LUXÓMETRO Instrumento de
2.8.8. Marco conceptual.
In order for economic initiatives created in the framework of the social economy to be effective they should be rooted in local communities. The company ought to be socially connected with the stakeholders (such as customers and suppliers) belonging to the community in which the organisation is operating. Partners should be treated with particular attention and respect. The result is that such a company takes into consideration not only market factors.
From this point of view, we can say that all the “Strug Valley” economic initiatives are “embedded”. Each initiative makes use of different instruments relating it to the local community, in various ways. Let us take a closer look at particular solutions.
The most important OST29 root instruments are: the offer profi le and the way stakeholders are allowed to co-decide about the company. The cooperative’s offer is divided into two parts: services based on special preferences for the cooperative members (for example, low standing charges, low Internet fees, free calls within the area of four “Strug Valley” communes, free Internet access for schools and public libraries, services improving the quality of life – such as telecardiomed, and the possibility 29 Telekardiomed makes it possible to undergo an EKG test and give back the test results to the patient on the phone.
of receiving individual bonuses – such as even lower standing charges for the poorest), and services paid in full (Internet access, Internet TV). On the one hand, the offer diversifi cation fulfi ls the company philosophy focused on helping the local community, while on the other hand, it allows the company to gain the profi ts necessary to fi nance social objectives and develop itself further, and to increase the quality of its services.
Another important aspect of the company being socially rooted is the way it is managed, taking into consideration the opinions of stakeholders. Each OST co-owner (currently 7,000 natural persons and legal entities), regardless of its share size, has one vote. Every fi ve years, the members choose their representatives who, during annual meetings, take binding decisions on issues such as the cooperative’s fi nancial plans, admissible levels of fi nancial liabilities, authorisation of fi nancial statements submitted by the Supervisory Board, statute changes, and selecting and dismissing Supervisory Board members. The cooperative’s Board of Directors meets with all of the cooperative’s members once a year. The meetings are held in all 28 towns in which the OST operates.
The rooting mechanism of the company “Chmielnik Zdrój”, JSC is quite different. On the one hand, the enterprise creates its customer relations, while on the other it focuses on local suppliers – farmers providing raw materials (crops, and produce) and local employees. The company (producing Alfred
mineral water, fl avoured drinks, and organic food – vegetables, bread, honey) is strongly related to its local customers. It uses individual sales techniques, employing its own sales representatives who sell products to local customers directly, for instance in their fl ats. Each “Chmielnik Zdrój” salesman builds up and then provides services to his/her own customer network (the company has more than 50,000 regular customers30 today). Thanks to this marketing approach, the company has developed strong and individual customer relations. It is Customer Relationship Marketing aimed at providing services to the local community (most of its clients), the very essence of rooting.
“Chmielnik Zdrój” takes good care of local suppliers and employees, treating it as its mission. The social aim here is more important than the economic one. We must remember that the company was created to provide new employment opportunities outside agriculture, open up outlet markets for local agrarian producers, and assist with the therapeutic process of alcohol addicts. As far as local suppliers are concerned –
the company guarantees buying crops and produce from them 31, helps them obtain ecological certifi cations for their products and make proper decisions in regard to production processes, and encourages them to undertake innovative ventures (e.g. grow untypical plant types). As for the local employment – the company, located in the centre of regional unemployment, gives work to people trying to stop being alcohol addicts and supports their therapy (offering elastic work hours adapted to their therapy schedule). The company is a fervent supporter of sobriety actions and the charitable “Trzeźwa Gmina” (sober commune) Association.
The rooting has a more direct character in regard to the Social Economic College in Tyczyn. Here, the market mechanisms are effectively used, stimulating the commune’s development: the College employs administrative staff mainly from the local community, it makes contributions to the commune budget, improves demand on the local market (lodging, restaurants, etc.), and helps renovate historic buildings in the city32. The College offers 10% rebates on tuition fees for “Strug Valley” students.
The fi rst thing “Strug Valley” brings to mind is the famous telephone installation. Most microregion inhabitants make the equation between the telephone cooperative and the “Valley”. The social effect generated by the OST may be called “empowerment”33, the unusual strengthening of the local community. It is a very deep, almost revolutionary, cultural change. The telephone became part of people’s everyday lives, changing them completely: children do their homework on the phone and older people talk to one another for long hours (sometimes in a group, teleconference mode). The telephone became a major instrument of social integration. One of the people we talked to said: the (physical and fi nancial) availability of telecommunications services made it possible “for people to start talking to one another”. They do talk – a lot! It has been estimated that the total length of telephone conversations in the “Valley” is more or less on the level of a large city. At the early stages, the cooperative operated on the level comparable to that of New York34.
31 Farmers sign short-term or mid-term contracts with the company, which allows them to sell their products without having to take them to distant wholesalers. It is a source of secure income, and certainty in regard to the successive year market situation
32 Today, the college is part of the non-public Rzeszów School of Informatics and Management. Our analysis was conducted when the College was still an independent entity.
33 “Empowerment” here is understood as the effect of actions aimed at helping the local community or actions undertaken by the community itself in order to be stronger.
The OST success was an encouraging example for other innovative economic activities. None of them, however (not even “Chmielnik Zdrój”, JSC or the College), managed to create so much “empowerment” or entrepreneurship stimulation. The “Strug Valley” inhabitants treat the cooperative like an icon of their success. In people’s minds, the other initiatives are not so much associated with the “Valley”.
The “Chmielnik Zdrój” company is particularly interesting in this respect for our analysis. The company was created in order to help the local community and it makes use of a vast array of rooting instruments.
The history of its creation is almost mythical, as in its early days the company was following a kind of informal methods – it was just a small bottling plant located in commune cellars that had been constructed as nuclear shelters, the waters were manually bottled, production handled by several people – mainly the unemployed35. Therefore, one might think that “Chmielnik Zdrój” is predestined to fulfi ll the role of a rooted company, a partner for local stakeholders. However, according to feedback given by co-operators, the rooting is rather weak36 in spite of the vast array of used means. The rooting is made no stronger by employees’ ideas to establish trade unions. In conclusion, we may say that the most important “Chmielnik Zdrój” stakeholders do not identify themselves with the venture as it is not “their” creation.
When analysing the process of the gradual straying away from the Galician model to the public issue management through inter-sector cooperation, it is a good idea to juxtapose two ventures particularly concerned with social objective fulfi lments – the OST and “Chmielnik Zdrój”. Both companies were founded in a Galician style. They were both developed with a fl ourish and a certain amount of non-transparency from the institutional point of view. The rules of local governments, the market, and citizens were all mixed up. There were no clear-cut responsibility limits. The OST proves that the Galician model can be very successful. In other words, the “Strug Valley” experiences demonstrate that it is not possible to say that the inter-sector cooperation and the public- private partnership are better forms of activity, a better approach to public matters. The effectiveness of the Galician model – whose irrefutable advantage is its receptiveness towards the local community
35 Data source: Garbacz, op. cit.
36 A. Gramzow, Experience with Endogenous Rural Development Initiatives and the Prospects for Leader+ in the Region “Dolina Strugu”, Leibniz Institute of Agricultural Development in Central and Eastern Europe, Discussion Paper No. 89, 2005.
needs – depends on fulfi lling two conditions: 1) sticking to market rules which render it possible to maintain profi tability, and competitiveness; meritocratic management, and 2) streamlining the company rooting level and balancing its economic and social goals. To put it simply, preferential treatment for local stakeholders while maintaining market calculations and economic settlements.
There are different kinds of rooting. The Social Economic College represents an establishment with a dominant market element, “Chmielnik Zdrój” seems to be rooted too much with its predominance of social objectives, and the OST seems to be an ideal proportion of both (social and economic) aspects. Paradoxically, a good social economic venture must not overrate the social component of its objective.
When analysing the rooting levels, it is necessary to remember that the companies we are describing are the most effective organisations in the region37.
6. Summary
“Strug Valley” is not just an initiative or a single venture, but it is a multi-level, well-thought combination of actions, solutions, and connections. The history of the “Valley” refl ects the transition from the Galician local government model to inter-sector cooperation. The transition does not have to mean giving up one way completely in favour of the other. Its most important aspect is the model “upgrade” – adapting the proven Galician methods to new standards resulting from changing public issue management norms. All the actions have to be transparent and professional. As for the partner cooperation, the model change included the establishment of clear-cut responsibility and competence limits of particular actors (local government, business, third sector organisations). In the fi eld of economic initiatives, the transition was mainly concerned with meritocratic management implementation and establishing proper root levels.
In order to explain the “Strug Valley” processes, the laboratory metaphor is extremely useful. The laboratory is a workshop for testing and developing the optimal partner cooperation model, looking for an adequate formula of united actions. It reminds us of medieval alchemic study rooms where people were trying to discover the philosopher’s stone 37 T. Kaźmierczak, M. Rymsza (eds.), Kapitał społeczny. Ekonomia społeczna. Institute of Public Affairs, Warsaw 2007.
– a magic substance that changes metals into gold. In the “Strug Valley” laboratory, people would look for something valuable for the cooperation, for best local community solutions, the best remedy. Let us not forget that the beginnings of partner cooperation from the 1990s were characterised by the lack of clearly defi ned inter-sector cooperation procedures, so the original “Valley” establishment was quite experimental in its character.
“Strug Valley” was a stormy attempt to fi nd proper formulas adapted to the changing social, economic, and legal conditions in early, post-communist Poland. One of the most important demands was the crystallisation of inter- sector cooperation standards and the promotion of the transparency public institutions.
The laboratory metaphor refl ects the dynamics of processes taking place inside the “Valley” cooperators’ network. Just like in chemistry laboratories, the processes would often be violent, sudden, and rapid. The peculiar “Strug Valley” voltage setup would make the public matters management transition process occur in all sorts of diffi cult situations. Apart from all that, the laboratory processes were modifi ed by external factors, such as the modernisation of the local government election system.
This analysis is one of many possible interpretations of the “Strug Valley” phenomenon. It does not pertain to evaluating it. Our selection of facts on which the review has been based may make someone think that the “Valley” is haunted by some negative shadows. It has to be underlined, however, that the “Valley’s” institutional and social achievements are quite impressive. “Strug Valley” is a powerful cannon built on a fallow. It is a great example of momentous actions, courage, commitment and effort. At the same time, the “Valley” is not a delusion or a castle in the air. The social and economic initiatives undertaken by the “Valley” have been extremely successful in developing the commune and its people. It is shown in press articles, talked about during various conferences, and presented in scientifi c analyses. The “Valley” has become an interesting subject for the Polish parliament, the world of business, foreign scientists, and international organisations, such as the UN. Our article has presented different aspects of this region’s development and we hope that our ideas will help create effective and innovative solutions in other parts of Poland.