system, the purpose of every organization…is to add value to the larger
system(s) of which it is a part, while maintaining its own health and vitality” (Robertson, 2006,
p. 9). Regions like the Rust Belt have a history of local governments pandering to big business,
in the form of smokestack chasing, which has not been the key to sustained local and/or regional
success. By subscribing to such methods, other local resources like small businesses and
typically disenfranchised residents are not being used to their full potential and, as such, are not
adding value to the larger system (their local economy). The key elements of collaborative
governance can be divided into design, process, and relationship characteristics, and they are:
 Consists of uncentralized hierarchy (design)
 Consists of cellular networks (design)
 Engages in a subsidiary decision-making process (process)
 Relies on collaboration and collaborative networks (process)
 Relies on cooperation among its members (relationships)

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 15
Uncentralized hierarchy. Within an ecological paradigm, collaborative governance models
consist of uncentralized hierarchies. The opposite of centralization, Landau described
uncentralized hierarchies as self-organizing, self-regulating, adaptive, and allowing for creativity
and innovation (Landau, 1991). Cleveland defined uncentralized organizations as “…looser
systems— featuring personal initiative, voluntary cooperation, joint ventures, committee work,
and networking” (Cleveland, 2000, p. 295). An alternative to traditional bureaucratic hierarchical
systems, uncentralized systems are flat, and “because there is no center of authority, they may
appear to be disordered” stated Chisholm (as cited in Landau, 1991, p. 317). However, complex
social systems are not successful if they are too centralized. So, Cleveland (2000) suggested
mutually agreed upon standards as the necessary tool for circumventing disorder. Efforts to reach
such consensus are especially important when operating within a flat system characterized by
organized chaos, because having no central organizing authority, means that “each citizen is
partly in charge” (Cleveland, 2000, p. 295). When authority and decision making are shared
among members, having mutually agreed upon standards and a well-defined sense of purpose
ensure that each member moves the organization forward, and in the same direction.
Cellular networks. Collaborative governance models also consist of networks. Booher and
Innes agreed on the potential capability of networks in moving organizations forward, based on
their ability to create environments which breed innovation— “Probably the most important
aspect of network power is the ability of networked agents to improve the choices available to all
of them as a result of collectively developed innovative ideas” (Booher & Innes, 2002, p. 226).
Networks replace hierarchies, within the collaborative governance model. Robertson defined
cellular organizations as “…composed of cells, [and] which can be thought of as individuals,
groups, or departments, or even whole organizations participating in an interorganizational
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 16
network…” (Robertson, 2006, p. 9). Within the cellular network model, cells are responsible for
diverse functions, and have authority over their own tasks, but not over people and not over other
cells (Robertson, 2006, p. 13). This differs from a mechanistic perspective which “…tends to
assume that a centralized control mechanism either internal or external to the system is required
to insure effective system performance” (Robertson, 2006, p. 10).
Subsidiary decision-making process. In a cellular network model, decision making authority
over certain tasks is given by the members to explicit cells within the organization. For example,
cells within the cellular network could delegate decision making authority over certain tasks, to a
policy center cell, whose job would be to look out for system-wide functions, such as strategic
planning or budget allocation. To the extent that a cell is autonomous, it can make decisions on
its own, but it is not in control. Rather, it is given subsidiary decision-making authority over
certain decisions on behalf of the organization. As the scope or the scale of an issue expands, so
should the decision-making network. As the decisions get bigger and broader, the process
becomes more inclusive, with representatives from as many cells as necessary, such that at every
incrementally higher level, the decision-making process is being synthesized.
Collaboration and collaborative networks. Collaboration is an essential process for
achieving success within any uncentralized network because it is the process by which
individuals and/or organizations can address and hopefully resolve problems which are bigger
than themselves (Milward & Provan, 2006, p. 8). In order for organizations to adopt shared
ownership of problems, and willingly uncentralize their authority to create and implement
solutions, there must be collaboration. As a process, Vigoda explained that collaboration entails,
“…negotiation, participation, cooperation, free and unlimited flow of information, innovation,
agreements based on compromises and mutual understanding, and a more equitable distribution
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 17
and redistribution of power and resources” (Vigoda, 2002, p. 529). Sink concurred and stated
that
…building cooperation involves establishing mutuality of interdependence. Unless most of
the stakeholders perceive benefit to be gained from cooperation within a coalitional structure,
they likely will not participate. This perceived advantage must be greater than the ability of
individual stakeholders, particularly the most powerful, to control the issue unilaterally.
(Sink, 1991, p. 1181)
Trust and reciprocity are so essential to network development, that Milward and Provan
(Milward & Provan, 2006, p. 10) described them as the currency within any network, and stated
that “…the more trust and reciprocity in the network, the greater the ability of the network to
accomplish shared goals”. As such, the collaborative process is more likely to work in a network
where participants invest in trust, reciprocity, and fairness. This investment frees members to
focus on the tasks within their cell, and trust their peers to do the same. It also assumes that
information is being shared and fairly distributed, which allows members a higher level of
participation when negotiating for change within the organization.
Relies on cooperation. Cooperation among members is essential to ensure the progress of an
uncentralized system. Lindblom (as cited by Cleveland, 2000, p.296) described cooperation as
…a generally understood environment of moral rules, [and] norms,… people watch each
other, then modify their own behavior just enough to accommodate the differing purposes of
others, but not so much that the mutual adjusters lose sight of where they themselves want to
go. (Cleveland, 2000, p. 296)
This definition recognizes that even in traditional western models of organizational hierarchy and
decision-making, most organizational decisions are not made as a result of people giving and
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 18
receiving orders for every task, but as a result of cooperation and mutual adjustment. This level
of mutual aid requires people to not only understand their own role and be well positioned to
fulfill that role, but to simultaneously understand how their actions impact the success of others,
and fit into the overall organization. This level of understanding and commitment to the success
of others requires continuous adjustments of priorities and resources. Just as people are better
able to collaborate when they are given access to good information, they are also better equipped
to make mutual adjustments. By facilitating the ease of information flow through collaborative
processes, people are better equipped to complete tasks and make decisions on behalf of
themselves, while taking others into consideration.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 19
Need for Study
Approaching globalization from the perspective of the ecological paradigm. In
economic terms, Moghadam (2007) defined globalization as the outward-oriented and
transnational nature of economic activity, the importance of national competiveness, and the
increasing integration of markets, all of which have employment, price, and wage implications.
More than just the culmination of international economic activities, globalization is also a
process. Pizzarro, Wei, and Banerjee defined the process of globalization as “…a condition of
flux rather than stasis. It replaces certainty, stability, order, and equilibrium with uncertainty,
instability, disorder, and disequilibrium. It is a process that can be described in terms of flows,
networks, capacities, distributions, diffusions, and movements” (Pizarro, Wei, & Banerjee, 2003,
p. 113). What happens when a local economy is left out of this process? What options are there
for a city to redefine its role in this process? Globalization has a paradoxical impact on cities, in
that it has the potential to both strengthen and weaken them. If a city has something of value to
exchange in the global market, it also has an economic window into the rest of the world. If that
local economy is large enough, or their share of the global market is large enough, then that city
also has greater potential to preserve its identity, and to exert its influence on the global
economy. Cities without the sufficient wherewithal to play such an influential role globally are
generally reduced to the economic role of consumer as their gateway into the global economy,
which can be a weak and costly position. Small to medium size cities in the United States with
smaller and less diverse local economies, or with local economies which do not fulfill a niche
demand in the global market, have a comparatively more difficult time benefiting from the
profitable possibilities of globalization. A local economy which encourages productive
participation or which has opportunities for productive participation to occur at every level, and
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 20
which does not resign itself to the passive role of consumer, has a better chance of enjoying
globalization’s economic benefits. Is it possible for communities and/or businesses to
simultaneously advocate for and subscribe to principles of sustainability and pursue financial
success in the global economy? Several authors (Haughton, 1999; Hawken, 2004; Williams,
2007) agreed that sustainable development, even in the midst of pursuing success amid
globalization, would best be realized in a system of collaborative governance.
Researchers such as Stiglitz and Norberg-Hodge encouraged others to look beyond the
range of possible impacts from globalization and pay closer attention to how globalization is
being managed— Stiglitz stated, “The problem is…with how it has been managed” (Stiglitz,
2007). The model of economic development in the United States is largely based on tax and non-
tax incentives intended to directly benefit firms, thereby attracting large employers to a
community. Tax incentives include tax increment financing, and tax relief accommodations in
the form of corporate income tax exemptions, sales tax exemptions and credits, and job credits
(Sperry et al., 2001). Non-tax incentives include business grants, loans and loan guarantees, and
infrastructure accommodations such as road and utility construction (Peters & Fisher, 2004).
However, this model sometimes promotes a false development strategy, leading to negative long-
term impacts on local economic stability. There is consensus among some authors, such as
Mayer and Knox (2009), Norberg-Hodge (1996), Peters and Fisher (2004), and Williams (2007)
that these strategies have had a mixed track record in terms of providing the anticipated
abundance of well-paying jobs, and in some cases they may have lessened rather than improved
the chances for long-term economic stability.
In the current western capitalist world, classical economists base theories and models on
the assumption that competition always keeps prices in balance. Free market forces, if
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left unchecked by regulatory agencies, will eventually bring equilibrium and equity to all
the players, they argue. This assumption has so permeated our entire culture that it is hard
to convince ourselves that competition may, in the last analysis, not be good for us at all;
in fact, it may be our downfall. (Williams, 2007, p. 60)
Norberg-Hodge also expressed concern about the impact of globalization’s mismanagement on
small businesses:
The free flow of capital has been a necessary ingredient in the growth of transnational
corporations. Their ability to shift profits, operating costs, and investment capital to and
from all their far-flung operations enables them to operate anywhere in the world and to
hold sovereign nations hostage by threatening to pack up, leave, and take their jobs with
them. Governments are thus forced into competition with one another for the favors of
these corporate vagabonds and try to lure them with low labor costs, lax environmental
regulations, and substantial subsidies. Small local businesses, given no such subsidies,
cannot hope to survive this unfair competition. (Norberg-Hodge, 1996, p. 400)
As the negative impacts of globalization radiate throughout all levels of the economy, those
communities struggling to stay afloat will increasingly turn inward for solutions and, based on
some authors’ assertion. Economic localization presents an alternative to corporate led
globalization. Economic localization strategies “…should entail an adaptation to cultural and
biological diversity; therefore no single blueprint would be appropriate everywhere. The range of
possibilities for local grass-roots efforts is as diverse as the locales in which they would take
place” (Norberg-Hodge, 1996, p. 404). When formulating a local level response which addresses
the impacts of globalization, two particular aspects of neoliberal economics should be addressed:
complexity misinterpreted as progress, and the hierarchical culture of capitalism. These two
aspects, in particular, challenge the idea of a local response and the possibility of a local solution.

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Complexity misinterpreted as progress and the hierarchical culture of capitalism.
Increasing complexities in our political and economic systems are interpreted as progress. Clark
challenged readers to rethink the concept of progress by challenging Westernization’s fascination
with complexity, as a sign of progress— we inherently value those things which are more
complex (Clark, 1995, p. 78). However, Clark reminded us that “…there is no linear
evolutionary trend toward complexity…” (Clark, 1995, p. 79). Instead, some things adapt by
becoming less complex, and “…the real meaning of human progress… means moving to the next
stage of adaptation. It implies neither complexity nor linear accumulation from the past” (Clark,
1995, p. 80). When applied to the reclamation of cities, this means that smaller institutions and
organizations with less bureaucracy, in some ways, ought to be better positioned for adaptability
than larger, complex organizations— “…complex institutions…do not seem readily adaptable to
future needs…Their massive infrastructure is too difficult to change” (Clark, 1995, p. 80). Local
systems, on the other hand, especially if structured as uncentralized cellular networks are more
easily adaptable because each cell is empowered with authority over their own tasks, after having
collaboratively defined a purpose for the overall network.
Despite Clark’s description of the potential advantages associated with a local approach
to managing globalization, Norberg-Hodge noted that there is still little widespread conviction
regarding the possibilities of localized economic solutions. Already accustomed to the elongated
hierarchies of our national and international bureaucracies, Norberg-Hodge noted that “many
people seem to find it difficult to even imagine a shift toward a more local economy” (Norberg-
Hodge, 1996, p. 393), and so they wait for international agencies and national governments to
author treaties and trade agreements for their benefit. The hierarchal culture of capitalism
perpetuates itself so emphatically that people assume it is also right, efficient, effective, and
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legitimate. It is assumed, for example, that those at the top of a hierarchy are there as a result of a
meritocracy, or that one’s tenure in a position is the extension of a legitimate claim through
professional merit. Weber described this as the willingness of most to accept the decisions and
the premises of those at the top of bureaucracies. Robertson (2006), Vigoda, (2002), and Sale
(1996) found that more so than other countries, the United States was probably more swayed by
Frederick Taylor’s principles of scientific management and his principle of close supervision
which influenced what became, in the 70s and 80s, more elongated bureaucracies, where each
manager supervises fewer workers. With the steepest bureaucracies in place, the United States
probably has the longest way to go to reach egalitarian organizations like worker-owned
cooperatives.
Conclusion. As a tool of the ecological paradigm, collaborative governance may be used to
reach sustainable development goals. Sustainable development calls for procedural equity.
Today’s governance model responds with hierarchical structures embedded with disparities.
Collaborative governance responds with cellular networks and subsidiary decision-making
processes. Sustainable development calls for a balance between environmental, economic, and
social values. Today’s worldview is characterized by faith in substitutes and unrestrained
consumption. Collaborative governance promotes cooperation and acknowledges social capital.
Sustainable development requires principles and practices of equity. Today’s mechanical
paradigm responds with patriarchy, whereas collaborative governance responds with
collaborative partnerships. Sustainability requires simplicity. Today’s economic orientation
responds with growth and complexity Collaborative governance model responds with synthesis
instead.
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As such, today’s modern paradigm is ill-equipped to support sustainable development, so the
effort to define and/or implement sustainability within the current framework, is limited. A
governance model, which actually reflects the attributes of the systems it intends to implement,
ought to benefit from such congruencies. A collaborative governance model has the necessary
structure to support sustainable development endeavors and is, therefore, the goal society will
have to move toward, if sustainability is truly a priority.
This study is needed because communities in economic decline, the unemployed working
class, skilled and semi-skilled laborers, and the economically disenfranchised would benefit from
additional research on business models which prioritize communities and people along with
profits. This study is needed because while considerable research has been done on agricultural
and financial cooperatives, and their benefit to both individuals and communities (Majee &
Hoyt, 2010; Williams, 2007) there is a dearth of research on worker-owned cooperatives, the
social and economic benefits they may provide to both individuals and communities (Majee &
Hoyt, 2010), and the financial and social assets minimally required to support them. Similarly,
there has been a notable absence of cooperative models from textbooks, which instead tend to
focus on proprietorships, partnerships, or corporations, despite the economic and social
contributions of cooperatives over the last 150 years (Hill, 2000; Kalmi, 2007). Additional
research is needed on models wherein society’s economic values reflect its “…humanitarian
values and ethics, as well as ecological priorities” (Gordon Nembhard, 2008, p. 265).
Leadbeater, as quoted by Sauser described how such a model might look— “We want companies
which are dynamic and entrepreneurial, and yet socially responsible and inclusive” (Sauser Jr.,
2009, p. 152). This study is needed because it will help researchers and practitioners better
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understand strategies which are intended to produce such companies and in so doing,
economically engage all of us.
An exploratory study of Alvarado’s cooperative endeavors will aide prospective employee-
owners, community economic development foundations, and social and community urban
planners understand the role social capital may play in their local economy, as well as in
understanding the social capital which potentially needs to be nurtured in their communities to
encourage worker-owned cooperatives and other social businesses. At minimum, an exploratory
study of Alvarado should encourage community shareholders to evaluate the social capital
capacities and capabilities of the communities they service.
Research Questions
Having grown into a $30 million annual business, where the lowest paid member-owner
earned a salary of $55,000, and employees earns, on average, $33 per hour, it would behoove
medium size for-profit businesses, especially fellow worker-owned cooperative businesses to
learn about Alvarado’s success and how they have nurtured it. Answering the following
questions should assist researchers and practitioners in understanding Alvarado’s success story,
and the social costs and assets which contribute to those achievements.
1. How does Alvarado define success?
2. What socio-cultural attributes are required to sustain their success? Where are those
attributes reflected within Alvarado’s organization, and how are they nurtured?

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 26
Research Purpose
Urban Planners, developers, and economists cannot continue to push communities into
the zero-sum competition upon which an elite group thrive and materially benefit. Smaller cities
have recognized the limitations of such an approach, especially when it comes to solving
complex public issues, such as economically integrating those who have historically been
economically marginalized (i.e. people of color, women, and immigrants). By implementing
economic development tools which are placed-based, people-centered, and well-suited to smaller
local economies, the practices of urban planning and economic development should evolve
beyond its prior prescriptive measures, into a more realistic practice which takes local assets into
consideration, when addressing local needs.
My intuition is that worker-owned cooperatives may be an avenue for local economic
reclamation, and economic integration of economically marginalized people. Referred to as a
form of indigenous business development (Sperry et al., 2001), worker-owned cooperatives are
alternatives for communities to use “…various self-assessment and action planning
processes…to capitalize on already existing local resources” (Sperry et al., 2001). Doing so,
strategically places communities in a position to influence their economic future, which ought to
make this approach an appealing alternative to the approach of smokestack chasing. Smaller
cities typically neither have the resources nor the capacity to engage in large scale projects, but if
they engage citizens in small-scale projects, and coordinate grassroots efforts, they can create
their own unique opportunities
The Alvarado Street Bakery, as a worker-owned cooperative, provides an alternative
model to generating sustainable wealth within local communities. Alvarado implements a
collaborative governance structure as part of its cooperative business strategy, which may serve
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as a guide to businesses, future entrepreneurs, and communities of how to economically engage
historically marginalized populations. Understanding the socio-cultural framework which
supports the governance and management structures of Alvarado’s cooperative model should
teach communities, businesses, and future entrepreneurs how modern day economic opportunity
may exist and be nurtured using an ecological paradigm as its theoretical framework. However,
even if this strategy is useful for some, it will not be an appropriate response for all. As such,
exploring and describing the conditions under which the Alvarado Street Bakery cooperative
model has enjoyed social success, while not sacrificing its financial goals, will be necessary.
The purpose of this exploratory and descriptive case study is:
 To understand how Alvarado defines success, and determine the socio-cultural
attributes necessary to support Alvarado’s strives towards success
 To understand how Alvarado’s organizational structure nurtures the socio-culture
attributes necessary to support its success
 To understand how Alvarado has engaged the economically disenfranchised into a
successful cooperative business
 To consider how these lessons learned might be useful to practitioners and policy-
makers
As an exploratory study, conclusive answers to the research questions may not be feasible (Flick,
2009, p. 51). Despite that possibility, the results will not be without value, as the intention behind
the study is also to describe and understand Alvarado Street Bakery’s current state of success.
Such information should lend insight towards which research methods would be most suitable in
future stages of research.
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Chapter 2: Literature Review
Introduction
Economic decline is consistently a hot topic among urban planning academics and
practitioners. Job losses, home foreclosures, bankruptcies, and state and federal budget cuts have
touched every corner of the country. As reflected in this literature review, there are no shortage
of academic positions on globalization’s contributions to local domestic economic struggles,
ongoing economic challenges in regions like the Rust Belt, or possible solutions to help
communities rise above these problems and their associated impacts. In an attempt to find
strategies which are an alternative to smokestack chasing (the pursuit and enticement of large-
scale manufacturing companies to settle locally), and which are consistent with the ecological
governance paradigm, cooperatives as a social enterprise business model and as a potentially
viable response to achieving living wages in an economically disenfranchised community, are
also reviewed below.
Restructured manufacturing sector: from brawn to brains. The progression away
from the capital-intensive manufacturing industrial (brawn) economy towards a knowledge-
driven (brain) new economy is not recent, but has been occurring since the 1980s (Blakely &
Bradshaw, 2002; Doussard et al., 2009; Kalette, 2007). Characterized as the evolution of modern
industrialization, this transition from brawn to brains has contributed to the loss of manufacturing
jobs and the capital disinvestment in regions like the Rust Belt (Kalette, 2007). In such
circumstances, the manufacturing infrastructure and technology, and skilled-trade labor were
inadequately prepared to design and mass produce high-tech commodities (Kalette, 2007),
despite contemporary technological advances, and increased access to technological amenities.
As such, some communities were not well primed to play as significant of a role during the high-
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technology manufacturing boom and were largely overlooked as high technology and services
industries sought out more advanced urban centers to relocate.
The high-tech sectors of the economy, characterized by firms such as Google and
Microsoft, but including a host of lesser-known, more specialized companies, thrived in
places with an abundant supply of highly educated workers...Rust-belt cities, built for and
shaped by capital intensive manufacturing, were ill-positioned to capitalize on these
changes. Laid-off auto and steel workers lacked the educational foundation necessary to
become software engineers, graphic designers, financial analysts, or biomedical
researchers, which made it difficult to lure firms that required educated workers.
(Connolly, 2010, p. 4)
Glaeser pointed out that cities, like New York, specialized in skills, small enterprises, and strong
connections with the outside world, whereas Rust Belt manufacturing cities relied on unskilled
and semi-skilled workers, and on self-sufficient factories which, for the exception of their
exports, were isolated from the outside world. As such, the move toward high technology proved
to be a difficult transition for some cities, not only as a result of an ill-equipped labor force, but
also as a result of the increased productivity associated with technological advancement (Blakely
& Bradshaw, 2002; Connolly, 2010; Johnson, 2000)— “…technological innovation created
efficiencies that increased production while reducing the amount of labor required to sustain or
even to increase output levels” (Blakely & Bradshaw, 2002, p. 9).
Jobless growth in the new economy. Blakely and Bradshaw called this “jobless growth”
— a “threatening new phenomenon in the manufacturing sector” (Blakely & Bradshaw, 2002, p.
9) where within the manufacturing sector, across industries, there had been “improvements in
productivity without corresponding increases in human resources” (Blakely & Bradshaw, 2002,
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p. 9). The jobless growth phenomenon had wage implications which did not favor the skilled-
trade manufacturing employee of the 1980s— “…deindustrialization in the 1980s signified not
only the final throes of Fordist manufacturing, but also a foundational moment in the
establishment of a new pattern of economic growth…” (Doussard et al., 2009, p. 202). The
socio-economic redistribution impact associated with manufacturing’s restructuring to a high-
tech industrial base and a knowledge and service economy, is joined by a decreased need for new
workers. The resulting polarizing impact could be seen in places like Chicago, where “from 1992
to 1998, the Chicago economy generated approximately 400,000 net new jobs, nine-tenths of
which fell in the upper-wage quintiles…” (Doussard et al., 2009, p. 202). Openings for lower-
wage workers… “[were] confined to the bottom quintile, together with an expansion
in…employment in the informal, unregulated, and undocumented economies…” (Doussard et
al., 2009, p. 202). Little to no job growth at the lower quintile meant limited income growth for
mid-wage earners which contributed to a growing economic strain throughout the Rust Belt
region.
The new economy is a global economy. Competition for jobs has not been limited to
domestic competition between the Rust, Sun and Bible Belts for skilled-trade and working-class
manufacturing jobs, nor for high-tech manufacturing jobs, for quite some time. Using the city of
Cleveland as an example, Kalette noted that “Like other Rust Belt cities, Cleveland watched
smokestacks shut down as manufacturing shifted overseas” (Kalette, 2007, p. 14). Such changes
reflect what Castells described as the nation-state losing power as a result of its capacity being
undermined by the globalization of core economic activities (Castells, 2010). A global economy
characterized by interdependent currency markets, harmonized monetary policies, and linked
budgetary policies constrains the nation-state’s autonomous control over its economic policy. A
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global economy which succeeds on the basis of free and open trade, with loose market regulation
allows greater flexibility for corporations to invest and disinvest its resources at the local level—
what Castells calls the transnationalization of production (Castells, 2010). The flexibility
afforded corporations, of moving assets around the global market, also brings new meaning to
global competition in the market place, as evident by the change in primarily merchandise but
also service exports over the last 20 years. Dollar explained what has become of the modern face
of developing countries’ exports:
Twenty years ago, nearly 80 percent of developing country merchandise exports were
primary products: the stereotype of poor countries exporting tin or bananas had a large
element of truth. The big increase in merchandise exports in the past two decades,
however, has been manufactured products, so that 80 percent of today’s merchandise
exports from developing countries are manufactures. (Dollar, 2005, p. 150)
Governments could implement policies to make it easier for their cities to compete in the global
economy or to give them a national advantage at home (as is the case in the subsidized
agricultural sector in the United States), but such subsidies may have long-term negative effects
in the global market, especially if such subsidies are not sustainable in the long-term. The heart
of competition in today’s global economy resides at the local level, and local economies must be
able to compete in the global market. If not sustainable, national subsidies only stave off that
inevitability.
Living wages in the global economy. In addition to localizing global competition,
globalization has impacted living wages, although the valuation of those impacts is controversial.
There have been multiple complex wage trends (Dollar, 2005), resulting in what may appear to
be sometimes conflicting results, especially when comparing the economies of developed against
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developing countries. Dollar documented five wage related globalization trends having occurred
since the 1980s. One generally positive trend, for example, is the dramatic reduction in the
world’s population of the extremely poor by 375 million people since 1981 (Dollar, 2005)), with
the largest share of this decline represented by a 50% decrease in those living on less than $1
USD per day, “though the number of people living on less than $2 USD per day has increased”
(Dollar, 2005, p. 153). Another trend Dollar documented which speaks to the favorable
possibilities of globalization is that “within-country inequality in general is not growing, though
it has risen in several populous countries (China, India, and the United States)” (Dollar, 2005, p.
145), where global inequality represents the disproportionate distribution of benefits between
rich and poor people on a global scale. The absence of this positive trend in the United States
speaks to some of the jobless growth experienced in regions such as the Rust Belt. One of the
negative impacting trends noted by Dollar is that wage inequality has generally risen since 1981,
“meaning larger wage increases for skilled workers than for unskilled workers” (Dollar, 2005, p.
153), which has had a tangible effect on the local economies of industrialized countries, where
the distinction between skilled and unskilled labor is acute. Tang and Wood wrote about similar
trends, when researching the cooperation costs of wage inequalities in the global economy,
where cooperation costs are defined as “the ease with which highly-skilled workers from
developed countries can work with less-skilled workers whose wages are comparatively lower
than their domestic counterparts” (Tang & Wood, 1999, p. 1). They found that reduced
cooperation costs “narrow the gap between developed and developing countries in wages of less-
skilled workers, but in most cases widens the wage gap within developed countries between
highly-skilled and less-skilled workers” (Tang & Wood, 1999, p. 1). Viewed together, when
applied to the United States, these trends speak directly to the socio-economic statuses of
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economically disenfranchised communities in the United States, especially the unskilled or semi-
skilled laborer. It is the unskilled or semi-skilled laborer residing in a developed country that,
despite indirectly benefiting from narrowing wage gaps between developed and developing
countries, is simultaneously negatively impacted by increasing wage disparities at home.
A Local Approach to Economic Development
Why a local approach is still needed. Blakely and Bradshaw promoted a local approach
to economic development. While Glaeser (2011) advocated economic development and urban
renewal policies which encouraged cities to compete within the free market, just as most
corporations do, Blakely and Bradshaw (2002) concluded that the free market would not resolve
the problems associated with job migration, and that because of perpetuating geographic
inequalities, jobs needed to be created where people reside, instead of relying on people to
follow jobs. Litvak and Daniels, as quoted by Blakely and Bradshaw, stated
Regardless of how it manifests itself, the existence of relatively depressed communities
in substate regions mean a certain segment of the population is cut off from the fruits of
national economic development. People in these localities will not simply migrate to
healthier areas. On the contrary, better-educated people with more promising job
prospects are likely to move from place to place looking for employment. Moves by poor
people tend to be within the same county or city. Clearly there is a need to try to bring
jobs to people rather than counting on people to move to jobs. (Blakely & Bradshaw,
2002, p. 11)
What authors like Dollar (2005) take from such lessons is that local access to markets matter and
simply living in a richer country is not alone sufficient for local laborers to have advantageous
global market access. The outward-oriented strategies indicative of the current wave of
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globalization (Dollar, 2005) require local communities, and especially local laborers, to have
outward-oriented strategies which connect them to the global market.
The competitive advantage in a global economy lies in local assets. Several authors
(Fulton, 2010; Glaeser, 2011; Porter, 2000) recognized that a city’s economic advantage in the
global economy lies in the advantageous use of and/or investment in its local assets. Porter
described this as the location paradox where “…the enduring competitive advantages in a global
economy lie increasingly in local things— knowledge, relationships, motivation— that distant
rivals cannot match” (Porter, 1998, p. 78). If Porter is correct, then it behooves cities to look
inward when addressing the impacts of deindustrialization and transitioning economies.
Lichtenstein also championed a local approach to economic development that enhances local
assets and uses them as part of the foundation for its strategy— “The goal is producing cohesive,
attractive, and economically vibrant communities— for the present and future. This includes
ensuring that communities are capable of fulfilling their own potential, while overcoming
difficulties, including community conflict, extremism, deprivation and disadvantage”
(Lichtenstein, 2007, p. 10).
Authors such as Blakely and Bradshaw (2002), Porter (1998), and Glaeser (2011)
suggested that the existence of a global market does not lessen the significant role of a local
economy, or its ability to impact the global market. Porter not only insisted that local economies
and their potential for large-scale impact within the global market deserved attention, but he also
challenged the idea that as a result of globalization, the importance of location was quickly
diminishing. “The role of locations has been long overlooked, despite striking evidence that
innovation and competitive success in so many fields are geographically concentrated-whether
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it’s entertainment in Hollywood, finance on Wall Street, or consumer electronics in Japan”
(Porter, 1998, p. 78).
Despite technological advances which have granted global access to remote locations,
thereby stretching the boundaries of business, culture, and politics, the importance of location
and of physical proximity has not diminished, nor has it been replaced with technology. There is
still such a thing as local advantage. Authors like Porter (1998) and Glaeser (2011)agreed that
the benefits related to the local level will only intensify and become increasingly relevant in our
global economy.
In a global economy— which boasts rapid transportation, high-speed communication,
and accessible markets— one would expect location to diminish in importance. But the
opposite is true. The enduring competitive advantages in a global economy are often
heavily local, arising from concentrations of highly specialized skills and knowledge,
institutions, rivals, related businesses, and sophisticated customers. Geographic, cultural,
and institutional proximity leads to special access, closer relationships, better
information, powerful incentives, and other advantages in productivity and innovation
that are difficult to tap from a distance. The more the world economy becomes complex,
knowledge based, and dynamic, the more this is true. (Porter, 1998, p. 90)
Developing a local approach. To strategically position a local economy, Fulton (2010)
and Porter (1998) argued that activities which provide more value add, such as the research and
development, marketing, and strategic planning roles should be kept within the local cluster.
Porter’s and Fulton’s advice reflected their understanding of the location paradox, and their
belief that communities’ competitive advantages lay in the strength and resourcefulness of local
economies, even among global competitors.
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To take advantage of the location paradox, it is important for a community to invest in an
economic development approach which is suitable to its locale, and to not give into the
temptation to follow urban planning and economic development fads. Currid-Halkett and
Stolarick (Currid-Halkett & Stolarick, 2011) found, when studying the chasm between the
practice of economic development, and the scholarly literature on the economic development
strategies promoted by academics, a reliance on what they described as the old school techniques
of “smokestack chasing” (i.e. tax incentives, enterprise zones, and business improvement
districts) combined with new fads (i.e. casinos, film, creative economies, etc.), but without the
thoroughness needed to confirm the effectiveness and feasibility of their approach—
Our survey of the practice of development demonstrated a lack of thorough research into
what works and what does not, with many localities investing either in faddish strategies
or old school approaches that have not proven their worth or effectiveness or are not
suitable to their locale. (Currid-Halkett & Stolarick, 2011, p. 151)
Currid-Halkett and Stolarick insisted that the city’s locale should not be overlooked for the sake
of pursuing popular economic development practices. Using Silicon Valley and its various
“Siliconia” lookalikes as examples, the authors concluded that “one size does not fit all” (Currid-
Halkett & Stolarick, 2011, p. 151). Porter, as quoted by Currid-Halkett and Stolarick, but also
supported by others authors (Connolly, 2010; Fulton, 2010; Glaeser, 2011) found that cities best
succeed when “…they capitalize on their strengths and unique competitive advantages” (Currid-
Halkett & Stolarick, 2011, p. 151). This position taken by academics validates creating a local
approach to economic development, by tailoring one’s strategy toward local needs and resources.
Solely pursuing large companies may actually put abject communities, and/or small
communities at a disadvantage. In his research, McClenahen found that “…a small- to medium-
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size company that’s growing creates jobs at a rate about 10 times faster than a larger company
does…Traditional industries, such as…metal forming, tend to create better multiplier effects
than the high-tech industries” (McClenahen, 2006, p. 15). Glaeser reached a similar conclusion
in his research— “…areas with abundant small firms have grown more quickly than places
dominated by enormous enterprises” (Glaeser, 2011, p. 42). Connolly also discouraged small
cities and/or decaying cities from the sole act of luring large companies for the purpose of
economic revitalization. He stated “The competition among localities for high-tech and
knowledge-economy firms is intense. Decaying towns with poor schools and few amenities are
hardly in a good position to attract the “creative-class” workers they need to make such a
transition. Getting to the point where small cities can lure such companies or keep a home-grown
business will require extensive retooling, not just economically but in terms of their built
environment, cultural character, political economy, and demographic mix (Connolly, 2010, p. 2).
Connolly wrote that “…the past experiences of smaller cities and the present challenges they
face in a global, neoliberal economic order differ substantially from those of their larger
counterparts” (Connolly, 2010, p. 3). As such, there is no one size fits all approach to economic
development. National and regional strategies may cast such a large net that smaller cities, and
cities with fewer obvious assets slip through the cracks of land write downs, tax breaks, and
attracting foreign direct investment. Simply adopting the best practices of other successful cities
will not yield desired results. Glaeser (2011) encouraged cities to learn from one another, but to
embrace the fact that there are different paths to success instead of blindly importing economic
development models.

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Globalization from Below: Social Enterprises as an Alternative to Shareholder Primacy in
a Global Economy
Social businesses and social entrepreneurship. While there is a dearth of literature on
worker-owned and producer cooperatives, great strides have been made in the last decade on
social business and social entrepreneurship. Social businesses operate within a different business
model than do conventional businesses and non-for-profit organizations. Unlike other socially-
oriented organizations, which also address community disparities, but through social means,
social enterprises are “…organizations seeking business solutions to social problems”
(Thompson & Doherty, 2006, p. 362). A social business “…has both the potential to act as a
change agent for the world, and sufficient business-like characteristics to ensure it survives to do
so” (Yunus, Moingeon, & Lehmann-Ortega, 2010, p. 310). Despite their social objectives, social
businesses are not charities. “Social businesses need to recover their full costs so they can be
self-sustainable” (Yunus et al., 2010, p. 310), whereas not-for-profit organizations pursue their
social objectives at the sake of financial solvency, expect to operate in the red and, therefore,
dedicate a notable amount of their resources to generating financial support through grants and
donations. Conventional businesses’ primary objective, as described by Yunus, Moingeon, and
Lehmann-Ortega (Yunus et al., 2010) is to maximize financial profit for their shareholders.
Social businesses vary from that model by prioritizing a social objective along with the financial
objective of being self-sustaining, and by focusing on returns to their stakeholders, in place of
shareholders. Daz-Foncea and Marcuello noted other identifying characteristics of social
enterprises are their promotion of development and an equitable distribution of wealth, such that
“the lead is returned to the people (consumers, workers, and entrepreneurs) through their role as
economic agents in the different institutions…” (Díaz-Foncea & Marcuello, 2012, p. 76). Doing
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 39
so empowers people to take on greater roles and responsibilities within their community, and
connects them to the outside world through their participation in the global.
Minimal requirements for successful social enterprise business models. Authors such
as Sink (1991), Majee and Hoyt (2010), Sauser (2009), and Williams (2007) have researched
various social enterprise models, and found concluded certain social capital are essential to a
successful social enterprise. Based on their research, tools such as mutuality of interdependence,
open communication, and clearly defined shared interests are necessary to ensure that the social
goals of social enterprises are not be sacrificed for the financial goals.
At the heart of any team is cooperation. That cooperation is necessary for the completion
of all tasks, even agreeing on and defining goals. It is a mistake to underestimate the value of,
and the advantage gained from, cooperation in a competitive in the global economy. Sink
concluded that group consensus regarding the mutuality of interdependence is what motivates
people to cooperate while maintaining a balance of power of resources within an organization.
Specifically, building cooperation involves establishing mutuality of interdependence.
Unless most of the stakeholders perceive benefit to be gained from cooperation within a
coalitional structure, they likely will not participate. This perceived advantage must be
greater than the ability of the individual stakeholders, particularly the most powerful, to
control the issue unilaterally. The act of participating in a coalition requires each of the
members to give up some power. Hence, the benefits must appear attractive enough to do
this. (Sink, 1991, p. 1181)
While mutuality of interdependence motivates people to cooperate with each other, open
communication encourages their continued cooperation and commitment to the group because of
its potential to reinforce trust and manage expectations, thereby strengthening relationships.
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 40
Open communication, characterized by the free flow of information both horizontally and
vertically within an organization, and by little to no hesitancy regarding information sharing and
transparency, and providing multiple avenues for communication fosters participation because it
enhances team work and builds trust (Majee & Hoyt, 2010). “A knowledgeable person feels
valued by his peers and is motivated to participate more in activities involving his counterparts
and in which his knowledge is situated” (Majee & Hoyt, 2010, p. 424). The free flow of
information is critical to the development and/or strengthening of partnerships and networks.
With strengthened partnerships, people are willing to invest more of themselves and increase
participation in and involvement with the business, which reinforces feelings of unity and is
empowering.
With an understanding of one’s mutuality of interdependence and the implementation of
open communication, a group will be better equipped to define goals and work towards them.
Shared interests and cooperation around those interests reduce conflict between workers,
managers, and shareholders. Sauser advised shareholders to “explicitly adopt a set of common
foundational values” (Sauser Jr., 2009, p. 153) and “craft an organizational culture of character,
and take active steps to maintain that culture throughout the life cycle of the EOC [employee-
owned cooperative]” (Sauser Jr., 2009, p. 153). Williams described the nature of cooperation as:
Cooperation involves working together to achieve a common goal or the common good.
It uses small groups to maximize each other’s productivity and achievement. In
cooperative situations, individuals perceive that they can reach their goals only if other
group members also do so. Their goal attainments are highly correlated and individuals
help each other and encourage each other to work harder. (Williams, 2007, p. 61)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 41
Cooperatives as a social enterprise business model. The United Nations defines the
cooperative movement as
a highly democratic, locally autonomous, but internationally integrated organization of
associations and enterprises, whereby citizens themselves rely on self-help and their own
responsibility to meet goals that include not only economic, but social and environmental
objectives, such as overcoming poverty, securing productive employment and
encouraging social integration. (United Nations, 2001)
The International Co-operative Alliance (ICA) defines a cooperative as “an autonomous
association of persons united voluntarily to meet their common economic, social, and cultural
needs and aspirations through a jointly owned and democratically-controlled enterprise”
(International Co-operative Alliance, 2015). Cooperatives are based on the values of “self-help,
self-responsibility, democracy, equality, equity and solidarity” (International Co-operative
Alliance, 2015), which inspire their 7 guiding principles: Voluntary and Open Membership,
Democratic Member Control, Member Economic Participation, Autonomy and Independence,
Education, Training, and Information, Cooperation among Cooperatives, and Concern for
Community. Cooperatives may be defined by their membership (consumer, producer, retailer,
and worker-owned), by their market area (local, regional, national, and international), and/or by
their primary business activity (financial services, agricultural production, consumer, etc.)
(Majee & Hoyt, 2010). Familiar domestic examples of cooperatives include the Best Western
international hotel chain (a marketing cooperative), Recreational Equipment Incorporated (also
known as REI (a consumer cooperative), Land o’ Lakes (an agricultural cooperative) and local
credit unions (financial cooperatives).
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 42
Cooperatives are a form of social enterprise and social business. However, in terms of
ownership, participation, and stakeholder representation, there are still differences. Williams
summarized cooperatives’ distinguishing characteristics as requiring “…participation of every
member under a principle of one share, one member, one vote, remain relatively free of
government and other outside intervention, encourage equitable distribution of resources…, and
strive for sustainability with respect to resource and energy use” (Williams, 2007, p. 56). These
are especially distinguishing characteristics, when cooperatives are compared to conventional
businesses and for-profit organizations. Several authors (Hill, 2000; Kalmi, 2007; Spear, 2006;
Thompson and Doherty, 2006) agreed that cooperatives distinguish themselves from socially-
oriented organizations and initiatives by describing them as social enterprises. Even though
growing a profitable business is vital to a cooperative’s success, they are not primarily motivated
by profit as are their conventional business competitors.
Cooperatives as a placed-based strategy. Diversified community-based economies are
gaining momentum (Norberg-Hodge, 1996) (Stiglitz, 2007). Shuman researched the momentum
of place-based movements such as the cooperative movement, which he defined as “…locally-
oriented economic development, rooted in the needs, resources, and skills of local communities”
(Shuman, 2004, p. 171). Worker-owned cooperatives exemplify grassroots mobilizations that
develop alternatives to a corporate-led globalization. The worker-owned cooperative model
considers the importance and promotion of local culture, knowledge, participation, and history,
and has the capability to harness these assets in a locally unified, yet globally connected effort.
The employee-owned cooperative model’s goals are economic sustainability, job preservation,
broad and equitable distribution of capital, increase local ownership of capital, improve working
conditions, wages, and productivity, and implement workplace democracy, and essential to the
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 43
pursuit of these goals is the idea that local conditions matter (Majee & Hoyt, 2010) (Williams,
2007) (National Cooperative Business Association, 2013). Some 300 worker-owned
cooperatives throughout the United States operate in all sectors of the economy and provide their
employees with “…employment and ownership opportunities”— allowing them to directly
benefit from the financial success of the business (National Cooperative Business Association,
2013). Kalmi summarized their significance by stating that
Cooperatives…have social significance beyond their economic role. Through private
initiative and mutual aid, cooperatives alleviate poverty and promote social stability of
the communities where they operate…While practically all types of cooperatives aim to
improve the economic position and capabilities of their members, worker cooperatives
arguably have the most far-reaching social goals. (Kalmi, 2007, p. 3)
How worker-owned cooperatives function. The basic management and organizational
strategies, as described by Dickstein (1991), Williams (2007), and Rothschild (2009), of
cooperatives are the implementation of a democratic governance structure, and an equitable pay
scale. These basic practices are intended to merge the cooperative movement’s social values with
the creation of organizational design, so that their values are not only reflected in what their
businesses create, but also in all levels of their businesses operations.
Management by democratic governance— one member, one vote governance structure.
Unlike investor-owned corporations, cooperatives are owned and democratically controlled by
their members. In a worker-owned cooperative, the members make up most, if not all, of the
employee population. The implication is that, influence on the business and, therefore, on the
fate of the employee-owners, comes from within, instead of from outside investors. Like other
cooperatives, the Board of Directors for a worker-owned cooperative is elected by, and primarily
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 44
from within, its membership— the workers. The board is usually majority controlled by the
workers, although some worker-owned cooperatives have outside directors and advisors serving
on their boards. Management structures of worker-owned cooperatives vary based on the
members’ preferences. Some worker-owned cooperatives use what Sauser Jr. (2009) called a
traditional management hierarchy. Under this structure, concentration of influence and decision-
making is under the purview of a few people at the top of the hierarchy, which gets diluted as
one goes down the hierarchy where there are more people, but less influence and authority. Other
management options include flat management systems, team-based management systems, and
cellular management systems. Flat management systems allow employees to be directly involved
in management decisions. A team-based system employs elements of both traditional and flat
management systems. A cellular management system consists of uncentralized collaborative
networks that engage in subsidiary decision-making (Robertson, 2006).
Profits and wages. The federal and state governments recognize that cooperatives do not
earn profits, and tax them accordingly. As such, under Subchapter T of the federal tax code,
“…cooperatives generally do not pay income tax on surplus earnings that are refunded to
members” (National Cooperative Business Association, 2013). Each year, worker-owned
cooperatives return profits not needed for reinvestment in the business, to their worker-owners in
the form of patronage dividends and retained equity. The dividends are taxable income in the
year they were received (National Cooperative Business Association, 2013). Vigoda (2002)and
Spear (2006) described this as attractive for some workers, because after the company’s debt is
paid off, its profits are available to employees when they are earned, not years later in retirement
benefits. Instead, the worker-owners have the flexibility to invest that income as they see fit
(Kenney, 2003). Within cooperatives, pay structures vary. Dividends are typically distributed
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 45
based on management position, hours worked, salary and/or seniority (Williams, 2007). Some
worker-owned cooperatives use a seniority- and skill-based pay scale. At the other end of the
spectrum are worker-owned cooperatives that pay all workers the same wage.
Proponents make a case for the worker-owned cooperative model. The neo-liberal
model of globalization and its impact on economic development are not the only viable options
for economic transformation in a globally competitive environment (Norberg-Hodge, 1996).
Authors like Kalmi (Kalmi, 2007), and Norberg-Hodge (Norberg-Hodge, 1996) believed that
neoclassical economics either disregards or underestimates the value of social enterprises and its
potential to generate sustainably profitable outcomes. Glaeser insisted that “revitalization
requires a complete shedding of the old industrial model” (Glaeser, 2011, p. 43). “In general,
cooperatives provide a systematic alternative framework to the concept of shareholder primacy
dominant in many economic and corporate governance discourses…” (Kalmi, 2007, p. 628). As
with clusters, cooperatives are not new participants in our local economies, but have been an
available alternative business model for more than two centuries— “During the past two
centuries cooperatives have provided one of the main alternatives to shareholder-based
capitalism, and therefore understanding cooperatives is essential to appreciating alternatives to
shareholder primacy” (Kalmi, 2007, pp. 625-626).
Proponents of the cooperative model describe its potential as:
 Fosters, assesses and mobilizes local resources by acting upon different types of capital,
such as natural, social, and human capital (Dickstein, 1991; Majee & Hoyt, 2010;
Williams, 2007)
 Empowers local consumers by economically engaging them in their local economies,
improving quality of life, and by increasing residents purchasing power (Williams, 2007,
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 46
p. 57; see also Dickstein, 1991; Kalmi, 2007; Kapila & Mead, 2002; Majee & Hoyt,
2010)
 Create and retain local jobs, and target job opportunities towards specific populations
(Dickstein, 1991; Kapila & Mead, 2002)
 Provide financial and entrepreneurial education, and technical support to smaller
businesses (Kalmi, 2007)
 Is flexible enough to allow diversely structured networks to succeed across regions, and
nations (Spear, 2006; Williams, 2007)
 Is potentially profitable (Williams, 2007)
 Is the “fullest expression of workplace democracy” (Kalmi, 2007)
Worker-owned cooperatives represent a change in labor relations, which acknowledges the
aims of the working class and existing disparities. Cooperative ownership fosters the confidence
residents need to address and minimize existing disparities in their communities. Taking an
active role to address disparities through cooperative ownership fosters social capital (Majee &
Hoyt, 2010). Such experiences, through the role of cooperative business owner, encourage one to
continuously investment in his/her local community, and foster a sense of empowerment (Majee
& Hoyt, 2010).

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 47
Mondragon: An International Cooperative Success Story
The Mondragon cooperative is a contemporary cooperative success story. Based in the
Basque Country of Spain, this cooperative conglomerate owns $33.5 billion in assets and
employs more than 92,000 workers (Ridley-Duff, 2010), many of whom are owners of the group
(Williams, 2007). Williams summarized their operation as an integration of
…over 100 firms in high growth and high technology industries…Caja Popular Laboral
(CLP— the co-op bank), co-op universities, a co-op medical system, cooperative
housing, and a large portion of all agriculture form a single cooperative network in over
40 communities in northern Spain. (Williams, 2007, p. 34)
In addition to the supportive political environment, economic orientation, and political culture,
integral to Mondragon’s success are its organizational design, and its system of internal
financing which supports the diversification of cooperative development into its strategic plan.
Organizational design. Intrinsic to Mondragon’s design is that the organization shares
power among several bodies within the organization, which limits the concentration of power of
any one department or business center. The major bodies within the organization and their
functions are (Ridley-Duff, 2010, pp. 42-43):
 General Assembly— consists of all member-owners, and operates on a one
member — one vote policy, regardless of position or tenure; responsible for
approving overall strategic development, and electing the Governing Board, the
Management Board, the Social Council, and the Audit Committee
 Governing Board— serves as the central representative of the cooperatives, and is
responsible for governance, and management
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 48
 Management Board— headed by an elected General Manager, and is responsible
for overseeing the daily operations
 Social Council— consists of member-owners, and is powerful in shaping the
strategic direction of the organization
To discourage the development of a managerial elite, “…managers are elected and can be
recalled” (Ridley-Duff, 2010, p. 44), and the compensation for this additional administrative
responsibility is “…decent but relatively low” (Ridley-Duff, 2010, p. 44).
Sauser insisted that uncentralized power in employee-owned companies is essential to
protecting employee stock and increasing its value because it proactively addresses the potential
conflicts of employee ownership (Sauser Jr., 2009). By that he meant that network governance
better serves democratic and self-governed organizations, such as cooperatives, because they are
less likely to succumb to the problems associated with hierarchical systems, such as conflict of
interests, ambiguous strategic planning and the corruption of absolute power. Uncentralized
power should alleviate conflicts of interest that can arise when trying to balance employee and
owner interests. The dual role of employee-owner is bound to experience some form of tension
because the two roles can potentially represent competing interests, and the impact of that
competition might potentially stall an organization’s growth and productivity by rendering its
decision-makers impotent. Mondragon also implements a network governance model, where
information is freely shared, which aides in organizational self-assessment, by providing internal
checks and balances. Network governance allows many to participate in the decision-making and
auditing, by having multiple decision-making centers with a limited breadth of authority and
impact, and it also allows widespread participation, without the semblance of control. This
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 49
approach keeps network members sharp and creative, which ultimately leads to a stronger
competitive position among industry peers (Kenney, 2003; Sauser Jr., 2009).
Financing. Mondragon addresses the capital formation problem through a series of
financial insulation strategies, beginning with the operation of their own cooperative bank, Caja
Laboral (CLP). Their insular strategies include ensuring a high level of retained earnings, and
controlling the growth of wage rates, relative to the external labor market. Doing so provided a
means for reinvestment and expansion, and also provided financial insulation during lean times.
In addition to financial support from the government and commercial banking, to secure
financing, Mondragon relied on creative sources, such as their relatively high new member entry
fee, which helped to finance capital investment and also screened out applicants lacking a long-
term commitment (Williams, 2007).
The Mondragon Cooperatives in Basque Country, Northern Spain, require rather large
membership fees— on the order of one year’s wages. They then make it possible to pay this one-
time fee through a line of credit with the Caja Laboral (Williams, 2007). Most cooperatives are
not able to charge such a high membership fee. Once a sizeable membership is established,
implementing larger fees might be feasible, but raising membership fees at that point for long-
time members would likely make long-term membership unattractive. Therefore, it is advisable
for cooperatives to base their planning on large cash flows through sales and not rely totally upon
membership fees (Dickstein, 1991; Williams, 2007).
However, most integral to Mondragon’s financing success has been their cooperative
bank— the CLP. In addition to providing financial oversight and management, the CLP puts its
members’ monies to work by determining how they might be used to fund additional growth. For
example, the CLP uses Mondragon’s high membership fees and its membership’s savings as
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 50
leveraging for investments into the growth of its subsidiary cooperatives. The CLP also tightly
monitors the performance of individual cooperatives and supplies them with technical expertise.
Doing so ensures the continued judicious use of the bank’s funds. CLP’s role has continued to
grow and now also includes identifying new business opportunities and making strategic
development decisions on behalf of Mondragon. The CLP’s strategic plan actively promotes an
entrepreneurial culture within Mondragon, which creates an incubator for other cooperatives.
The diversification, which currently exists as a result, is valued as an aggressive form of
cooperative development and expansion (Williams, 2007). Williams described the CLP as “…a
model for the world in establishing a cooperative Bank…”, and that the “early move in the
formation of Mondragon’s approach to cooperation has resulted in a remarkably strong and
resilient economic system for the entire Basque area” (Williams, 2007, pp. 154-155). Access to
internal financing allows Mondragon to play a significant role in its membership and technical
growth. In comparison to the credit unions in the United States, which are domestic
cooperatives’ alternative to the commercial banking industry; an employee-owned cooperative
could not enjoy such a relationship because under the Anti-trust laws, it is illegal.
Conclusion
Glaeser stated that cities have reinvented themselves by returning to their old,
preindustrial roots of commerce, skills, and entrepreneurial innovation. Cities suffering from
manufacturing disinvestment economic decline will need to embrace virtues like competition,
but do so along with virtues like connection and human capital (Glaeser, 2011, p. 43).
Cooperatives and clusters are good examples of collaborative competition and reinvention. There
does not appear to be an alternative suggested by the government which presents the same level
of adaptability based on local resources, or which considers the appropriateness of scale and
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 51
local diversity. Government response has primarily consisted of premature investments in
infrastructure, subsidies, and tax breaks. However, as Glaeser stated, “…cities don’t need
handouts, but they need a level playing field” (Glaeser, 2011, p. 250). Promoting cooperative
development, as part of a cluster strategy for economic development could be a means of
promoting a level playing field, by increasing the accessibility of smaller entrepreneurs and
workers to the global economy. Smaller cities, and/or cities with fewer resources cannot continue
to be pushed into the zero-sum competition upon which larger and richer cities thrive. Smaller
cities have recognized the limitations of such an approach, especially when it comes to solving
complex public issues, and they want to help create and implement strategies that are well-suited
for their scale and their goals. Worker-owned cooperatives have the potential to be the successful
alternative smaller cities seek. An attempt should be made to develop policy and implement
development initiatives which encourage worker-owned cooperative growth.
The majority of American cities do not have the size or diversity of New York or Los
Angeles’ populations and economies. More than 97 percent of U.S. cities have a population of
less than 50,000 residents (Mayer & Knox, 2009). These smaller cities are the fastest growing
places in the country, especially those that are close to major metropolitan areas (Mayer & Knox,
2009). As such, there is legitimacy in developing place-based solutions, which speak to smaller
cities’ needs and resources. Many, however, have suffered severe economic and social decline,
in their attempt to keep up with larger cities, by seeking the external investment of a few large
employers or by investing in the latest technical trend to reinvent their image and attract an
industry. However, a singular and heavy dependence on a few large employers can have severe
impacts when an employer relocates or closes, and takes their local jobs with them—
“Nonmetropolitan manufacturing cities have more often tended to be dominated by one industry,
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 52
or even one company. When those firms depart the community, they leave behind has few
economic alternatives” (Connolly, 2010, p. 2). Even though small towns typically neither have
the resources nor the capacity to engage in large scale projects, they can strategically engage
citizens and develop grassroots efforts to create their own unique opportunities. Despite the
academic support which suggests worker-owned cooperatives can be instrumental in creating
opportunities which promote greater economic participation at the local level, this is not likely to
be championed from the top-down. Residents and cooperatives will have to harness the
necessary political will and organizational skill to bring about the change they want to see, such
that the livelihood of their forgotten cities can be restored. This will be a challenge, but the
possibility for cities to redefine their role in the global economy and to not be totally beholden to
the globalization process should serve as sufficient motivation.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 53
Chapter 3: Methods
Research Design
This was an exploratory and descriptive single-case case study, of the Alvarado Street
Bakery, reliant upon semi-structured interviews, an unsolicited written survey, and descriptive
statistics. In order to conduct research at this site, I had to sign a non-disclosure agreement for
certain protected information.
Case study. This study focuses on a single case of a worker-owned cooperative, the
Alvarado Street Bakery. In order to analyze Alvarado Street Bakery’s cooperative model, and
understand its socio-cultural environment, I conducted a case study of the Alvarado Street
Bakery worker-owned cooperative. I reviewed their management and governance structures, and
financial structures. I conducted problem-centered interviews with management and non-
management staff. The analysis of this data should also help determine those characteristics
critical to Alvarado’s success, and serve as a foundation for a discussion on the usefulness of
worker-owned cooperatives as an instrument for engaging the economically disenfranchised,
which might be of particular use in regions characterized by economic decay and semi-skilled
unemployed labor, such as the Rust Belt.
Interviews. I conducted and recorded 16 in-depth semi-structured anonymous interviews
with Alvarado member-owners, whose primary responsibilities varied from management,
administration, production, and delivery. The interviews took between one and two hours, and
were conducted either in person or via telephone. Interviewees were given the option to be
interviewed in either English or Spanish. The interview questions were emergent, such that
questions were revised as themes emerged and the participants understanding of the study
deepened. For confidentiality purposes, names and other identifying characteristics which might
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 54
make it possible to identify the people who participated in this research are not used. The
purpose of the interviews was to learn about Alvarado’s governance and management structures,
and how their socio-cultural values are reflected, nurtured, and sustained within those structures.
I also used the interviews to aide my understanding of Alvarado’s success, and the relationship
between its success and the company’s socio-cultural attributes.
Surveys. Unsolicited written surveys were initially mailed to 121 Alvarado employees,
with a 40.5% response rate goal. Alvarado employees had the option of completing a survey in
English or in Spanish. After the low mail survey return rate, especially among the Spanish
surveys, I redistributed the surveys in person.
1
I also enlisted the help of a Spanish speaking
cultural agent (my husband, Carlos P. Salcedo Maldonado, MSW) to distribute surveys in the
hopes that, with his assistance, the survey return rate would increase. Carlos’ presence was
instrumental in increasing my return rate from 19% (23 surveys) to 36.4% (44 surveys).
Specifically, Carlos was able to get 17 Spanish surveys, whereas only one Spanish survey had
been returned to me via mail.
2
Of the 121 distributed surveys, 44 were returned, representing a
36.4% response rate. The purpose of the surveys was to gain understanding of the employee-

1
When I visited Alvarado, I followed up the Spanish-speaking employees to inquire about their lack of response to
the survey mailing. The few women with whom I spoke said they felt more inclined to complete a survey once they
met me in person. I repeatedly received variations of one woman’s comment: “I didn’t know you from the mailing,
but now I met you, and I want to help”. The men with whom I spoke provided similar feedback, but also regularly
included various comments related to what they described as competing priorities. For example, one man said,
“When I’m at work, I focus on work, and when I am at home, I focus on my family. I didn’t want to sacrifice my
focus on work or family for a faceless survey”.
2
In order to intercept potential survey respondents, Carlos hung out in the employee lounge where people took their
breaks and transitioned between shifts, while I conducted interviews in a conference room. I wanted to meet
employees during my interview breaks, and went to the break room to do so. I noticed that when I approached the
lounge, male voices (my husband’s among them) were be raised in energetic and lively discussion (in Spanish).
However, when I entered the room, the discussions either abruptly stopped or obviously dwindled. After this
happened three times, I stopped visiting the lounge in case my presence was making people uncomfortable and/or
affecting Carlos’ ability to establish and maintain a rapport with these male employees. For those employees who
also consented to be interviewed, I asked them how my presence in the lounge affected them, if at all. I repeatedly
received comments like, “You’re a woman I don’t know, and so it was more appropriate for me to speak with your
husband”, and “I was more comfortable speaking with your husband. He’s a guy, and a paisano (paisano is Spanish
for a fellow countryman). I gleaned from such comments that gender played an important role in influencing the
extent to which male Hispanic employees, with whom I had no prior relationship, were comfortable engaging me
versus my husband.
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 55
owner experience. Questions gauged their self-perceived value to the company, and inquired
about the advantages and disadvantages to being both an employee and an owner. The survey
also inquired about their understanding of Alvarado’s values, and the consistency of Alvarado’s
representation of those values. Finally, the survey also included questions intended to gauge how
working for a social enterprise, such as a cooperative, has affected respondents’ quality of life.
Why studying Alvarado is important. Alvarado successfully demonstrates how a
community of high school graduates, immigrants, and self-proclaimed hippies created an
exploitation-free living wage opportunity for the working class semi-skilled labor pool in
Sonoma County. As a for-profit business, Alvarado is unique because of its longevity in a
competitive niche market, and because of its success in that market as an employee-owned social
business, where Alvarado’s social and ecological goals are successfully prioritized alongside its
financial goals. As an employee-owned cooperative, Alvarado is unique because unlike
traditional cooperative management structures, Alvarado has hierarchy built into its managerial
structure, which it balances against its egalitarian governance structure. Those characteristics
which distinguish Alvarado from traditional for-profit businesses and from its cooperative
counterparts contain lessons from which businesses and communities may learn and, therefore,
make Alvarado an interesting subject for research and, in particular, this case study.
As a case study, Alvarado sheds light on how a business might approach a competitive
market in global economy from an ecological perspective. It also exemplifies how governance
and management structures may be simplified by being less stratified, and yet still effective,
productive, and democratic. By studying Alvarado, companies may learn that hierarchy does not
have to be the antithesis of democracy, and that democracy does not have to be the antithesis of
profitability. Alvarado’s existence and success are proof that profitable living wage exploitation-
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 56
free employee-owned businesses, intentionally reliant upon a working class employee pool are
financially feasible and socially viable. While both the financial feasibility and the social
viability are worth studying, this project delves deeper into socio-cultural characteristics which
make such an environment possible. The results may serve as a guide to others interested in
creating similar opportunities in their businesses or communities. At the very least, the results
will hopefully expand others’ understandings of cooperatives and their reformative potential in a
working class community.

Case Description
Alvarado’s origins. Alvarado Street Bakery is a wholesale bakery and distribution center
located in Petaluma, California. Their mission is
…to give superior service in providing the
finest quality baked goods to its valued
customers nationwide by utilizing a worker
owned and managed cooperative business
structure and to strive to use whole grain
and organic ingredients, wherever
possible, to support sustainable agricultural
practices and healthy living. (Alvarado
Street Bakery, 2015)
Alvarado began producing whole grain organic baked goods in 1979, as part of the “Food for
People not for Profit” movement in the San Francisco Bay Area. Alvarado was originally part of
a non-profit organization called Red Clover Worker’s Brigade, along with a retail store, a
Figure 1: ASB Sign (Alvarado Street Bakery, 2015)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 57
trucking company, and a wholesale warehouse. In 1981 five brigade workers decided to form a
worker cooperative and purchased the bakery from the brigade. They formed Semper Virens
Bakery Food Cooperative, and later changed the name to Alvarado Street.
In northern California, Alvarado runs their own fleet of trucks, servicing all major
supermarket chains as well as smaller health food stores and natural food markets. Outside of
California, Alvarado’s products travel frozen (one of the major attributes of sprouted breads is
that they freeze very well) allowing consumers throughout the country, as well as in Canada, and
Japan to enjoy their products. Now in business over 35 years, with 121 employees, and a product
line of over 30 organic baked goods, Alvarado has grown into a $30 million annual business and
it continues to grow.
Alvarado as a worker-owned cooperative. The International Co-operative Alliance
(ICA) is “…an independent, non-governmental organisation established in 1895 to unite,
represent and serve co-operatives worldwide. The Alliance provides a global voice and forum
for knowledge, expertise and co-ordinated action for and about co-operatives” (International Co-
operative Alliance, 2015). The ICA defines a cooperative as “an autonomous association of
persons united voluntarily to meet their common economic, social, and cultural needs and
aspirations through a jointly owned and democratically-controlled enterprise” (International Co-
operative Alliance, 2015). Whether its members consist of employees, customers, residents, or
other businesses, the members own and run the cooperative. Worker Cooperatives are
cooperatives wherein “the employees or workforce in a for-profit enterprise directly own and
control the business on a democratic basis of one person, one vote" (Alvarado Street Bakery,
2015). Typically all workers in a worker cooperative, including management, are eligible to be
member owners after meeting the requirements of a probationary period of employment and
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paying a membership fee. In a worker cooperative, a central element of the business structure is
that labor employs capital, instead of capital employing the labor as another input along with
other raw materials. Generally speaking, “…profits and losses are allocated to worker-owners
according to either the hours’ worked or gross pay. Skill and seniority determine wage rates,
which are often set in conjunction with an internal policy establishing an equitable ratio between
the highest and lowest paid levels. (Alvarado Street Bakery, 2015)”. Alvarado’s ratio of highest
to lowest paid is 3:1.
Of Alvarado’s 121 employees, 112 are members (also called worker-owners), 5 are in the
process of becoming members, and the remaining 4 have decided not to seek membership. In
terms of race, Alvarado’s labor force primarily consists of Hispanics/ Latinos and non-Hispanic
Whites, with Hispanic Latino population representing 33% of its employee population. While
such demographics may not be considered not be considered racially diverse, when compared
with Petaluma’s 2010 Census data, Alvarado’s Hispanic population is proportionately higher.
The 2010 US Census reports that Petaluma’s non-Hispanic White population is 69.4% of the
population, and the Hispanic/Latino population is 21.5% (U.S. Census Bureau, 2015).

Figure 2: ASB Company Photo (Alvarado Street Bakery, 2015)
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Whereas some worker-owned cooperatives have egalitarian wage structures, Alvarado’s
wages are based on a competitive market survey, and members vote on the wage ranges for each
position. Alvarado’s average worker-owner makes $33 per hour. The average production worker
makes $60,000 a year, and some workers’ quarterly gain sharing bonuses exceed their annual
income (Great Place To Work, 2015). In 2013, the lowest paid worker-owner earned $50,000. A
3:1 ratio of highest to lowest paid member, means that the highest paid worker-owner made
$150,000. Part-time workers, working at least 20-hours per week receive 95% healthcare
coverage. Called a Cadillac Plan by its members, Alvarado’s health care plan includes coverage
for acupuncture, aromatherapy, and other non-Western health procedures. Alvarado’s 401k plan
retirement contribution is also known in tax language as a defined contribution profit sharing
plan, as opposed to a traditional defined benefit pension, which Alvarado does not have. This
serves as Alvarado’s retirement plan contribution, and is not dependent on deposits from
employees. The membership votes on what the contribution will be, and all employees receive it,
whether they individually contribute to their plan or not. All employees are eligible for the
retirement plan, not just members.
Membership is voluntary and most workers choose to become members at Alvarado. To
become a member one has to meet certain requirements like working for a 9-month probationary
period, attending membership training classes, and being voted in by the membership. When one
becomes a member, he/she pays for, and receives, one Class A voting share. Members may not
purchase more than one share. Since nobody may own more than one share, no one has
controlling interest in the company. Ownership shares are linked to voting privileges, such that
each share sold represents the voting privilege of one member. As is the case with all worker-
owned cooperatives, Alvarado’s members hold the means of production. The profits are shared
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through a concept called patronage, which is common among worker-owned cooperatives,
although how those profits are split varies between companies. Unique to Alvarado is their gain
sharing program, which is a quarterly cash bonus. Once Alvarado determines its income from
operations for a quarter, anything over 8% of sales is paid to workers. One does not have to be a
member to be eligible for this quarterly bonus, but one does have to work a certain number of
hours and be employed at the beginning and end of the quarter. The average quarterly bonus is
$4,000 and is included in the W-2 wages. After wages, the 401k contributions, and the quarterly
gain sharing, the company arrives at its pre-tax net income. That amount is allocated to members
based on their member hours worked. Per the tax requirement, 20% of it is paid in cash one
month after the end of the fiscal year. The remaining 80% is allocated to members as Class B
Shares. These shares are kept in the company to use for any purpose. The Board of Directors
decides how much and when to redeem these Class B Shares, which is based on their financial
situation. Due to its financial success, Alvarado has been able to redeem these shares on a 3-year
schedule in the past several years, but that has not always been the case.
Alvarado’s management structure. Unlike most worker-owned cooperatives,
Alvarado’s management structure is not flat. It used be, when it was managed by a committee
system over 20 years ago. Under the committee management system, different plant
responsibilities, such as discipline and grievances, accounting and payroll, scheduling, etc., were
managed by committees. People were elected to these committees, and each committee would
manage its assigned area of responsibility. However, serving on a committee did not absolve one
of their primary bakery related job responsibilities. So, if a person’s bakery job was Bagel
Maker, he/she still held that position, in addition to the elected administrative committee
position. As such, these elected positions were treated as voluntary, and were not given high
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priority by committee members. When recalling that time, one worker-owner stated, “I’ll use
myself for example. I’d get elected into the position, get frustrated that no one ever really got
held accountable, just quit the position, and leave it kind of open ended. Nothing ever happened
to me, because I was elected into the position. I still had my job as a worker.” Not having a
system of accountability, and not having someone dedicated to these administrative tasks, some
of which required a unique skillset, affected Alvarado’s ability to make good management
decisions. Another member, when speaking of that period in Alvarado’s history shared that after
serving on a couple of committees, he realized a skillset was involved which he could not
fulfill— “Management is a skill. It’s a skill you develop, and so are scheduling and
disciplining…We didn’t have people with those skills on our committees.” Since turnover for
Alvarado was high during that time and those with skills tended to leave, Alvarado realized that
its management structure was not conducive to knowledge sharing and redundancy, and that such
an environment could have disastrous results.
A series of safety accidents, poor management decisions, and a high turnover rate led to a
state of crisis, which put Alvarado at risk of closing. In an attempt to save the company,
Alvarado engaged consultants from a local university to help them resolve what the membership
felt to be systemic organizational problems. The consultants advised Alvarado to separate its
management structure from its governance structure, to implement a hierarchical management
structure, and to change its wage structure. In 1988, Alvarado’s membership elected to
implement the consultants’ suggestions and did so over a 3 year period. However, the decision to
adopt these changes was not an easy one. Some of today’s members called it “a battle on many
levels”, as it contributed to people leaving the cooperative.
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When changing to a hierarchical management structure, Alvarado’s membership
recognized the need to differentiate between production and administrative responsibilities, and
created Area Coordinator positions, which are the equivalent of management positions. The Area
Coordinators supervise different departments (also called workgroups), such as Sales and
Marketing, Operations, Facilities, and Distribution. They also created Specialist Position
Coordinators who do not manage departments, but are responsible for plant wide administrative
tasks, such as the Personnel Specialist who is responsible for hiring. The 11 Coordinators and
Specialists report to the General Manager, who is hired by and reports to the Board of Directors.
A larger department, such as Operations which includes the production lines on two shifts and
the Sanitation department, has Assistant Coordinators.
Prior to the implementation of the new hierarchical management structure, the wage
system was also a flat pay structure, where the only differentiation depended on how many
children one had to support, for which there was a special bonus. Pay did not reward skill. As
people took on responsibilities, and gained skills, it was common for them to leave Alvarado for
market rate paying jobs which rewarded their skillset. One worker-owner described these times
as feeling like “Alvarado University, where you’d come in, you’d acquire a skill, and then you’d
go someplace else where you could actually get paid for it.” In addition to the skilled worker
turnover, resentment was beginning to build among some remaining members because the lack
of policy allowed employees great freedom and flexibility to come and go as they pleased
without consequence. When speaking of that time, one member said, “…if you’re in a system
where people are not held accountable (because people weren’t being held accountable) and
you’re a really great worker, and you look around at other workers that are doing a crappy job—
they’re not coming in on time, and nothing’s happening to them, and they’re getting paid the
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 63
same as you, it starts to breed resentment. And the good workers tend to leave— not the ones
that are not really contributing to the coop’s long-term goals of getting better. So the wage
system just didn’t work.” In addition to the difficulty Alvarado had with keeping skilled, and/or
desirable employees, the old pay structure also made it difficult to attract skilled employees. At
one point, for example, Alvarado needed a Facilities Manager— someone with an engineering
degree, who understood how to handle their machinery and equipment. Not having that expertise
contributed to repeated costly mistakes. However, by not offering a competitive market wage, it
was difficult to attract somebody with the required skillset. They also recognized that while some
jobs were task oriented, others were responsibility oriented. This difference became more
obvious when Alvarado moved to the new management structure where individuals replaced
committees, for specific administrative and management responsibilities. It did not make sense,
for example, for the new General Manager (the equivalent of a CEO) to clock
in and clock out as the production workers did, since he was not being paid for
a task from which he could necessarily walk away at the end of an 8-hour
shift. If he were paid an hourly rate, for the actual hours worked, the company
would not be able to afford his salary. Despite membership’s discomfort with a
non-egalitarian compensation philosophy, the membership agreed that
their wage structure needed to reflect market rates and differences in job responsibilities.
Alvarado’s governance structure. The Board of Directors is not a part of the
management hierarchy, but a part of the governance hierarchy. It consists of 9 members who are
elected from the membership and by the membership, and reports to the membership. The Board
of Directors is responsible for making strategic decisions on behalf of the membership, in
accordance with the cooperative’s bylaws and board policies. They are charged with certain
Figure 3: ASB Environmental Award
(Alvarado Street Bakery, 2015)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 64
tasks, such as determining the patronage pay out schedule, and preparing and presenting the
business plan to the membership. Board members are elected to 3-year staggering terms, so that
all board members are not replaced at once and a sense of organizational knowledge and
continuity are preserved. The Board reports to the membership at quarterly membership
meetings, where issues such as the business plan, the annual budget, wage and salary rate
adjustments, and other non-job-function related issues are voted on, as defined by Alvarado’s
bylaws. In response to the needs of Alvarado’s sizeable Hispanic population, a Spanish translator
is hired for the quarterly governance meetings, to ensure equitable access to information and
hopefully minimize language induced disadvantages. At present, a majority of the board
members are also managers, who have been reelected to their board positions so often that many
are considered to be institutions at Alvarado. All members have one vote, which is a cornerstone
of cooperative ideology— one member, one vote. A member’s tenure or position does not entitle
them to more than one vote.
Also, within the governance structure are committees to which members are elected.
Committees handle various governance oversight responsibilities, and serve as a form of check
and balance. For example, there is a grievance committee, to which members may file grievances
if they have an issue with their supervisor or another employee.
When becoming a member, one must purchase a Class A share which costs about $1,500.
Unlike when Alvarado began, the company no longer needs the membership fee to cover its
capital costs, which allows them greater flexibility in terms of accepting payments. The entire
$1,500 does not have to be paid at once. A member does not have to pay the entire cost upfront.
Alvarado will take payroll deductions over a 3-year period to cover the cost. Alvarado has also
always taken care to keep the cost of membership affordable, because its intention was always
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 65
for its membership to reflect the working class population of their community. While the cost of
membership was originally used to fund Alvarado’s capital needs, it did not represent real capital
investment in the sense that its worth appreciated with time. Rather, the membership share
represents a member’s voting right. When that member leaves, the price paid for his/her
membership share is returned to him/her. It does not represent real wealth, and cannot be passed
on to others.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 66
Chapter 4: Findings
This study was conducted at Alvarado Street Bakery, a worker-owned cooperative
located in Petaluma, California.
The worker-owner interviews and surveys yielded three broad findings. First, as a social
business, Alvarado does not define success by financial metrics alone, but also takes into
consideration social attributes, such as improving safety, creating an exploitation free product,
and improving the health and wellness of its membership, some which do have a financial
benefit but are valued for the non-monetary benefits they provide. Second, the socio-cultural
attributes Alvarado’s membership deems necessary to support their success are accountability,
transparency, trust, empowerment, and cultural compatibility. Third, various governance and
management tools have been implemented to nurture the socio-cultural attributes Alvarado’s
membership require to be successful, such as effective communication, a democratic and
collaborative governance structure, a hierarchical management structure, workgroup and
membership meetings, and coworker vetting process. I discuss each of these findings in greater
detail below.
Figure 4: Petaluma, CA Figure 5: Petaluma in reference to Northern California

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Research Question 1: How does Alvarado define success?
As a social business, it is expected that Alvarado measures its success, in part, using
social assets. Alvarado defines success according to four concepts: profits, safety, an exploitation
free environment, and membership health and wellness.
Success as defined by profits. Many of the interviewees spoke similarly about the
importance of Alvarado’s financial success. Seventy-five percent of the interviewees mentioned
that they measure Alvarado’s success by what they, as worker-owners, are able to pay
themselves in wages, benefits, bonuses (gain sharing), retirement plan contributions, and
patronage dividends (profit shares). Across the interviews and surveys, there was a consistent
message that while Alvarado worker-owners value people over profit, this is still a business, and
profit is still valued. When asked to describe what financial success looked like to them, both
managerial and non-managerial subgroups were clear and consistent in their description. One
worker-owner explained “Most Alvarado workers have an expectation that every 3 months,
there’ll be a bonus check, for about $4,000. We’ve been fortunate that, every year, Alvarado
does better, which means that we all do better. This is reflected in our benefits package, which
now includes things like aromatherapy, massages, and acupuncture. The former benefits package
was good, but as Alvarado has done better, we’ve been able to give ourselves more. That’s
financial success.” This image of financial success was a common perspective, referenced by
employees across all demographic subgroups, regardless of their tenure, job position, age, and
educational status.
One worker-owner explained that democratic participation, transparency and effective
communication contribute to the membership’s common perspective on what it means to be
financially successful, and on how financial success is prioritized by the company. She
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explained, “We have membership vote on the business plan every year, and then the membership
approves the budget that's based on the business plan. Then, all during the year we're [the Board
of Directors] adjusting and monitoring and making sure that we make our budget, and reporting
those results to the membership. So, it's very much financial as far as measuring the success. If
we had a good year— if our sales increased, if our gain sharing increased, if our income was at
the level it needs to be, everybody knows what happened, and what it means for our company.
Then, if we're paying out the patronage dividends on a good schedule, which we do, we're set,
you know? And again, we're kind of tightly managed. We know that the members want to get
their patronage dividends back so we manage things very conservatively to allow that to happen
on a good schedule.”
Despite its importance, even the impressiveness of financial success has its limitations, as
noted by interviewees and survey respondents. While both managerial and non-managerial
interviewees were clear about what financial success looks like and consists of, they were also
clear about what did not qualify as financial success. For example, over the last 35 years,
Alvarado has grown into a bakery with 30 million dollars in annual sales, but the interviewees
insisted that this growth is not the result of Alvarado chasing sales. Rather, it is the result of
Alvarado strategically chasing profit. In both interviews and survey commentary, Alvarado
worker-owners were careful to distinguish between increased sales contributing to an overall
financially healthy state, and increased sales actually being a goal to pursue because it is equated
with success. When explaining the difference, one interviewee said, “In a traditional business
model, they’d be out chasing sales, but Alvarado doesn’t chase sales. We chase profit.” He then
explained how Alvarado had declined multiple offers from a major national retailer because the
retailer wanted extreme discounts to which Alvarado was unwilling to concede, despite the
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 69
retailer’s promises of increased regional visibility and increased sales. Alvarado’s management
felt that agreeing to those terms would sacrifice their financial well-being and possibly the
quality of their product. This decision was consistent with comments provided by 80% of the
survey respondents, who mentioned wanting to continuously improve and grow the business, but
not at the risk of exploiting themselves, their customers, or the environment. Members
considered financial self-exploitation to be working for less than their budgeted profit margin, or
working for less than their budgeted expenses. They also spoke of protecting customers from
exploitation in the forms of increasing bread prices beyond what is affordable for community or
cutting costs such that the quality of their product is compromised. To guard against exploiting
the environment, they support sustainable agriculture. So, even though the idea of more— more
sales, more shelf space, and more retailers— is alluring, it is not what Alvarado aspires towards
because more sales are not singularly equated with success in general, or with financial success
in particular.
One worker-owner helped me understand how Alvarado sets their priorities around
financial success, by explaining the philosophy against which they measure most, if not all
corporate decisions. She explained that Alvarado subscribes to the triple bottom line concept
which she summarized as “people and planet, before profits”. When explaining Alvarado’s
application of the triple bottom line concept, she stated that “It’s really important to us, and is
used as a guide when we're thinking about if something new fits in or conflicts with our
priorities. We ask ourselves, does it fit into that— the people and planet before profits?” This
commitment to the triple bottom line was shared by many of her peers. Fifty percent of the
interviewees and 68% of the survey respondents clearly stated that while their financial success
is a priority, there are still philosophical boundaries which Alvarado will not compromise for its
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 70
sake, such as its commitment to producing an exploitation free high quality product. Despite
68% of the survey respondents confirming the company’s commitment to prioritizing people and
planet over profits, when asked to numerically rank their perception of Alvarado’s priorities,
only 25% of the survey respondents who answered the question ranked both people and planet
over profit. Profit, on the other hand, was ranked above people and planet by 46% of the survey
respondents. The survey rankings convey a different message than the survey comments, and the
reason behind those conflicting results is unknown. However, when comparing the ranking of
only people to profits, people were ranked above profits by 46% of the respondents who
answered the question. So, it appears that there are some ambiguous feelings towards Alvarado’s
commitment to the planet over profits.
Some ambiguity towards such philosophical commitments is understandable, since such
commitments are sometimes associated with financial sacrifices. On more than one occasion, for
example, the worker-owners have voted pay cuts during difficult financial times. While
definitely a sacrifice, such drastic decisions have protected them from laying people off— “And
when it came time to make cuts we didn't lay off one person. We created an on-call system
where when we're overstaffed. Five different people would get a single day off that week, and
they were on-call if we needed them. If we didn’t need them, then they just got to have a day off,
but without pay. Although, they could be compensated if they chose to use their vacation bank.”
Many of the interview subjects spoke similarly about making such sacrifices. Another described
two such occasions and their effect on his personal circumstances: “In the past we've had to
make some difficult decisions among competing priorities. The first time we had to go down to, I
think, three or five [dollars], or something like that an hour and things weren't too good. This
was 1981. Yeah, that was pretty bad but we had to take a wage cut to save the business so we
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 71
went to minimum wage which was three- or five-something per hour at the time, I can't
remember.” This was not the only time Alvarado voted to cut pay in lieu of laying people off,
permanently downsizing, or closing the company. The same worker-owner went on to say, “We
did it another time, the first dot com bust, a year after that the economy kind of tanked and we
voted to take our wage cut then as well. We took a 6% wage cut. It was pretty heavy, I had to
refinance my house and save just enough money to keep making the payments. So everybody
sacrificed, but we were able to build and build and build, and now we're doing great. We're
getting a good base wage, we're getting good profit sharing, and we're getting good bonuses.
Personal sacrifice for the greater good and for the company’s future paid off, and without
compromising the quality of our bread.” Preserving such a delicate balance comes with its
challenges, but 100% of the interviewees agreed, regardless of how they ranked these competing
priorities, that pursuing such balance was necessary and worthwhile. One worker-owner offered
the following explanation: “Our workers make a great living, and uh, nobody gets rich, but
nobody is exploited either, which is really the other thing about a worker-coop. In our mission
statement, we try to make sure we’re not exploiting anybody— ourselves, the environment, our
customers, and keeping that, you know, balance.”
Worker-owners who have weathered past financial storms with Alvarado and can recall
those times of sacrifice, or who remained steadfast when the company was not yet financially
prosperous expressed what could be described as a feeling of vindication by the eventual
financial success of their exploitation-free worker-owned cooperative business model. Eighty-
one percent of the interviewees stated they were happy they stayed through these difficult times,
and that if given the opportunity to do it again, they would make the same choice. One worker-
owner stated: “…other drivers, they always looked at us as some poor little hippy bakery, and
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 72
would look at me like I had fallen on hard times, asking me questions like “How are you doing?
Are you okay?”…all these other guys work at places like Orowheat, [and] they are all
teamsters…but I was laughing all the way to the bank because they didn’t know how successful
we had become. Now, these same guys are coming to me and saying, Got any openings?”
Consistent with that view, 84% of survey respondents employed at Alvarado 15 years or longer,
agreed that they did not regret staying with Alvarado through those difficult financial times, and
79.5% agreed that they would make the same choice if given a second opportunity.
Success as defined by safety. When discussing success at Alvarado, safety was a
recurring theme among interviewees. Sixty-nine percent of the interviewees emphasized the
importance of work safety as a measurement of Alvarado’s success. While some spoke of a
philosophical commitment to safety that was in keeping with the triple bottom line practice of
prioritizing people and planet over profits, others spoke of safety in terms of the financial
incentives associated with the safety goals, and the financial costs associated with not meeting
those goals. At one point in the bakery’s history, their work-related accidents were so high, and
the worker’s compensation insurance so expensive, that it couldn’t afford to pay for its budgeted
expenses. The membership voted to take a pay cut in order to cover their other expenses, which
was a costly unanticipated sacrifice. However, not doing so would have put the bakery at risk of
closing, which helped make it clear that organizational cultural changes were needed. Being
faced with this financial sacrifice shed light on what had become a problematic pattern with
reverberating impacts throughout the company. People would get hurt, go on disability, and due
to a lack of cross-training, accountability, and job standardization, that person’s skillset was not
easily replaced, which sometimes contributed to more work-related accidents, and which
affected the quality of work being done. To make matters worse, sometimes those people did not
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 73
return after recuperating; thereby further handicapping the company by permanently taking their
skillset with them. One interviewee described this time period as not safe and not fun— “…when
you’re in a system where people are getting hurt, because you have no safety, really, protocols,
or people are just leaving, and you’re hiring new people all the time, and no one is staying, you
look around, and you do think, we need to change. We need to look at something that will work
better for us because this isn’t fun. You know, not that baking is always fun, but it’s way less fun
when you’re overworked in unsafe conditions, where you’re exploiting yourself, you know,
basically. Not that someone’s exploiting you, but you’re still getting exploited by yourself. How
do you get out of that issue? So, crisis led to us going, this isn’t working”.
Management worked hard to promote a culture change around the concept of safety.
Providing a financial incentive played a major role in influencing this culture change— “We
used to have a lot of safety issues, and our insurance was really expensive. It took a while for
that to change, but we finally decided that we rather put the $200,000 going towards insurance,
into our own pockets. So, we launched a campaign to educate ourselves on better safety
standards, and implemented processes to improve safety.” On a macro level, interviewees
appeared quite knowledgeable of the relationship between poor safety and the company’s profits,
and comfortably discussed the safety metrics and their high level impact— “When a business
starts out in the worker’s comp world, you have an experience modifier that they use to rate you.
It's 1.0. If you get worse, you go up. If you get better, you go down. It's based on a four year
running total and it's based on a really complicated mathematical equation. So the Bakery began
at 1.0, but I think at our worst, it was 2.6, which is high. Now we're at 0.5, which is a big
difference over a period of time. When we were at the height of 2.6, the entire Bakery had to take
a pay-cut just to pay for stuff at that time, because the insurance was so costly. That was a huge
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 74
hit, and it put the Bakery at risk at that time. It was possible that the Bakery might not have
survived it, had there not been changes”. Interviewees were just as, if not even more aware of
how that macro impact trickled down to affect their personal bottom line, which motivated them
to keep abreast of work related accident gossip, although some might call it news. One
interviewee said, “You're on the team and if we have a bad safety run, which we don't, but if we
do, then every worker hears about it and sees less [money] because of it. Even though it's a small
increment, we all know the math— our experience modification is X therefore we all return this
to ourselves.” Another interviewee confidently stated that “…each employee is quite aware of
how much that increased cost [associated with worker’s comp] incrementally deducts from his/
her profit shares.”
While the culture was slow to change, based on the feedback from 93.75% of
interviewees, it has changed. A majority of the interviewees (81.25%) agreed that the safety
bonus served as an incentive for them to be more mindful of safety protocols. The safety bonus
was a result of their culture shift campaign, and is a bonus paid to worker-owners when the
experience modification or the insurance decreases.
Three-quarters of the interviewees agreed that Alvarado’s application of participatory
management, where each worker-owner is empowered to directly address quality and safety
issues has also helped hold people accountable. Since the impact of neglectful safety standards
affects everybody’s income, ensuring adherence to safety standards has become a shared
responsibility, as explained by one interviewee— “Now, safety standards are so well set in stone
that if someone sees another person lifting something incorrectly, they’ll stop them and correct
them.” Based on such comments, it appears that the goal of improving safety standards and
creating a culture where promoting safety is a shared concept has been achieved.
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In addition to the safety modifiers with which worker-owners appear to be hyper aware, 4
interviewees spoke about the company’s commitment to safety because of their commitment to
its people. In keeping with the aforementioned people and planet before profits philosophy,
interviewees provided multiple examples of how delivery routes were adjusted to reduce the
strain on the employee, despite the impact to sales. One worker-owner was emphatic in his
assertion that changes made to accommodate his health needs would have never occurred at his
previous employer, a well-known bakery with an international market presence. He stated of that
past experience, that “I couldn't keep up with four weeks’ work, and how fast you had to work at
[bakery name redacted]. I wouldn’t have lasted. My body would have broke[n] down. I got two
knee surgeries, an elbow surgery, and all that. Whereas, here, I could see myself working until
I’m 68. My route was one of the longest routes here. My supervisor and boss, they've seen that,
so they adjusted it to make it to where it's much more doable.” This was one of three such
examples where management reduced or rerouted a delivery route, despite its impact to sales, in
order to preserve a driver’s health. Drivers salaries are partially based on commission, based on
the new customers they contract along their delivery routes. However, a really successful driver
could eventually end up with an overgrown route that he/ she is no longer equipped to supply—
at least not without some risk to their own health and safety. So cutting or rerouting a delivery
route affects a driver’s commissioned income, and possibly the company’s income. However, in
an effort to preserve the health and safety of their employee-owners, all 4 interviewees who
spoke on the matter, said it was worth it.

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Success as defined by health and wellness. I was surprised to hear 43.75% of the
interviewees discuss Alvarado’s commitment to health and wellness as integral to their definition
of success. One interviewee acknowledged that this had not always been an explicit priority.
However, as the membership demographic began to change from people who were members
because they were drawn to Alvarado’s socio-political views, to people with no prior association
to the cooperative movement’s socio-political views, the need to educate on health and wellness
from a people and planet first approach, and Alvarado’s commitment to not just producing a
healthy product, but living a healthy lifestyle became evident. As such, promoting healthier
living is the most recent culture change management has introduced to its membership—
“Getting their employees to make healthier life choices will be a culture change, similar to what
we experienced when changing the organizational culture related to safety. That took years to
cultivate, and it will take years to cultivate a culture of wellness, but it’ll be worth it.” There was
consensus among all interviewees, even those who did not refer to health and wellness as a part
of their measurement of Alvarado’s success, about the futility of ensuring that employees are
well while they work at Alvarado, while their families were unwell at home, or if the employees
are not able to enjoy their retirement for preventable health reasons. A recurring idea mentioned
by interviewees was that going home with more money that they would not be healthy enough to
enjoy, was “a waste” and just another form of “self-exploitation”.
Alvarado’s health and wellness campaign efforts include offering cooking, CPR, and
ergonomics classes; providing hearing tests for productions workers; distributing healthy recipes
and providing company products for free to its membership; continuously improving their health
care benefits as they can afford to do so; and educating members on physical fitness, hydration,
the importance of sleep, and organic and non-GMO food choices. At the time of these
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interviews, Alvarado was in the midst of a 4-week healthy eating competition, where the group
with the most points logged in according to their healthy eating choices would win a prize. In an
effort to appeal to those whose priorities lean toward the financial, management goes so far as to
explain the financial benefit of improved individual health by explaining the projected associated
incremental cost reduction in health insurance. They also provide a health related financial
incentive called well-pay, which is Alvarado’s alternative to accruing sick time beyond an 80
hours maximum. Instead of accruing additional sick time, those who have not used their sick
time get 3% of their gross pay as a bonus. Of Alvarado’s 121 employees, half of them get well-
pay, which for those 43.75% of interviewees who consider health and wellness as part of
Alvarado’s success story, is confirmation of their priorities.
While many worker-owners shared stories of how working at Alvarado has made them
more health conscious, one employee summarized the general sentiment this way: “I've always
worked for small companies where I work with the boss or something like that. I've put in my
hours and then I go home and my job is done— I get a paycheck and try to make a living.
Working here, though, is integrated into my lifestyle. It's a part of who I am. It's changed the way
I live, the way I eat. By working here and understanding how organics work and health classes
that they've put us through and different things like that and the influence of other people, I can't
sit at my desk and eat a Snickers bar. I just can't. I can't do it. Just going to the grocery store it's a
different experience for me.”

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Research Question 2: What socio-cultural attributes are required to sustain the areas of
success? Where are those attributes reflected within their organization, and how are they
nurtured?
What socio-cultural attributes do members feel are essential to support and sustain the
metrics of success described above? Many of the interview subjects spoke similarly about what
socio-cultural attributes were needed to support their goals, with the top attributes being
accountability, trust, a sense of empowerment, and organizational cultural compatibility.
Worker-owners, in the interviews and surveys spoke of a deliberate and intentional approach to
creating an organizational culture which is compatible with the levels of success they hope to
achieve. An organizational culture which promotes recklessness, for example, might not be
compatible with goals related to a commitment to safety. It is as important, therefore, for
Alvarado members to not only have a common understanding of what it means to be successful,
but also of the cultural attributes which will nurture those areas of success.
Accountability. There was consensus among 87.5% of interviewees, across job function
subgroups, about the significance accountability, as a socio-cultural attribute, plays in Alvarado’s
success. Accountability was a particularly sensitive subject for interviewees who had worked at
Alvarado 20 years or more, as reflected in the emphasis those employees placed on
accountability over other socio-cultural attributes. Of the interview subjects who worked under
Alvarado’s former committee management system, 92.8% of them described what they felt to be
a recurring problem with a lack of accountability. Under that system, responsibilities were
assigned to committees, not individuals, and the group was responsible for the completion of a
task. Critics of the committee management system said it was difficult to hold a group
accountable for incomplete or insufficiently completed tasks. At one point, accountability was
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such a problem that delivery routes were not going out, and customers were not being serviced,
which put the business in jeopardy. When describing that time period, one interview subject
stated, “When you have this type of business, I think, which grew [in sales], things got too
nebulous when you had the committee structure. You had a committee of six or so people
running distribution but nobody really took responsibility. The person who had the knowledge,
energy, and commitment took control, and did most things on the committee, which meant that
they got more educated and realized they could work somewhere else for a lot more money. We
were making minimum wage so we ended up losing the people who were the smartest and most
responsible employees. So, having a structure and tools which promote accountability, helps
those who have worked through some of the tumultuous times feel better about their chances of
being successful.” Another worker-owner similarly stated, “In a committee system it's hard to
hold a committee accountable. You've got six people, what are you going to do? Maybe one
person said, “Okay I'll do this”, and they didn't get it done but it's the committee's responsibility
to get it done. Accountability is what we strove for when we went to hierarchical management
system.” With the exception of one interviewee, the others overwhelmingly attribute their
improved accountability to Alvarado’s new management structure, which is now separated from
its governance structure. While still governed using a committee system, Alvarado is no longer
managed by committee, but by individuals, which proponents feel more clearly defines job
responsibilities. By defining scopes of authority, responsibility, and supervision, everybody
answers to, and is accountable to somebody, and Alvarado has clearly defined those relationships
at each level.
In addition to the hierarchical management structure, another tool used to promote
accountability is the internal vetting by peers within the workgroups. Feedback from one’s peers,
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regarding one’s work ethics, organizational cultural compatibility, responsiveness, and skillset is
weighted into membership candidacy. If a new hire is repeatedly late, does not adhere to safety
protocols, and/or is wasteful of resources, his/ her workgroup peers will make note, and share
those observations with supervisors, management, and other worker-owners at the quarterly
membership meeting. One interviewee explained what others repeatedly touched on when
explaining the value of internal vetting as a self-discipline tool used to promote a team oriented
environment.
You know, when you come in, and somebody’s not working as hard as they should be,
you get resentful…it’s a team-oriented environment, and so discipline comes in from the
collective thought of, if you don’t come in on time, you’re exploiting the rest of us,
‘cause we all come in on time. So, we want our group to agree to do those things that
make our life easier, ‘cause when you’re in a bakery and someone doesn’t come in on
time, you have to do their job, ‘cause bread is a harsh mistress. So, the disciplinary aspect
of holding each other accountable comes from the inherent need and want of workers to
have great teammates. When we bring in new workers to the environment, we do
interviews and screening, but the real test is when they go out on the floor, or they go out
on a route. And then we’ll ask their co-workers, because they are the people who actually
make that final decision [on who becomes a member]. But, that’s what happens with how
our coop disciplines itself. …any discipline we put in, such as with the peer vetting, we
put in to protect the whole.
Transparency is also used as tool to promote accountability. If a worker-owner from
production wants to know about the sales negotiations with a particular client, all she/he has to
do so is ask. Inquiring about aspects of the business, which do not necessarily pertain to one’s
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daily responsibilities, is interpreted as a desire to be more engaged. One manager explained,
“…somebody will ask me [about] a sales deal, or what’s going on with this piece of the business
that they’re not necessarily involved in, but they realize how it might affect them, and they see
that piece of work just like it’s their piece. That’s real engagement.” This sentiment was echoed
across the entire management sub-group. When asked why transparency was such an important
tool when holding others accountable, one interview subject stated, “…to me, it’s just practical
unless you’re unethical because, for example, in our history, we’ve had to vote ourselves pay
cuts, and that can be painful, but if you’re given all the information of why it’s necessary, it’s
easier to do it. So, I don’t understand why other people aren’t more transparent in their
organizations.”
Along with transparency, effective communication was also named by 100% of the
interviewees as an important tool in fostering accountability. When asked to describe effective
communication at Alvarado, one worker-owner mentioned how well the General Manger has
outlined job expectations, which makes it easier to resolve problems— “Joseph Tuck has done a
really good job, in my opinion, on defining disciplines and then defining what your
responsibilities are, and how those responsibilities interface. If I have this issue, I know which
component needs to be addressed by Administration, and which component is for Distribution,
and those two workgroups understand how to interface with each other to address the problem.”
Interviewees also referenced the formal input system, which 93.75% say they highly value. In
the formal input process, if someone has an idea or suggestion he/she gives it to a supervisor, and
the supervisor is obligated to follow-up with the employee on that suggestion. The supervisor is
not obligated to agree with, or implement someone’s idea, but they have to respond to that
person and explain their decision. With the exception of one worker-owner, all other interview
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subjects repeatedly referenced this input process as a positive distinction between Alvarado and
other companies for whom they have worked.
A final tool mentioned in relation to both effective communication and transparency was
the monthly workgroup meetings which are held plant wide. These conversations, facilitated by
the supervisors and/or managers, are opportunities for worker-owners to ask job related
questions, share information, provide feedback, and troubleshoot problems. While not all
interview subjects touted the effectiveness of these meetings, 87.5% said these monthly
meetings, in conjunction with the CEO’s monthly newsletter helped them to feel connected to all
aspects of the plant and provided a format for issues to be openly discussed, regardless of which
shift a person may work, thereby ensuring that nobody is left out of the loop. Critics of the
monthly meeting said that while it was informative, it used to also be fun and an opportunity to
bond with coworkers from other shifts. Since the change in management structure, the meetings
have become more formal, which critics have found to be a waste of time and bad for morale.
While this was the consensus across all interviewees about the important role
accountability has played in achieving success in all categories for which success is measured,
one interview subject stated that doing so also resulted in a less flexible work environment, with
more restrictions and punitive consequences for infractions. She associated the increased efforts
towards accountability with these changes, and felt that those changes had an overall negative
impact on the work environment and on work relationships. She shared, “I know in the
Distribution department, that we had a lot of flexibility in scheduling. Back then, it was easy to
say, hey, something's going on, take over for me this Saturday and I can work for you the
following Saturday. It was a lot more loose— a lot more hippy-ish.”
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Trust. Another socio-cultural attribute for which there was consensus from 87.5% of
interview subjects, as being integral to all of Alvarado’s success, is trust. As mentioned in the
section on accountability, workgroups play a major role in vetting new hires according to their
job functions and organizational compatibility, which plays a role in that person’s opportunity to
be voted into Alvarado as a worker-owner. However, since there is no longer an in-depth vetting
of an individual on the governance side, those who do not work with the new hire must trust the
vetting of the applicable workgroup— “…when you get to that level of standing before the
membership, asking them to accept you, you have been vetted by your work group. We have a
very accountable by department workgroup system that you're not gonna get past if you’re not a
reliable and trustworthy employee.” From this statement, it appears that the worker-owners place
a high level of trust in one another to keep the company’s best interest in mind when it is their
turn to take on the role of gatekeeper.
There is also trust between workgroups and within workgroups that, once scopes of
authority and responsibility have been defined, and a culture of accountability has been fostered,
people are going to perform and be held accountable for the quality of their performance. As a
means to hold people accountable, transparency is built into the management and governance
structures in various ways. However, when tempered with trust, as expressed by three-fourths of
the interviewees, people feel less of a need to constantly track and assess others from afar, even
though they have the right and means by which to do so. One such interview subject shared, “We
don't get into somebody else's stuff. We could, but we're trained to do our jobs, and we generally
assume that the people around us are also trained to do a good job. If they aren’t, then we trust
that the peers in their workgroup will handle it, and give the feedback they need to do a better
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job. If somebody abuses that trust, it soon becomes clear with all of the meetings, newsletters,
and transparency built into our management system. It’s all about systemic competency.”
Empowerment. Empowerment was mentioned by 81.25% of the interviewees as
necessary to achieve success. Interestingly, though, empowerment was valued differently by
employee subgroups. The Management subgroup, who was more likely to have worked Alvarado
for 13 years or more, valued empowerment because having a traditional management hierarchy
in today’s management structure empowers managers to make decisions without the need to first
seek group consensus. Managers are empowered, through the hierarchical management system,
to make decisions in the company’s best interest regarding job related tasks and functions, based
on their professional skillset and experience. Unlike the days of committee management, where
one’s expertise and skillset did not necessarily reflect one’s committee assignment and/or job
function, the current management structure promotes empowerment because it gives those with
the necessary professional knowledge the freedom to act on what they know without having to
get consent from a group of people who, while they may have good ideas, are not necessarily
equipped with the particular skillset unique to a particular problem. Empowering managers to
make difficult decisions was especially important when attempting to reach safety goals because
the skillset needed to understand the dangers associated with mass food production, and how to
address those dangers, required collegiate and other forms of secondary educational training.
While there may have been some room for variation in processes, much of what was needed to
accomplish the work safety goals, needed to come from those with knowledge, training, and
experience, and empowering those individuals with the authority to make decisions based on
their knowledge, training, and experience has helped Alvarado reach its goals.
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Likewise, 90% of the non-management subgroup expressed feeling empowered, through
the democratic and collaborative governance system, which allows them to control the direction
of the business by voting on the budget, the business plan, and the committees’ and Board of
Directors’ members. Interviewees from this subgroup described having a vote, and the
opportunity to influence the direction of the business, which is not based on one’s tenure,
position, or number of owned shares, as an empowering experience which reinforced their
feelings of being an owner. One worker-owner spoke of the time it took to embrace her new
position— “Yeah, it took a while to realize that I had a voice and what I said really had merit and
people actually would listen to what I say and take it and actually think about it.” When asked in
what ways they felt empowered, most responses reflected this quote given by one interviewee
who actually took a pay cut to work at Alvarado because of what she gained as an owner.
“Empowerment is, knowing that we get to make all of our own decisions, and run the business
plan and the budget. We get to elect a Board of Directors and if we don't like them, we could
elect somebody else to represent us. All of those things were so attractive to me. I’m an owner,
and not just in name, but also in practice, and again it was not the money. I took a pay cut to
work here”.
Empowerment is also used to hold people accountable for shared responsibilities related
to safety and quality control. For example, each member is empowered to address quality
control. “Every employee is empowered with quality control— to walk over to a product and
pull it off the line because they see it as damaged, and not good to sell to customers. It’s pretty
empowering for any one person to have the power to say “That’s not going out with our name on
it”. It also increases accountability and motivates people to look beyond their own job, and pay
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attention to what’s going on around them. Nobody can say, “Well, I saw it, but I didn’t do
anything about it because it wasn’t my responsibility”.
With the exception of two interviewees, the other interview subjects spoke of also feeling
empowered within the management structure, even though they did not have the final say on job
function related issues within that structure. When asked to expound, interviewees mentioned
feeling empowered as a result of opportunities to exercise their voice through what Alvarado
calls participatory management and team-oriented processes. This includes practices such as the
formal input process and the team vetting. Interviewees from the management subgroup stressed
that although non-management worker-owners did not have authority within the management
structure, they are still in a position to influence decisions in that setting using these tools. One
interviewee shared, “No prior job prepares you for this experience. At any other place, you can
suggest things to your boss and he can go, "Yeah whatever," or, "Yeah that's a great idea," and
he or she might actually make the profits from your idea. That doesn't mean that you're going to
get a raise because you have great ideas. But, here, if you have a great idea and something comes
from it, your great idea’s going to come back to you and everybody else.” While 2 interviewees
from the non-management subgroup did not feel empowered through these tools, they did agree
that the check and balance provided through governance oversight, was empowering.
While most managers celebrated the empowerment they within their managerial roles,
which they associated with the separation of the management structure, and having it separate
from the governance structure, all of them did not feel as equally empowered through the
governance structure and their role as a member-owner. One manager, in particular, shared that
while he is both a member and a manager, when operating within the governance structure, he
feels constrained by his role as a manager in the management structure. He spoke of occasions
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where he had conflicting opinions on an issue resulting from his roles as both a manager and a
member-owner. When experiencing these moments of internal conflict, he took care to be
explicit when voicing his opinion as a member-owner so that others would not mistake his
intentions. However, despite his approach to addressing this conflict, he feels that within the
governance structure, his feedback is interpreted by others based on his role as a manager, and as
one who supervises and evaluates others. In an effort to not intimidate others, he has since
decided to curtail his commentary despite his right to speak freely during the membership
meetings. When asked if he felt his hands were tied, he responded, “My hands aren’t totally tied,
no. It's just you have to be guarded because of the way people perceive you. They perceive you
as a manager not a member. I've found, and it's much better than it used to be, but there was a
general fear of management systems.” Beyond voting, he seeks alternative informal means of
expressing his membership-owner views.
When discussing the balance of empowerment between the managers and the general
employees, one interview subjected stated, “We believe that our model with the democratic
control and the governance system being separate from the management system [has] really been
key to our success because it empowers people that have the responsibility and the authority to
be managers or area coordinators. You have to do that to have a successful business, while, at the
same time, giving the cooperative members democratic control in the bigger picture areas like
corporate governance. Then, maintaining the balance of power so that one group isn't more
powerful than the other and that both groups are working towards the common goal.” However,
if everybody feels empowered, to what extent do people expect to get their way? To what extent
is their sense of empowerment tied to their ability to influence business related decisions? Using
a Likert scale, survey respondents were asked to what degree they felt they could influence
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change at Alvarado in an effort to better understand how employees’ sense of empowerment
works. Of the 42 that responded, 64% agreed with the statement that they could influence small-
scale change at Alvarado, while 31% somewhat agreed. However, also using a Likert scale, 33%
agreed with the statement that they felt they could influence large-scale change, while 57%
somewhat agreed. Survey respondents’ answers were consistent with the interviewees’
responses. Considering the effort taken to empower all members, regardless of their role, but to
provide sufficient balance such that no one person or group has sufficient authority to singularly
change the direction of the business, it is understandable that fewer people agree with the idea
that they are able to singularly affect large-scale change. This sentiment was summarized by one
interviewee, “You want no one to be important, though that may sound weird. But what it really
means is that the coop is more important. The coop holds all of the information and
knowledge…” As was the case in empowering both manager and non-management employees,
balance continues to be a theme.
As with other socio-cultural attributes, transparency plays a role in empowering worker-
owners, which 100% of the interviewees associate with their financial success. Interviewees
agree that their ability to make good decisions about the budget, business plan, and new
acquisitions, was dependent upon the transparency of the Board of Directors and the
membership’s trust in the Board. Even with the trust that is necessary for this to work, there are
still opportunities to verify that their trust has not been misplaced. As noted by one interview
subject, “We get to sit there every meeting. We look at the numbers. We see where we're at.
We're all informed too, so we know what's going on. We don't know everything. I mean, now
that we have a Board of Directors, but we can sit in on the meetings if we want. Most of choose
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not to, though, because we trust them. But, if I ever sense any funny business, I’ll be the first one
to show up at that board meeting.”
Cultural compatibility. Ninety percent of the interview subjects emphasized the
importance of cultural compatibility in defining targets for success, and in reaching those targets.
However, 93% of survey respondents said Alvarado was the first cooperative for which they
worked. Of those who had never worked for a cooperative before, 49% were not at all familiar
with cooperatives, and 39% were only somewhat familiar with cooperatives. That means that
88% percent of the survey respondents (about 39 people) had little to no knowledge of
cooperatives before joining Alvarado. It is interesting to note that when compared to Alvarado’s
beginnings, the socio-political demographic has changed in that the majority of its current
members have no prior affiliation with the cooperative movement. The upper middle-class,
white, college educated hippies of Alvarado’s past are being replaced by Latino immigrants who
speak English as a second language, many of whom only have a high school diploma. This is not
to suggest, however, that variations in ethnicity, education, and/or prior familiarity with
cooperatives prevent people from sharing a value system. Despite the membership’s changing
employee demographic and socio-political affiliations, the importance of organizational cultural
compatibility still resonates with both interviewees and survey respondents across ethnic and
educational subgroups.
Interestingly, since joining Alvarado, 20% of survey respondents say they currently have
a lot of experience with cooperatives. Forty-eight percent say they currently have some
experience, and 23% say they have a little experience with cooperatives since joining Alvarado.
This is quite a change from the 88% who had little to no knowledge and experience prior to
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working at Alvarado. After working at Alvarado, 68% of the survey respondents have at least
some experience with and knowledge of cooperatives other than Alvarado.
Both interview subjects (90%) and survey respondents (88.64%) emphasized the
importance of organizational cultural compatibility when in an environment where the person
working next to you is not only your co-worker, but also your business partner. A recurring
theme among survey respondents was, wanting a business partner who was going to be engaged,
and more than minimally active. One survey respondent stated, “If you're not going to work out
here you're going to know that you don't fit in here. The people who are here like it here, they
work out, they're part of the community…They'll raise their hands and ask the questions and
they'll be part of it. If you just sit around and don't participate and you do a bad job, you're going
to get weeded out. It's not going to work out. You have to hold up your end of the line, otherwise
you won’t last.” Interview subjects came across as more flexible about where people resided
along the spectrum of participation, and did not solely associate one’s level of participation with
their commitment to Alvarado, its membership, and its values— “…it's my opinion, but there is
nothing wrong with people that want to come in, clock in, do their gig, clock out, and go home.
There are people that want to participate at various levels. Some people participate a lot in the
governance system. You get a packet for the membership meeting. Some people open it up and
do homework and write questions to ask. Some will open it up when they get there. I don't have a
problem with any of those people, if that's what they want to do.” Regardless of how one shows
their commitment to Alvarado’s values through the spectrum of participation, through
relationships, etc., both interviewees and survey respondents clearly stated that a person who
does not fit in with the culture will not last.
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It is difficult to believe, however, that people just walk in off the street, without any prior
cooperative exposure, ready to embrace organic sprouted wheat, engage in democracy and,
above all else, put the cooperative’s interest above their own self-interest in the belief that doing
so would actually benefit them in the end. From what interview subjects stated, especially those
who had been with the company less than 15 years, there is a cultural transitioning period.
During this period, Alvarado takes deliberate measures to explain its values and perspectives on
sustainable agriculture, exploitation-free work environments and products, and democratic work
environments. One interviewee shared his perspective, “Yeah. We do a good job here culturally
of outlining expectation and criteria, following through in an accountability sense from the entry-
level worker up to the manager, and what that means to you and your lifestyle, and your ability
to provide for your family. I think those three things get your attention.” A majority of the
survey respondents confirmed that the first lesson drilled into them was that they are all working
for each other, and because of that circumstance, they were all in this together.

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Chapter 5: Conclusion
Summary of Findings
My project yielded three primary findings. First, as a social business, Alvarado measures
its success by financial and social metrics. The social indicators of success are improving safety,
creating an exploitation-free product, and improving the health and wellness of its membership.
Although there are financial benefits associated with improving safety and with improving
employee health and wellness, these social indicators are also valued for the social benefits they
provide.
3
Second, the social assets that Alvarado deems necessary to support their success are
accountability, transparency, trust, empowerment, and cultural compatibility.
4
Third, various
governance and management tools have been implemented to nurture the social capital required
to be successful, including opportunities for effective communication, a democratic and
collaborative governance structure, a hierarchical management structure, monthly workgroup
meetings, quarterly membership meetings, and a coworker vetting process.
Within Alvarado’s participatory management structure, great care is taken to be
transparent about the decisions being made and why, while freely communicating decisions and
sharing information vertically and horizontally throughout the organization. Simultaneously,
great care is also taken with defining and upholding boundaries. People know which aspects of

3
My site visit was limited to a tour, survey collection, and interviews, and direct observation was not a part of my
methodology. However, I did observe through limited interactions with employees, the familial relationships
between employees. For example, on multiple occasions, I observed employees of diverse educational and racial
backgrounds discuss shared weekend plans such as children’s birthday parties, dinner plans, etc. Also, when
speaking to interviewees about the impact Alvarado has had on their lives, employees seemed intimately
knowledgeable of their colleagues’ job histories, and financial and familial circumstances. As such, they were
regularly able to direct me towards others who I might want to interview. This level of familiarity supported
interviewee and survey respondent comments related to the familial environment which promotes strong collegial
relationships.
4
Due to my limited observations, it was difficult to verify the extent to which Alvarado’s practices reflected their
policies and cultural ideologies. Despite this limitation, I think it important to note that while Hispanic employees
spoke of similar social assets as non-Hispanic employees, they did not speak of the same motivations to The
Cooperative Movement to the same extent as non-Hispanic employees. Rather, Hispanic employees were more
likely to frame their commitment to these social assets as a result of their commitment to Alvarado, and their belief
in Alvarado’s commitment to them.
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the job are up for debate and may be put to a vote, and which aspects are not. Creating those
boundaries, clearly communicating the reasons behind them, and then consistently and fairly
reinforcing those boundaries, motivate people to trust the process, and appear to make it easier to
accept unpopular management decisions which are bound to occur. Also, giving employees a
regular outlet to communicate their ideas, and charging managers with the responsibility to
follow-up on each and every idea they receive, reinforces the organizational cultural approach to
establishing everyone’s importance. I find it interesting that the transparency, responsiveness,
acknowledgement and validation of ideas regardless of agreement, and information which freely
flows within the organization, are enough to satiate members and validate their experience such
that they continue to uphold the managerial boundaries put in place. Apparently, these
boundaries also make it easier for worker-owners to hold management accountable, since scopes
of authority and responsibility are so clearly defined, even though such definition may also be
considered somewhat restrictive.
As such, despite the participatory management process, it is not within the management
structure that employee-owners are most likely to exercise their democratic influence. Since
owners yield greater influence within the governance structure, how do owners avoid making
reactive governance decisions based on personal interactions which occurred between the
employee and manager within the management structure? Although there was consensus on the
value of management and governance structural split, as well as consensus on the need for
balance between the two structures, I believe there are some unresolved tensions resulting from
this cooperative governance model. There is an effort to maintain positive relationships within
the management structure, partially, in an effort reduce retaliatory decision making within the
governance structure. An example of this tension is the manager who feels that he will always
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been seen and treated as a manager and never as a member. His response is to curtail his
participation within the governance structure so as not to trigger negative feelings people may
associate with management. So, there is an incentive to “make nice” and “get along”, because
poor management-employee relations may affect future governance decisions. This form of
tension may also be seen when one applies for membership at Alvarado. One has to consider
that, while the pie is not permanently fixed, if there is opportunity for additional profits, then
adding another owner to the company means that one’s slice of that pie becomes smaller.
Keeping that in mind, as one is being vetted by their workgroup, there is an incentive to play
along to get along, and adopt the company culture even if one has not truly embraced its values.
This form of peer pressure may have both positive and negative effects. The members sacrifice
when they agree to prioritize the cooperative’s needs above their own, under the belief that doing
what is best for the cooperative will eventually benefit them personally. As such, member-
owners who are also managers, and who may feel constrained within the governance structure,
by their managerial role in the management structure, make a sacrifice which is reflective of the
cost of membership.
The potential for there to be tension between the governance and management structures
is not surprising. I am surprised, however, that given the potential for this to be the case, and the
fact that the Board primarily consists of managers, that more proactive measures are not taken to
ensure there is no overrepresentation of any subgroup on the Board or on any governance
committee. An example of such a measure could be that no more than 4 of the 9 board members
may also be managers. Such a limitation, however, might give further credence to managers who
already feel limited in their ability to exercise their membership rights within the governance
structure. Additionally, since a democratic process is already in place, and board members are
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elected to the board through that democratic process, one might say that additional measures are
not needed since members have a choice in who is elected to all of the committees. It should also
be said that the work Alvarado has invested into nurturing a culture of trust and accountability
likely plays a role in members’ comfort with their choice of elected board members.
At present, fewer current member-owners are drawn to Alvarado for socio-political
reasons than in the past; however, the company has influenced people’s perspective on concepts
such as social businesses, cooperative politics and economics, social capital, and collaborative
governance through the corporate tools which regulate members’ behaviors. While those
behaviors alone are not an indication of one’s personal commitment to various beliefs, my
interviews indicate that as people begin to move around the spectrum of participation, thereby
getting more exposure to the philosophy behind the governance and management tools which
reflect the company’s socio-cultural values, and as they establish relationships and strengthen
governance networks, they also begin to adopt values which are compatible with Alvarado’s
corporate culture and with the Cooperative Movement.
Comparison to Ecological Paradigm and Collaborative Governance Model
Ecological paradigm 3 orientations. With its overall emphasis on empowering individuals,
conscientious relationships, balance, and synthesis, Alvarado qualifies as a live representation of
the 3 orientations Robertson (2006) defined.
Interconnectedness. The ecological paradigm emphasizes interconnectedness, which
recognizes parts of systems in relation to one another. Alvarado interconnectedness was reflected
by how worker-owners across all subgroups were able to explain their role, within both the
management and governance structures, in relation to other roles in the organization. Not only
were worker-owners aware of how their governance and job related roles interacted with the rest
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of the organization, they were also aware of others’ roles and responsibilities. I found this to be
true regardless of how active people were within the governance and management structures. So,
those who did not serve on governance committees and had only ever worked in one department
were able to explain how the organization functioned, and the scopes of responsibility and
authority of the different management and governance groups, as clearly as those who served on
committees, or worked in multiple departments during their tenure. I believe that Alvarado takes
great pains to educate and effectively communicate about the work being done, and by whom, in
an effort to hold people accountable and reinforce trust.
Self-organizing capacity. Alvarado’s governance structure is set up as a cellular network
where its various committees (cells) are responsible for diverse functions, and have authority
over their own tasks, but not over people or over other cells. Worker-owners who play active
roles within those cells, as well as those who play passive roles, are quite aware of each cell’s
responsibility and authority. With such well-defined scopes of authority and responsibility, and
easy access to information, I believe that Alvarado has the self-managing and self-regulating
capacities necessary for its various cells to adapt to environmental changes and organizational
needs. Alvarado’s entrepreneurial spirit which seems to be encouraged through its broad
spectrum of participation opportunities, also allows for innovation within its various cells.
Within the governance structure, Alvarado’s self-sustaining, self-managing, and self-regulating
cells have freedom to be innovative over those issues for which they are responsible, which point
towards Alvarado having a self-organizing capacity. To some extent, this is also true for the
management cellular network. However, Alvarado’s hierarchical management structure is not
completely without predictable patterns and controlled outcomes which are contrary to having a
self-organizing capacity, and indicative of mechanistic systems associated with the Rational
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Model. As such, even though the capacity to self-manage and self-regulate are there, I believe
those capacities are sometimes not utilized.
Value-added organizations. Based on the surveys and interviews, Alvarado worker-owners
believe in the value each cell brings to the overall organization. Even when there was minor
dissention about what the value was, each cell was still deemed valuable.
Characteristics of ecological paradigm. When compared to the characteristics as defined
by Wilber (Wilber, 2001), I find that Alvarado does promote characteristics that are indicative of
the Ecological Paradigm.
Connectivism. With its deliberate approach to creating a democratic environment and
making an exploitation-free product, Alvarado has taken great pains to protect both the collective
and the individual. Alvarado asks its worker-owners to prioritize the collective’s goals and needs
above their individual agendas, but not to their personal detriment. Alvarado also recognizes that
they must invest in, and commit to, the individual (i.e. defining its success by the health and
wellness of the members) if they expect the individual to commit to, prioritize, and believe in the
collective.
Creativity. While Alvarado has established some processes reminiscent of Rational Model
hierarchies, such as its hierarchical management structure, it recognizes the benefit of creativity
and innovation— of making systems and processes fit its needs, instead of succumbing to
traditionally defined management boundaries. Instead of a rigid hierarchical management
structure, Alvarado has implemented a participatory management process which places high
value on transparency and empowerment. For example, within their participatory process, peer
vetting plays a large role in enforcing socio-cultural standards. Also, certain responsibilities,
such as maintaining the quality of the bread and ensuring no bad bread crosses the line, are not
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regulated to one person, department, or role. Instead, each employee is charged with the
responsibility and, some might say, empowered with the authority to implement quality control.
Doing so promotes everyone’s participation in upholding Alvarado’s manufacturing standards
and their sense of ownership of the products produced. These are creative ways of integrating
organizational values into company processes.
Partnership. Alvarado’s split governance and management structures are great examples of
creating a partnership between egalitarian and patriarchal systems. Alvarado’s commitment to
transparency, accountability, trust, and empowerment nurtures balance between these partnering
structures, so that each structure is free to do its own work, without worry of excessive
intervention or domination from the other structure.
Ecological governance. Alvarado’s collaborative governance structure is consistent with
Ecological Governance standards in its design, processes and relationships.
Uncentralized hierarchy. In place of a rigid, patriarchal hierarchy, Alvarado’s governance
structure consists of an uncentralized hierarchy as reflected by their voluntary cooperation,
committee work, and the entrepreneurial spirit that encourages members to take personal
initiative. Even though the Board of Directors is charged with a great deal of responsibility, they
are still bound by the direction of the membership, and must report to the membership. As such,
Alvarado’s governance structure is relatively flat because even though the Board of Directors
may have a larger scope of authority than the other governance committees, that scope is still
limited by the bylaws, and it is still not considered to be the center of authority of the governance
structure. Since uncentralized hierarchies consist of complex social systems, they present an
authority challenge where “each citizen is partly in charge” (Cleveland, 2000, p. 295). This is
reflected in Alvarado’s one person, one vote policy, as well as in the peer vetting process which
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influences access to membership. Under these circumstances, to keep the chaos at bay, having an
agreed upon value system is essential because it serves as a guide for each citizen’s decision
making. Based on consistent feedback from interviewees and survey respondents, Alvarado not
only has a generally agreed upon value system, but it is also important to them that members
make an effort to understand and adhere to that value system, as reflected by their prioritization
on organizational cultural compatibility.
Cellular networks. Alvarado’s governance structure consists of cellular networks in the form
of committees and its membership. The personal initiative resulting from Alvarado’s
uncentralized hierarchy encourages Alvarado’s membership to be innovative and creative in its
approach to problem solving and troubleshooting. Booher and Innes (2002) described this
initiative as being essential to a successful cellular network because the entire network benefits
from the improved choices such innovations create. Alvarado has also used its network of
governance committees to replace rigid hierarchies within its governance structure. The success
of Alvarado’s network is due, in part, to the well-defined scopes of authority and responsibility,
which gives each committee authority over their own tasks, but not over people or over other
cells. Instead, all committees answer to the membership, thereby meeting Robertson’s (2006)
standards for a healthy network.
Subsidiary decision-making process. Since Alvarado does not have a centralized governance
authority, they use a subsidiary decision-making process, where each cell makes decisions over
the tasks for which they are responsible. Both interviewees and survey respondents were clear
about the difference between those committees having responsibility over the tasks they have
been assigned, and those committees having control over the company’s direction. Worker-
owners repeatedly reiterated that ultimate control lays with the membership— the worker-
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owners, and giving up some oversight was not the equivalent of giving up control. Rather,
worker-owners appeared to be willing to give up oversight over certain tasks only because the
control still resided with them. If forfeiting oversight also meant forfeiting control, I do not
believe the subsidiary decision-making process would be as popular or as successful at Alvarado.
Collaboration and collaborative networks. Alvarado’s governance processes are replete with
examples of collaboration, which is essential within cellular networks. The interdependence
Alvarado has woven through its governance structure reflects collaboration in the forms of free
flowing communication, voluntary participation on committees, the equitable distribution of
power among its membership and of resources among its committees, and the mutual
understanding it has established regarding success and the social capital required to be
successful. At the foundation of this collaboration is the belief of Alvarado’s worker-owners that
there is greater benefit to sharing power and resources, than in singularly pursuing their
individual preferences. The trust, transparency, empowerment, and accountability built into
Alvarado’s governance structure serve to reinforce the collaborative processes upon which their
networks rely.
Cooperation among its members. Cooperation among members is inherent to any
cooperative. By joining a worker-owned cooperative, the members have committed to
collaborate, at least in practice, and do so based on an agreed upon system of social values.
Alvarado has done a good job of defining and communicating those social values, which
prioritize acknowledging the needs of others along with their own, recognize the ability for each
member to affect and influence the success of others, and value cooperation as a means of
addressing those mutual needs. This level of cooperation supports the uncentralized network
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hierarchy which depends on the mutual understanding of one another’s needs, and trust in the
subsidiary decision-making process to address those needs.

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Implications for Future Practice and Future Research
Implications for future practice and policy. By customizing products and services to
their local economies, and by transforming local consumers into local producers, Alvarado
exemplifies the potential of cooperatives to encourage high levels of local economic
participation, even among groups who have historically experienced economic
disenfranchisement, such as ethnic minorities, women, and immigrants. This leads me to believe
that worker-owned cooperatives, as part of a larger local economic development strategy, may be
invested in as a strategic place-based and people-centered alternative for smaller cities to manage
globalism’s local impacts.
Is Alvarado’s commitment to its social goals and its approach to achieving them
unique? Is it possible any successful business, even those with traditional management and
governance hierarchies might also say their business model reflects an organizational culture
similar to Alvarado’s and, as such, Alvarado’s value system and the social capital required to
support it are not as unique as one may think or like to believe? Traditional for-profit companies
invest in expensive and strategic marketing campaigns to ensure that consumers associate their
products with certain ideals and values, such as safety, reliability, and confidentiality. Is there
any business which would not make a public commitment to the safety of its employees and the
safe manufacturing of its product? How many businesses would willingly associate their
products and services with exploitation of any kind? If it is true that most businesses, even
traditional for-profit businesses promote social values and have social goals, then how is
Alvarado’s commitment to its social goals different and why should those commitments be
evaluated differently?
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Social enterprises are unique because their financial pursuits are not an end in itself.
Rather, social enterprises pursue financial success as a means of reaching their socials goals, and
they do not pursue financial success at the detriment of their social goals. However, even with
those distinctions, it is not impossible for a for-profit company to have social goals. I do not
assert in this paper that Alvarado is unique simply because it has social goals. While some of
Alvarado’s social values are not unique to Alvarado or even to cooperatives, but may be found in
any number of businesses across ownership type, Alvarado member-owners believe that their
social values are, at least, a major reason for their pursuit of safety, creation of an exploitation-
free product, and commitment to improving the health and wellness of its membership. It is the
motivation behind the pursuit of these goals and the consistency with which its membership links
those goals to their success, which I believe distinguishes Alvarado from traditional for-profit
businesses. The impact of Alvarado’s belief in the social reasons for their pursuit of a safe,
exploitation-free, and healthy promoting work environment should not be underestimated.
Policy implications: creating a positive policy environment for cooperatives. My
intuition is that worker-owned cooperatives may be an avenue for local economic revitalization,
and integration of economically marginalized people. The cooperative model acknowledges the
role national and global institutions can play in promoting local communities while still
supporting the diversity implicit in retaining one’s community identity, also known as
localization. Norberg-Hodge described the goal of localization as “…not eliminating all trade but
to reducing unnecessary transport while encouraging changes that would strengthen and
diversify economies at both the community and national levels” (Norberg-Hodge, 1996, p. 394).
This would include the promotion of locally produced basic goods, which are currently in
competition with cheaper mass produced products from industrial farms, thousands of miles
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away— i.e. seasonal produce and dairy products. Doing so reduces the need for long-distance
dependence on everyday needs and promotes local sourcing.
If they are willing to be aggressively creative, local and state municipalities could use
policy to create cooperative-friendly environments. In urban settings, local and state
governments could write down the land costs of potential job sites, or enter into long-term leases
with cooperatives who are interested in recovering unused, underutilized, and/or abandoned
infrastructure. Cooperatives and other small businesses could be deemed at least partially exempt
from expensive regulations which have evolved in response to problems caused by large-scale
production and fast-paced operational growth, but which do not apply to the scale of production
at which cooperatives typically operate. Subjecting small producers to essentially the same
regulatory standards as their larger corporate counterparts, unnecessarily inflates their costs.
Additional cooperative support could also come from local government, in the form of
more flexible zoning practices. In urban areas where there is a large-scale industrial presence,
land uses tend to be segregated in order to protect residents from the residual impacts of
commercial and industrial land uses. Such zoning practices limit locale options for smaller
producers, who may not have the same level of impact on their neighbors. Some cities have
already implemented more integrated zoning codes, allowing for more integrated mixed uses.
The result is artists in residence spaces, joint living and working quarters, home offices, and
other forms of small-scale production that enable small-scale producers to continue their work
without having to relocate or incur additional overhead.
One of the more progressive (or what some might even interpret as aggressive) local
reengagement ideas, explained by Norberg-Hodge, is to reverse what she described as a tax bias
against small businesses, which tend to be more labor intensive in comparison to their larger
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corporate counterparts. Her description of the current tax system is that machines receive favor
over people— “…tax breaks (such as accelerated depreciation an investment tax credits) are
handed out on the capital- and energy-intensive technologies” (Norberg-Hodge, 1996, p. 401).
There are not comparable breaks on the labor side, which is heavily taxed in the form of income
taxes, value-added taxes, social welfare taxes, etc. Norberg-Hodge’s suggestion is to implement
“…taxes on the energy used in production…” and on the environmental damage caused by their
consumption (Norberg-Hodge, 1996, p. 401). As aggressive as these policies may seem, cities
may actually benefit from such measures by igniting local transformation. Glaeser noted a
“…strong correlation between the presence of small firms and the later occurring growth of a
region. (Glaeser, 2011, p. 47)”, which suggests that cooperative are potentially empowering in
their ability to transform local communities. While they may be interpreted as aggressive, given
their transformative potential, the aforementioned policies might be worth pursuing if the result
is encouraging this type of economically stabilizing business development.
Implementing Alvarado’s governance and management model in other industries and
other cooperatives. Could any cooperative adopt Alvarado’s split management/governance
model and expect success? Alvarado’s split governance and management model evolved in
partial response towards their high turnover rate, and escalating concerns regarding
manufacturing safety and food quality. When considering an organizational response to resolving
these issues, Alvarado had to work within certain restrictions. Alvarado is a part of two heavily
regulated spheres – manufacturing and food production, both of which require measurable and
monitored work standards, and various levels of semi-skilled and skilled labor. Alvarado’s initial
cooperative model had policies and practices which conflicted with the quality and safety
standards of its industry, and which contributed to its high turnover, inconsistent production
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quality, and high number of injuries. Alvarado’s current split management-governance model,
and the social assets which have been deliberately cultivated to sustain such a model, are a direct
response to the Alvarado’s goal of meeting its financial and social goals within the regulated
industry of mass organic baking.
As such, I believe that the split governance and management model is well suited for
cooperatives which work in heavily regulated industries, and/or at least partially rely upon
experts, specialists, and semi-skilled and/or skilled labor. Examples include child care centers,
home health care agencies, and food production, engineering, and manufacturing firms— all of
which have a need for experts and specialists within the work and, in order to maintain those
standards, within the management of that work. Whereas non-licensed services and small-scale
retail establishments, such as cleaning firms and independent grocery stores, are not restricted by
the same level of regulation, nor are they dependent upon experts and specialists to flourish.
Although adopting a split governance and management model might still work for such
cooperatives, special care would be needed to manage the transition towards incorporating
additional layers of hierarchy.
In addition to Alvarado selecting an organizational structure which appropriately aligns
with its industry, training and acculturation are integral to Alvarado’s split management
governance model. Alvarado takes people, some of whom have no baking experience or have
never heard of sprouted wheat, and many of whom have little to no exposure to cooperative
culture, and invests in them. Worker-owners are trained, not only in the craft of organic sprouted
wheat baking, but also in the arts of business and entrepreneurship. Such training, in the form of
the initial worker-owner training curriculum, and workgroup probationary training by peers
prepares new hires for the work of baking and begins to prepare them for the work of co-running
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a business. If the average survey respondent is representative of Alvarado’s average worker-
owner, then he/she has not attained more than a high school diploma, then these are skills which
they may not have otherwise had the opportunity to learn, and which may provide access to other
job opportunities at Alvarado or elsewhere. The effort invested in acculturating new hires,
through the workgroup vetting process, and the quarterly membership meetings, helps worker-
members to understand the organizational structure and what is minimally required to maintain
that structure, as well as the consequences for not doing so. I therefore believe that another
cooperative interested in pursuing a split structure should deliberately invest in worker-owner
education to ensure its sustainability. Alvarado has taught people how to be successful within
this structure, and has deliberately carved out a space for its skilled, semi-skilled, and
professional labor, and has done so without creating a class system among their diversely skilled
laborers, but by training its staff, making information transparent and accessible, and ensuring
general understanding of each person’s role and significance to the structure.
While there was general consensus among interviewees and survey respondents regarding
the role of the Alvarado’s split governance management model in its success, people were also
careful to point out that simply adopting their cooperative model is not a recipe for success, and
that their success was as much about sound financial planning, producing a quality product,
timing, and luck. As such, it is imperative for current cooperatives considering such a shift to
assess the quality of their products and/or services, the feasibility of their financial planning, and
the social capital currently available to them, in case there is a dearth of some vital social
attribute, such as those necessary to Alvarado’s cooperative model.

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Traditional banks’ unwillingness to work with cooperatives will impact replicability of
Alvarado’s model. Several authors (Dickstein, 1991; Rothschild, 2009; Williams, 2007) cited
cultural unfamiliarity, the United States economic orientation toward capitalism, and the lack of
sufficient governmental and political support of non-agricultural cooperatives, as primary
reasons for the higher perceived financial risk associated with cooperatives. Williams (2007)
stated, to which Dickstein (1991) agreed, that the most important issue affecting a cooperative’s
successful formation is its access to proper financing— “If capitalization of the project is not
solid and if sufficient cash flow cannot be established, nothing else can make it function
properly” (Williams, 2007, p. 152). Without sufficient external financing sources, many
cooperatives turn inward for financing options. However, dependence on funds from operating
surpluses may create incentives for underinvestment because members can only benefit from
increased investment if it results in greater productivity and, therefore, greater income for the
employees. Such circumstances may create an incentive for workers to take capital out of the
business by voting themselves higher wages, for example.
The financial community has been hesitant to support cooperative development, as
evident by how difficult it is for cooperative ventures to receive financing (Dickstein, 1991;
Sauser Jr., 2009). There are, at least perceived, barriers to and discrimination against
cooperatives by conventional lenders, because they consider cooperatives high-risk investments
that are difficult to evaluate (Dickstein, 1991). As pointed out by Norberg-Hodge (Norberg-
Hodge, 1996, p. 401), “small businesses are discriminated against through the lending policies of
banks, which charge them significantly higher interest rates for loans than they charge big firms.
They also often require that small business owners personally guarantee their loans— a
guarantee not sought from the directors of large businesses”. Ben-Ner (as cited in Sauser, 2009)
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asserted that unfamiliarity with cooperatives is translated into higher perceived risk, by lenders.
Williams (2007) suggested that within the United States the cooperative business model still
needs time to earn credibility among people and within the market.
In response to the financing gap, some residents have established community banks and
loan funds to increase the amount of capital available to local businesses. Norberg-Hodge noted
that part of the appeal in supporting local financing is that it allows “…people to invest in their
neighbors and their community, rather than in distant corporations. (Norberg-Hodge, 1996, p.
404)” The US Congress established the Farm Credit System to meet the credit needs of
agricultural businesses, including agricultural cooperatives (Deller, Hoyt, Hueth, & Sundaram-
Stukel, 2009). However, non-agricultural cooperatives have not enjoyed similar forms of
financial support— certainly not on a comparable national scale.
In addition to employee-owned cooperatives attempting to find external seed capital,
there is also the problem of potential employee-owners, who are primarily working class, lacking
sufficient capital to buy into an existing worker-owned cooperative. The impact serves to inhibit
potential growth— both employee and production growths. If a firm needs to grow, but is unable
to do so, alternative means to financing that growth must be considered. A common
consideration, noted by various authors as an integral contribution to the demise of worker-
owned cooperatives, is the hiring of non-member labor at a fixed wage in order to meet
employment needs. Hiring labor instead of extending ownership to new employees can lead to a
problem Kalmi described as “cooperative degeneration” (Kalmi, 2007, p. 634), where in an
attempt to keep profits from diminishing, cooperatives hire wage labor, instead of offering them
ownership. Doing so conflicts with the cooperative movement’s distinguishing principle of one
share, one member, one vote— the defining characteristic of cooperatives, as described by the
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United Nations (National Cooperative Business Association, 2013), Williams (2007) and Spear
(2006). The likely result is a class system in the work place. Such disparities cannot be sustained
within a cooperative, nor are they intended to be, and would likely eventually lead to the
company’s demise. In response to this dilemma, there are examples of cooperatives allowing
employees to work off their entrance fee, or deducting the fee in installments from the
employee’s paycheck (Dickstein, 1991; National Cooperative Business Association, 2013;
Williams, 2007). Over the years, cooperative have gotten creative in securing sufficient financial
leverage to competitively start and grow their businesses. One example, as described by
Williams, is the ASP cooperatives in South-Central India. Williams described them as the
“…best example of successful partnerships with commercial banking firms in order to capitalize
first a huge microcredit program and then satellite cooperative enterprises of all kinds”
(Williams, 2007, p. 155). International examples of cooperative financing should serve as
examples for the United States on the possibilities of partnerships with traditional banking
institutions. Foreign cooperatives have used this financing method to increase their market
access and to more visibly integrate into the traditional business environment. If promoted as a
viable means of financing in the United States, such methods might challenge those views of
cooperatives as off-grid, elusive, and anti-capitalist businesses. When describing the significance
of these financial partnerships, Williams concluded that cooperatives would not have to be
“…ostracized from the market for fear of cartel formations or economic revolutions against the
entire capital system” (Williams, 2007, p. 153). Williams also described other methods foreign
cooperatives used to remain competitive— “Initial financing can be provided by microfinance,
government sponsorship, cooperative banking, partnerships with commercial banking, or simply
a slow growth through profits from products in stable demand” (Williams, 2007, p. 153).
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However, of these options, Williams promoted credit unions and microfinance as the methods
best suited to leverage cooperative growth in the United States— “The smoothest way to
accumulate capital for a variety of production co-ops is through micro-finance or cooperative
banking” (Williams, 2007, p. 162). All of these options should be considered by cooperatives
who are considering adopting Alvarado’s organizational structure, since such a change is likely
to come at a cost, and before pursuing such changes the cooperative should be assured that it can
afford to do so.
Building social capital in communities. In addition to considering the financial capital
necessary to aide in the adoption of Alvarado’s split governance-management model, the balance
of social capital should also be assessed. One advantage from which I believe Alvarado has
benefited is that, even before its organizational management and governance change, Alvarado
was birthed from the Red Clover Worker’s Brigade, whose roots were entrenched in the
cooperative movement and cooperative values. As such, it was no surprise that Alvarado’s
organizational culture showed evidence of longstanding and well established social networks,
shared values and understandings, relationships and roles, and social trust, despite the number of
survey respondents who were unfamiliar with cooperatives prior to joining Alvarado. I suspect
that Alvarado benefitted from this deeply rooted social capital which eased its organizational
transition, helped to sustain its membership through difficult times, and created personal and
professional opportunities among its membership.
If Alvarado may be used as a standard of measurement, then successful cooperatives have
an wealth of social capital, then communities interested in pursuing cooperatives as part of a
community economic development strategy ought to engage organizations which bridge social
gaps and integrate people from diverse backgrounds in an effort cultivate and nurture social
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 112
capital which may be leveraged into joint-ownership opportunities. I believe that connecting
civic organizations and community groups with cooperative development institutes and
foundations, and community loan funds would familiarize communities with the Cooperative
Movement, while establishing social and professional networks and addressing the perceived risk
associated with cooperatives. Organizations like the Northcountry Cooperative Foundation,
Northwest Cooperative Development Center, and the Cooperative Development Institute
collaborate with communities, governments, economic development agencies, and cooperatives
on issues related to the benefits and challenges of community-owned and democratically
governed enterprises. They also provide educational and technical assistance for established
cooperatives, and for those interested in launching a cooperative. Community Development
Financial Institutions, such as credit unions and loan funds are also a means of establishing
and/or reinforcing social assets within a community. Community Development Financial
Institutions provide credit access to economically disenfranchised groups and communities,
which strengthen communities experiencing conventional lending market failures. Establishing
networks with these types of organizations may assist with cultivating both social and financial
capital within a community. Networking opportunities for these types of organizations may
connect social and financial capital within a community.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 113
Implications for future research. My study only begins to scratch the surface in filling
the gaps in research which presently exists on worker-owned cooperatives. Through this project,
I provide insight on the inner workings of a financially and socially successful worker-owned
cooperative. I also explore the social capital needed to sustain its cooperative model. Whereas
there are numerous studies of agricultural and financial cooperatives, there is a dearth of research
on worker-owned cooperatives. There is still much to understand about worker-owned
cooperatives, such as the industries in which they are most likely to be successful. It would also
be helpful to understand the best practices for various governance, management, and wage
models, and which models are best suited for different industries. Alvarado’s success in
achieving its social goals is linked to it financial success, and it would be interesting to explore
this relationship through additional research, especially as it applies towards creating and
sustaining living wages for its membership. Such research should address the potential for
Alvarado’s cooperative model to be implemented outside of Petaluma and still provide living
wage jobs for unskilled and semi-skilled laborers in other cities. While Alvarado’s financial
success is linked to its investment in, and management of Alvarado’s social capital and
organizational culture, its financial success is also a factor of Alvarado’s product quality, and
financial planning and stewardship. Therefore, additional research into Alvarado’s financial
model should also help practitioners better understand Alvarado’s financial success and the
potential for replicability elsewhere.
As mentioned in the design limitations, one case study cannot be extrapolated to tell a
story about all cooperatives. A series of case studies on governance and management employee-
owned cooperative structures within an industry, and then a series of comparative case studies of
the management and governance structures across industries, may compensate for these limits in
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 114
generalizing and make the studies’ results more useful to practitioners. Additionally, more may
be learned from Alvarado’s cooperative model about how to recruit economically
disenfranchised groups into joint-ownership opportunities. Since it appeared that very few people
were drawn to Alvarado for ideological reasons, or due to any prior knowledge of, or association
with cooperatives or the Cooperative Movement, future research would benefit from
understanding what motivates people to join a worker-owned cooperative in today’s society.
This project gives some indication about the social capital which needs to be nurtured for a
cooperative to be successful. Building on that information, and combining it with an
understanding of who is drawn to a worker-owned cooperative, and why, might help researchers
and practitioners develop better screening tools for future members, and also develop tools to
reduce turnover and incentivize longevity.
The results of this case study are promising in terms of confirming the existence of a
successful worker-owned cooperative which is structured to deliberately include disenfranchised
populations. However, since exploratory research does not show causation, additional research is
needed to confirm the potential for worker-owned cooperatives to build the social capital
necessary to improve low income community conditions.
Lessons Learned
If given the opportunity to do this project again, there are some things I would do
differently, given the lessons I learned. I learned, for example, than a site visit was critical to
getting survey responses, especially from the Hispanic members. Prior to my visit, I only
received 1 Spanish survey. After the in-site visit, I received another 14 Spanish surveys. For
example, I found that providing a personal introduction to the Hispanic potential survey
respondents and interviewees was important to them before they were willing to commit to
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 115
complete a survey or consent to an interview. Another lesson was that a cultural agent, who
spoke Spanish, was critical to overcoming certain cultural challenges. Hispanic women, for
example, only expressed interest in completing a survey after participating in an interview which
I conducted with them in Spanish. Also, Hispanic men expressed that while they appreciated I
spoke Spanish; they were more comfortable engaging with a Spanish-speaking male. After the
low mailing survey return rate, I anticipated such a possibility and invited a male Hispanic
Latino to accompany me as my cultural agent, my husband, in the hopes that Hispanic
employees would be willing to speak with him in reference to the surveys.
Limitations
Limitations with the project’s design. The design for this project is a one-shot case
study. A pre-experimental design, such as a one-shot case study, has certain limitations such as
not establishing co-variation, and not revealing causation. However, a pre-experimental design
does serve exploratory and descriptive purposes, which are helpful in the early stages of learning
about a subject. Exploratory research conducted about worker-owned cooperative models, will
set the stage for explanatory research to be conducted in the future. Also, inherent within a single
case study design is the problem of generalization, where limiting the scope of the study also
limits the results’ scope of applicability and extrapolation. However, this may be addressed in the
future by “…doing a series of case studies” (Flick, 2009, p. 134), which could conceivably be the
next step in understanding the Alvarado Street Bakery’s success. The return rate of my survey
was 36.4%, and while that was better than the average rate for unsolicited surveys, it was still
low considering the 40.5% return rate goal. Also, my survey was an investigator-generated
questionnaire and had not been tested for reliability and validity. Now that I understand the role
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 116
that culture played in my return rate, I would have distributed the survey in person, instead of by
mail.
Limitations with the sample. The Alvarado Street Bakery is an organic bakery, which
uses sprouted wheat in their product line of 30 baked goods. As a bakery, Alvarado represents a
particular industry which requires certain technical skills and certifications for market entry. As
an organic bakery, which works with sprouted wheat, Alvarado represents a unique segment of
the food industry. As such, others interested in building upon this study or replicating this study
may find it difficult to do so unless also working with this segment of the food industry. Of the
121 employees at Alvarado, 56 are production workers, the majority of whom are Hispanic. I am
fluent in Spanish, and was able to conduct interviews in Spanish and create a Spanish written
survey. However, I am not Hispanic, which presented cultural challenges as mentioned in the
lessons learned section, for which I enlisted a Hispanic cultural agent to assist in the survey data
collection. Under my direction, he explained the purpose of the survey and of the research, and
answered any survey-related questions worker-owners may have had.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 117
Conclusion
Worker-owned cooperatives exemplify grassroots mobilizations that develop alternatives
to a corporate-led form of globalization. Despite the potentially devastating impact of
globalization on small local economies, there is not overwhelming political or economic support
of the idea that promoting localized economic activity is a viable solution (Norberg-Hodge,
1996, p. 393). Nor does there appear to be an alternative suggested by local governments which
presents the same level of adaptability based on local resources, or which considers the
appropriateness of scale and local diversity. Historically, government’s response has primarily
consisted of premature investments in infrastructure, subsidies, and tax breaks. However, as
Glaeser stated, “…cities don’t need handouts, but they need a level playing field” (Glaeser, 2011,
p. 250). Promoting cooperative development, as part of a larger localized economic development
strategy could be a means of promoting a level playing field, by increasing the accessibility of
smaller entrepreneurs and workers to the global economy. Worker-owned cooperatives have the
potential to be the successful alternative smaller cities seek. An attempt should be made to
develop policy and implement initiatives which encourage worker-owned cooperative growth.
Alvarado has grown into a successful organic sprouted wheat bakery. They have a unique
cooperative model in that their governance and management structures are split. Even more
unique is that their management structure is hierarchical in design, although collaborative
processes have been integrated into it. The compatibility between how Alvarado defines success
and the ecological collaborative governance structure they have implemented has contributed to
their success as a social business. Alvarado has even managed to successfully integrate its
cooperative values into a hierarchical management structure in such a way that protects their
goals from succumbing to the rigid machinations associated with rational model decision-
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 118
making. While this does contribute to some organizational tension, Alvarado works hard to
maintain balance between its governance and management structures so that nothing
overshadows the pursuit of its goals, thereby lending itself to a socially viable cooperative
model.
If Alvarado’s idea of success was limited to financial goals, then the collaborative
governance model would likely not be as effective since it is structured, with all of its
collaborative and democratic tools, to prioritize people and planet along with profit. A business
with only financial goals might feel encumbered by Alvarado’s collaborative processes, and by
the collaborative tools introduced into its managerial processes. However, since Alvarado also
considers forms of social capital as part of their success story, a collaborative governance
structure is well suited to carry them towards those goals. However great simultaneously
implementing a collaborative governance structure and hierarchical management structure
sounds, it is not without its complications, and requires a certain socio-cultural commitment from
the membership. Alvarado has figured out the socio-cultural attributes required to implement
such a strategy are accountability, transparency, trust, empowerment, and cultural compatibility.
Alvarado also understands that a true commitment to those values requires structural and
procedural tools, such as peer vetting, mutually responsible quality control, feedback
opportunities, and democratic and collaborative governance.
When it comes to solving complex public issues, such as economically integrating those
who have historically been economically marginalized, it is imperative that the solutions
employed are placed-based and people-centered. As communities are faced with economic and
community development models which thrive on zero-sum competition, which might not be
well-suited to their size, capital assets, or development goals, they may look to this project as an
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 119
example for an alternative approach. My intuition is that worker-owned cooperatives may be an
avenue for local economic reclamation, and economic integration of traditionally economically
marginalized people, as part of a larger ecological strategy. Cities, planners, and entrepreneurs
could look to examples like Alvarado when seeking examples for nurturing such strategies,
especially when looking for business models which may engage the economically
disenfranchised. Cooperatives encourage high levels of local economic participation by
customizing products and services to their local economies, and by transforming local consumers
into local producers. Cooperatives are among the range of possibilities for grass-roots responses
to globalization, and should be considered as a localized alternative approach to economic
participation in today’s global economy.
At Alvarado, there is a shared economic fate, based on an equitable distribution of profits
and agreed upon wage brackets, which encourages individuals to prioritize the company over
self, or at least along with oneself and, apparently, does so without nursing resentment among its
membership. As one worker-owner succinctly stated, “The good thing about the bakery is you
don't know what you're going to get. As well as we can do, is how well you're going to do as an
individual”, which is reflected in the four areas Alvarado monitors to determine its success:
profits, safety, exploitation free environment, and health and wellness.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 120
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Appendices
Appendix 1: Descriptive Statistics
Hispanic
 Non-Hispanic 26 (59.09%) (Mode)
 Hispanic 18 (40.91%)
Race
 American Indian 1 (2.27%)
 White/ Caucasian 32 (72.73%) (Mode)
 Black/ African American 1 (2.27%)
 No Answer 8 (18.18%)
 Incorrectly Answered 2 (4.55%)
Age
 Average Age: 44.68 years
 Standard Deviation: 12.38
 1 Standard Deviation: 32.3 57.06
 2 Standard Deviation: 19.92 69.44
 3 Standard Deviation: 7.54 81.82
Education Status
 GED 5 (11.63%)
 High School 24 (55.81%) (Mode)
 Associate’s Degree 3 (6.98%)
 Bachelor’s Degree 8 (18.60%)
 Master’s Degree 1 (2.33%)
 None of the above 2 (4.65%)
Other Professional Training
 Yes 11 (25.58%)
 No 32 (74.42%) (Mode)
Years Worked at Alvarado
 Average Years at Alvarado: 13.10
 Standard Deviation: 9.01
 1 Standard Deviation: 4.09 22.11
 2 Standard Deviation: -4.93 31.12
 3 Standard Deviation: -13.94 40.13
Based on the descriptive statistics, the average survey respondent was a 44-year-old non-
Hispanic White man or woman with, at most, a high school diploma, who had worked at
Alvarado for about 13 years.
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 127
Appendix 2: IRB Approval
UNIVERSITY OF SOUTHERN CALIFORNIA
UNIVERSITY PARK INSTITUTIONAL REVIEW BOARD
FWA 00007099

Exempt Review
Date: Mar 28, 2014, 12:58pm
Principal Investigator: Alaina Jackson, MPL
SCHOOL OF POLICY, PLANNING & DEVELOPMENT
Faculty Advisor: Elizabeth Currid
SCHOOL OF POLICY, PLANNING & DEVELOPMENT
Co-Investigators:
Project Title: An Exploratory Case Study on the Social Viability of the Alvarado Street
Bakery Cooperative Business Model
USC UPIRB # UP-14-00157

The iStar application and attachments were reviewed by UPIRB staff on 3/28/2014.

The project was APPROVED.
Based on the information provided for review, this study meets the requirements outlined in 45
CFR 46.101(b)(2) and qualifies for exemption from IRB review. The study is not subject to
further IRB review. IRB exemption of this study was granted on 3/28/2014.

To access IRB-approved documents, click on the “Approved Documents” link in the study
workspace. These are also available under the “Documents” tab.

Sincerely,
Ryan M. Brooks, M.A. Psy., IRB Administrator

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 128
Appendix 3: Worker-owner Surveys
English worker-owner survey. Instructions: Before completing this survey, please read the
attached information sheet, which explains your rights as a research participant. Then, please
complete this 20- 30 minutes anonymous survey. Participation in this survey is voluntary, and
you may choose to answer all, some, or none of the questions. After completing the survey,
please mail it to Alaina Jackson, using the pre-addressed and stamped envelope, by June 16,
2014. Please contact Alaina if you need a replacement envelope.
1. Are you Hispanic or Latino?
a. Yes
b. No
2. What is your primary race? (Circle one)
a. American Indian
b. White/ Caucasian
c. Arab/ Arab- American
d. Black/ African-American
e. Asian/ Asian-American
f. Native Hawaiian or Other Pacific Islander
3. What is your age? ______________
4. How far did you go in school? (Circle one)
a. G.E.D
b. High School Diploma
c. Associate’s Degree
d. Bachelor’s Degree
e. Masters’ Degree
f. Professional Degree (i.e. J.D., M.D., etc.)
g. Doctoral Degree
h. None of the above
5. Do you have any other training? (i.e. Real Estate License, Licensed Electrician, Licensed
Child Care Worker, Licensed Beautician, etc.)
a. Yes If so, please list: ______________________________________________
b. No
6. How many years have you worked for Alvarado? _____________
7. Are you a…? (Circle one)
a. worker-owner
b. worker-member
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 129
8. Have you ever owned your own business? (Circle one)
a. Yes
b. No
9. Have you worked for a cooperative, other than Alvarado? (Circle yes or no)
a. Yes
i. If yes, please list them:
b. No
i. If no, how knowledgeable were you about cooperatives before joining
Alvarado? (Circle one)
1. Very knowledgeable
2. Somewhat knowledgeable
3. Not at all knowledgeable
10. Which statement best describes your current experience with cooperatives besides
Alvarado? (Circle one)
a. I currently have a lot of personal experience with cooperatives.
b. I currently have some personal experience with cooperatives.
c. I currently have little personal experience with cooperatives.
d. I currently have no personal experience with cooperatives.
11. From your perspective, how does Alvarado rank the following activities? Please rank
them from 1 (most important) to 11 (least important).
a. Hiring locally ____
b. Making a profit ____
c. Education and training for employees ____
d. Promoting a democratic work environment ____
e. Financially investing in the local community ____
f. Ownership development for employee-owners ____
g. Promoting environmentally sustainable practices ____
h. Working with, and supporting other cooperatives ____
i. Sharing company information with employee-owners ____
j. Including worker-owners and worker-members in the company’s management
and business planning ____
k. Establishing a strong community presence by promoting community partnerships,
and contributing to the local community ____
12. How do you rank the following activities? (Please rank them from 1 (most important) to
9 (least important).)
a. Being an worker-owner or worker-member ____
b. Working for a company that makes a profit ____
c. Having an influence on the direction of the business ____
d. Working for a company that shows concern for its community ____
e. Working for a company that is locally based, and which hires locally ____
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 130
f. Working for a company with strong social and environmental values ____
g. Working for a company that promotes a democratic work environment ____
h. Working for a company that is autonomous, and does not have
shareholders ____
i. Working for a company that prioritizes the continues education and training of its
employees ____
Use the following answers for Questions 13- 17
Agree
Somewhat agree
Somewhat disagree
Disagree
13. I feel a sense of ownership of Alvarado. ____________
14. I feel valued by the company, as a worker-owner, or a worker-member. ____________
15. I feel I can influence large-scale changes within Alvarado. ____________
16. I feel I can influence small-scale changes within Alvarado. ____________
17. I feel responsible for Alvarado’s successes and challenges. ____________
18. How do you exercise your rights and/or responsibilities in your role as a worker-member,
or as a worker-owner?
i.e. serve on a committee to help direct or implement business decisions, vote on business
decisions at business meetings, train other employees, etc.
19. How has working for Alvarado affected you and/or your lifestyle?
i.e. provided me with job training, contributed my financial stability, enabled me to purchase a
car, etc.
20. Do you prefer working for a cooperative, instead of a traditional company?
a. Yes
b. No
c. No Preference
Please explain.
21. From your perspective, how does Alvarado benefit the community? (i.e. creates local
jobs, donates to charitable organizations, collaborates with other local businesses, etc.)
22. From your perspective, what else should Alvarado do to assist its community? (i.e.
increase its local hiring, increase its charitable donations, collaborate with more local
businesses, etc.)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 131
Spanish worker-owner survey. Instrucciones: Antes de completar el cuestionario, favor de
leer la información en la hoja anexa, la que explica sus derechos como participante del estudio.
Después puede completar el cuestionario anónimo en 20-30 minutos. La participación en este
cuestionario es voluntaria, y usted puede decidir a responder todas las preguntas, algunas o
ninguna de las preguntas. Después de completar el cuestionario, por favor envíelo por correo a
Alaina Jackson, utilizando el sobre pre-dirigido y sellado, antes del 16 de junio de 2014. Por
favor, póngase en contacto con Alaina si necesitas un sobre de reemplazo.
1. ¿Es usted hispano o latino? (Circule una)
a. Si
b. No
2. ¿Cuál es su raza primaria? (Circule una)
a. Indio Americano
b. Blanco/ Caucásico
c. Árabe/Árabe-Americano
d. Negro/Africano-Americano
e. Asiático/Asiático-Americano
f. Nativo de Hawái o de otras islas del Pacifico
3. ¿Cuál es su edad?
4. ¿Hasta dónde llegó en la escuela? (Circule una)
a. G.E.D- Examen de equivalencia de escuela secundaria/ preparatoria
b. High School Diploma- diploma de escuela secundaria/ preparatoria
c. Associate’s Degree- Nivel técnico (Carrera de dos años)
d. Bachelor’s Degree- Nivel profesional (Carrera de 4 años)
e. Masters Degree- Maestria o postgrado
f. Professional Degree (p.ej. J.D., M.D.)- Grado profesional (i.e. Doctor en
Jurisprudencia- Leyes, Doctor en Medicina, etc.)
g. Doctoral Degree- Doctorado
h. Ninguna de las anteriores
5. ¿Tiene algún otro entrenamiento? (p.ej: licencia como trabajador al cuidado de niños,
licencia en belleza, licencia de electricista, etc.)
a. Si En caso afirmativo, enlístelas:
______________________________________________
b. No
6. ¿Cuantos años ha trabajado para Alvarado? __________
7. ¿Es usted…? (Circule una)
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 132
a. worker-owner (trabajador-dueño)
b. worker-member (trabajador-miembro)
8. ¿Ha tenido alguna vez su propio negocio?
c. Si
d. No
9. ¿Aparte de la Cooperativa Alvarado, ha trabajado usted para otra cooperativa? (Circule si
o no)
c. Si
ii. En caso afirmativo, enlístelas por favor:
d. No
iii. Si no, que conocimiento tenia usted sobre cooperativas antes de unirse a la
Cooperativa Alvarado? (Circule una)
1. Muy bien informado
2. Un poco informado
3. No, en absoluto bien informado
10. ¿Cuál de las siguientes afirmaciones describe mejor su experiencia actual con las
cooperativas además de Alvarado? (Circule una)
e. Actualmente tengo un montón de experiencia personal con las cooperativas.
f. Actualmente tengo un poco de experiencia personal con las cooperativas.
g. Actualmente tengo poca experiencia personal con las cooperativas.
h. Actualmente no tengo experiencia personal con las cooperativas.
11. ¿Desde su perspectiva, ¿cómo Alvarado priorizar las siguientes actividades? Por favor,
clasificarlos de 1 (más importante) a 11 (menos importante).
l. Contrataciones locales _____
m. Haciendo ganancias _____
n. La educación y el entrenamiento a los empleados _____
o. Promoviendo un ambiente laboral democrático _____
p. Invirtiendo financieramente en la comunidad local _____
q. Desarrollo de los empleados-dueños _____
r. Promoción de prácticas ambientalmente sostenibles _____
s. Trabajando con, y ayudando a otras cooperativas _____
t. Compartiendo información con los empleado _____
u. Incluyendo trabajadores-dueños y trabajadores-miembros en la gestión de la
empresa y la planificación empresarial _____
v. El establecimiento de una fuerte presencia en la comunidad mediante la
promoción de asociaciones con la comunidad, y contribuyendo a la comunidad
local _____
12. ¿Cómo prioriza las siguientes actividades? Por favor, clasificarlos de 1 (más importante)
hasta 9 (menos importante).
a. Ser un trabajador-dueño o trabajador-miembro _____
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 133
b. Trabajar para una compañía que genera ganancias _____
c. Tener influencia en la dirección de la compañía _____
d. Trabajar para una compañía que muestra preocupación por su comunidad _____
e. Trabajar para una compañía que se basa a nivel local, y se contrata localmente
_____
f. Trabajar para una compañía con fuertes valores sociales y ambientales _____
g. Trabajar para una compañía que promueve un ambiente de trabajo democrático
_____
h. Trabajar para una empresa que es autónomo, y no tiene accionistas _____
i. Trabajar para una compañía que da prioridad a la educación y el entrenamiento
continuo de sus empleados _____
Use las siguientes respuestas para las preguntas del 13-17
De Acuerdo
Un poco de acuerdo
Un poco desacuerdo
Desacuerdo
13. Me siento un sentimiento de propiedad de Alvarado ____________
14. Me siento valorado por la compañía como trabajador-dueño, o como trabajador-miembro
____________
15. Siento que tengo influencia en gran escala para los cambios dentro de Alvarado
____________
16. Siento que tengo influencia en pequeña escala para los cambios dentro de Alvarado
____________
17. Me siento responsable de los éxitos y retos de Alvarado ____________

18. ¿Cómo ejercita sus derechos y/o responsabilidades en su papel de trabajador-miembro, o
como trabajador-dueño?
p.ej.: servir en un comité para ayudar directa o implementar las decisiones de negocios, votar en
las decisiones empresariales en reuniones de negocios, entrenar a otros empleados, etc.
19. ¿Cómo le ha afectado a usted y a su estilo de vida, por trabajar en Alvarado?
p.ej: me proporcionó capacitación para el trabajo, contribuyó a mi estabilidad financiera, me
permitió comprar un coche o una casa, etc.
20. ¿Prefiere trabajar para una cooperativa en vez de una compañía tradicional? (Circule una)
a. Si
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 134
b. No
c. Ninguna preferencia
Favor de explicar.
21. ¿Desde su perspectiva, como Alvarado beneficia a la comunidad?
p.ej: crea trabajos locales, dona a organizaciones de caridad, colabora con otros negocios locales,
etc.
22. ¿Desde su perspectiva, que más debería hacer Alvarado para ayudar a la comunidad?
p.ej: aumentar contrataciones locales, incrementar donaciones de caridad, colaborar más con
negocios locales, etc.

SOCIAL VIABILITY OF ALVARADO STREET BAKERY 135
Appendix 4: Semi-standard Interview Questions
Position & Responsibilities, & Familiarity with Cooperatives
1. What is your position at Alvarado?
2. What are your general responsibilities?
3. How long have you worked at Alvarado? Have you held any other positions?
4. Did you have prior experience related to your current responsibilities?
5. How did the current management and governance structures come about?
6. What attracts people to working at Alvarado?
7. Were you familiar with cooperatives before joining Alvarado? What drew you to
Alvarado?
Cooperatives versus Traditional Profit-making Companies
1. In your own words, how do cooperatives differ from traditional profit-making
companies?
2. From your perspective, how does the definition of success for a cooperative differ from
that of a traditional profit-making company? How does Alvarado measure its success
3. Please explain benefits package.
The Cooperative Movement
1. How does Alvarado differ from other employee-owned cooperatives?
2. How is a democratic work environment reflected in Alvarado’s governance and
management structures?
3. Why do you think a cooperative business model was appropriate for this community?
4. Do you think there’s a size limit to a coop business? Is there any business that would be
too big (in terms of sales or in terms of employee size) that would be too big for a coop
business?
Alvarado’s Implementation of Cooperative Culture
1. How are your decisions vetted within Alvarado? Are there some decisions for which you
need approval from the owners? In which areas of your job do you have free reign to act
on your own authority?
2. How do you share information with employees and members? i.e. monthly and/or
quarterly meetings, newsletters, etc.
3. How are employee-owners involved in Alvarado’s business and strategic planning? Are
there any other ways in which Alvarado promotes a democratic work environment?
4. What do you think is the key to Alvarado’s success?
SOCIAL VIABILITY OF ALVARADO STREET BAKERY 136
5. Mr. Tuck mentioned that trust among members was key to Alvarado’s success. In your
opinion, how is that trust nurtured among the membership?
Alvarado as a Community Institution
1. Have any community partners, such as university, other cooperatives, government
agencies, etc., been instrumental to Alvarado’s success?
2. How does Alvarado develop its community partnerships? i.e. mentor other cooperatives,
attend conferences, etc.
3. To what extent do you believe the community is aware of Alvarado’s presence?
4. In your opinion do worker-owned cooperatives benefit the community? If so, how? If
not, why?
5. How might Alvarado strengthen its community ties?
6. How has Alvarado impacted the quality of life of its employee-owners?
7. How have federal, local and/or state policies helped, and/or hindered Alvarado’s growth?
8. If Alvarado’s management and governance model were to be replicated in other cities,
which tools would be essential for a successful implementation?

Abstract (if available)

Abstract Alvarado Street Bakery is an organic sprouted wheat wholesale bakery that has been in business over 35 years, annually grosses over $30 million dollars, and is run as an employee-owned cooperative. The purpose of this case study is to understand how Alvarado defines success, and determine the socio-cultural attributes necessary to support its success

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Asset Metadata

Creator Jackson, Alaina (author)

Core Title An exploratory case study on the social viability of Alvarado Street Bakery’s employee-owned cooperative model

School School of Policy, Planning and Development

Degree Doctor of Policy, Planning & Development

Degree Program Policy, Planning, and Development

Publication Date 11/12/2015

Defense Date 06/18/2015

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag case study,cooperative,employee-owned,OAI-PMH Harvest,social viability,worker-owned

Format application/pdf (imt)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Currid-Halkett, Elizabeth (committee chair), Banerjee, Tridib (committee member), Dyrness, Grace (committee member), Mitchell, Leonard (committee member), Wertman, Adlai (committee member)

Creator Email alainaja@usc.edu,alainajackson@gmail.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c40-199114

Unique identifier UC11279325

Identifier etd-JacksonAla-4037.pdf (filename),usctheses-c40-199114 (legacy record id)

Legacy Identifier etd-JacksonAla-4037.pdf

Dmrecord 199114

Document Type Dissertation

Format application/pdf (imt)

Rights Jackson, Alaina

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus MC 2810, 3434 South Grand Avenue, 2nd Floor, Los Angeles, California 90089-2810, USA