IDEAS home Printed from https://ideas.repec.org/a/seb/journl/v7y2009i1p35-53.html
   My bibliography  Save this article

Technology, Effort and the Efficiency of Production: Labor-managed versus Capitalist Firms

Author

Listed:
  • Josef C. Brada

    (Arizona State University)

  • Jose A. Mendez

    (Arizona State University)

Abstract

We explore how the modeling of effort as a factor in production affects the relative productivity of labor-managed and capitalist firms. Using simple models of privately-owned and labor-managed firms, we show that the more important the role of effort in production, the greater the differences in the efficiency of the two types of firms even if monitoring remains fixed. The results show that even minor differences in the extraction of effort can cause large changes in output and efficiency. We draw implications from our results for the viability of labor-managed firms and cooperatives.

Suggested Citation

  • Josef C. Brada & Jose A. Mendez, 2009. "Technology, Effort and the Efficiency of Production: Labor-managed versus Capitalist Firms," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 7(1), pages 35-53.
    • Handle: RePEc:seb:journl:v:7:y:2009:i:1:p:35-53
    as

    Download full text from publisher

    File URL: http://www.asecu.gr/Seeje/issue12/BradaMendez.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Carter, Michael R, 1987. "Risk Sharing and Incentives in the Decollectivization of Agriculture," Oxford Economic Papers, Oxford University Press, vol. 39(3), pages 577-595, September.
    2. Josef C. Brada, 1996. "Privatization Is Transition--Or Is It?," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 67-86, Spring.
    3. Boyd, Michael L, 1987. "The Performance of Private and Cooperative Socialist Organization: Postwar Yugoslav Agriculture," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 205-214, May.
    4. Chinn, Dennis L., 1979. "Team cohesion and collective-labor supply in Chinese agriculture," Journal of Comparative Economics, Elsevier, vol. 3(4), pages 375-394, December.
    5. Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
    6. Estrin, Saul, 1991. "Some reflections on self-management, social choice, and reform in eastern europe," Journal of Comparative Economics, Elsevier, vol. 15(2), pages 349-366, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Depken II, Craig A. & Redmount, Esther & Snow, Arthur, 2001. "Shirking and the choice of technology: a theory of production inefficiency with an empirical application," Journal of Economic Behavior & Organization, Elsevier, vol. 44(4), pages 383-402, April.
    2. Gabriel Burdín, 2016. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms," Economic Journal, Royal Economic Society, vol. 126(594), pages 1372-1403, August.
    3. Guillermo Alves & Gabriel Burdin & Paula Carrasco & Andrés Dean & Andrés Rius, 2012. "Empleo, remuneraciones e inversión en cooperativas de trabajadores y empresas convencionales: nueva evidencia para Uruguay," Documentos de Trabajo (working papers) 12-14, Instituto de Economía - IECON.
    4. Arando, Saioa & Gago, Monica & Jones, Derek C. & Kato, Takao, 2011. "Efficiency in Employee-Owned Enterprises: An Econometric Case Study of Mondragon," IZA Discussion Papers 5711, Institute of Labor Economics (IZA).
    5. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2019. "Equilibrium unemployment as a worker insurance device: wage setting in worker owned enterprises," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 653-671, October.
    6. Fakhfakh F. & Perotin V. & Gago M., 2009. "Productivity, Capital and Labor in Labor-Managed and Conventional Firms," Working Papers ERMES 0910, ERMES, University Paris 2.
    7. Erik Mathijs & Johan F. M. Swinnen, 2001. "Production Organization And Efficiency During Transition: An Empirical Analysis Of East German Agriculture," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 100-107, February.
    8. Chris Doucouliagos, 1997. "The Comparative Efficiency and Productivity of Labor-Managed and Capital-Managed Firms," Review of Radical Political Economics, Union for Radical Political Economics, vol. 29(2), pages 45-69, June.
    9. Cecilia Navarra & Ermanno Tortia, 2014. "Employer Moral Hazard, Wage Rigidity, and Worker Cooperatives: A Theoretical Appraisal," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 707-726.
    10. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650, January.
    11. Fathi Fakhfakh & Virginie Pérotin & MÓnica Gago, 2012. "Productivity, Capital, and Labor in Labor-Managed and Conventional Firms: An Investigation on French Data," ILR Review, Cornell University, ILR School, vol. 65(4), pages 847-879, October.
    12. Bela Greskovits, 1999. "Consolidating Economic Reforms: the Hungarian Experience with Lessons for Poland," CASE-CEU Working Papers 0031, CASE-Center for Social and Economic Research.
    13. MARINI, Marco, 1996. "Property Rights and Market : Employee Privatization as a Cooperative Bargaining Process," LIDAM Discussion Papers CORE 1996023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Tortia, Ermanno, 2014. "L'impresa come bene comune," AICCON Working Papers 131-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    15. Michael Kremer, 1997. "Why are Worker Cooperatives So Rare?," NBER Working Papers 6118, National Bureau of Economic Research, Inc.
    16. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    17. Meyendorff, Anna & Snyder, Edward A., 1997. "Transactional Structures of Bank Privatizations in Central Europe and Russia," Journal of Comparative Economics, Elsevier, vol. 25(1), pages 5-30, August.
    18. Deng, Kent & Shen, Jim Huangnan, 2019. "From state resource allocation to a 'low-level equilibrium trap': re-evaluation of economic performance of Mao's China, 1949-78," Economic History Working Papers 101127, London School of Economics and Political Science, Department of Economic History.
    19. Shannon Sutton, 2012. "Add Producers and Stir? (Re) politicizing Fairtrade participation," Working Papers 38, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    20. Qi Quan & N. Huyghebaert, 2004. "Privatization. Issues at Stake in the Case of China," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(4), pages 647-687.

    More about this item

    Keywords

    Labor Managed Firms; Cooperatives; Effort; Incentives; Competition; Efficiency of Firms;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:seb:journl:v:7:y:2009:i:1:p:35-53. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ms. Melina Petromelidou (email available below). General contact details of provider: https://edirc.repec.org/data/asecuea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.