Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?
Author(s)
Bonin, John P.; Jones, Derek C.; Putterman, Louis
Abstract
“In recent decades, as the number of worker-managed firms, or producer cooperatives (PCs), has increased, economists have engaged in extensive theoretical and empirical analyses of such enterprises. However, theoretical and applied studies tend to approach the subject in different terms, often making incompatible assumptions about the institutional structure of PCs. This article reviews and compares the theoretical and empirical literature on PCs, addressing four related questions: Do PCs and comparable conventional firms (CFs) make different decisions about employment, output, and prices? Does the internal organization of the PC affect worker motivation and productivity? Does the assignment of property rights in many PCs lead to underinvestment? Finally, why do so few PCs exist in developed market economies? The scope of this article is restricted to industrial cooperatives, where workers have formal decision-making power over the firm’s operations, in developed countries. Even with this somewhat restrictive definition, there is a broad diversity of experience with PCs. Italy has the largest PC sector, accounting for 2.5% of all nonagricultural employment nationwide. Other countries with substantial numbers of PCs include France, Spain (particularly the Mondragon group of cooperative enterprises), the U.K., and to a lesser extent Sweden and Denmark. In the U.S., the plywood industry in the Pacific Northwest has a long history of cooperatives, as do a scattering of other smaller industries. The size of cooperative enterprises varies, but most are quite small: the average Italian PC has less than 20 workers, while a few have exceeded 2000. Profit-sharing arrangements, limits on salary inequalities, hiring of nonmember workers, and provisions for the sale of shares by departing members all vary widely between countries, industries, and individual firms.”
