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Revisiting the objectives of worker-managed firms: An empirical assessment

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  • Burdín, Gabriel
  • Dean, Andrés

Abstract

This paper provides new evidence on the objectives pursued by worker-managed firms (WMFs). The basic neoclassical model assumes that WMFs maximizes net income per member instead of total profits (Ward, 1958). Even though it has been largely criticized, the Ward model has dominated the self-management literature. Alternative models suggest that WMFs are not only concerned about income per worker but also about the level of employment. However, the empirical content of these competing theoretical models has been rarely analyzed. This paper contributes to fill this gap by estimating the parameters of a generic welfare function, following the methodology proposed by Craig and Pencavel (1993). These parameters determine the relative importance that a WMF places on income per worker vis-a-vis the level of employment. Estimates are based on a long micro-panel of Uruguayan firms covering the entire population of Uruguayan worker-managed firm and conventional firms in 31 3-digit sectors over the period April 1996-December 2005. Following a strictly neoclassical framework, but simply allowing a more general specification of the WMF goals, we show that the assumption of the basic neoclassical model of the WMF is misleading. Our results support the view that WMFs are concerned with both employment and income per worker.

Suggested Citation

  • Burdín, Gabriel & Dean, Andrés, 2012. "Revisiting the objectives of worker-managed firms: An empirical assessment," Economic Systems, Elsevier, vol. 36(1), pages 158-171.
  • Handle: RePEc:eee:ecosys:v:36:y:2012:i:1:p:158-171
    DOI: 10.1016/j.ecosys.2011.06.003
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gabriel Burdin, 2012. "Does workers’ control affect firm survival? Evidence from Uruguay," Department of Economics University of Siena 641, Department of Economics, University of Siena.
    2. Burdín, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute for the Study of Labor (IZA).
    3. Gabriel Burdín, 2014. "Are Worker-Managed Firms More Likely to Fail Than Conventional Enterprises? Evidence from Uruguay," ILR Review, Cornell University, ILR School, vol. 67(1), pages 202-238, January.
    4. Malleson, Tom, 2014. "After Occupy: Economic Democracy for the 21st Century," OUP Catalogue, Oxford University Press, number 9780199330102.
    5. Kranz, Olaf & Steger, Thomas, 2016. "Resurrected, recovered, but still didn’t survive? A case study on the viability of employee-owned companies," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 27(4), pages 234-260.
    6. Flavio DELBONO & Carlo REGGIANI, 2013. "Cooperative Firms And The Crisis: Evidence From Some Italian Mixed Oligopolies," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 84(4), pages 383-397, December.
    7. Verónica Amarante & Andrés Dean, 2012. "Dinámica del mercado laboral uruguayo," Documentos de Trabajo (working papers) 12-17, Instituto de Economía - IECON.
    8. repec:ulr:tpaper:dtm-02-13 is not listed on IDEAS
    9. 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.
    10. repec:bla:annpce:v:88:y:2017:i:3:p:65-86 is not listed on IDEAS
    11. Andrés Dean, 2014. "¿Las cooperativas de trabajadores degeneran?," Documentos de Trabajo (working papers) 14-01, Instituto de Economía - IECON.
    12. Virginie Pérotin, 2013. "Worker Cooperatives: Good, Sustainable Jobs in the Community," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(2), pages 34-47, May.
    13. Pencavel, John, 2015. "The labor supply of self-employed workers: The choice of working hours in worker co-ops," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 677-689.
    14. Sebastián Berazategui & Emilio Landinelli & Daniel Ramírez, 2013. "Una comparación del comportamiento innovador entre Cooperativas de Trabajo y Empresas Capitalistas en Uruguay," Documentos de Investigación Estudiantil (students working papers) 13-02, Instituto de Economía - IECON.
    15. Carmen Marcuello & Pablo Nachar-Calderón, 2012. "Sociedad cooperativa y socio cooperativo: propuesta de sus funciones objetivo," Documentos de Trabajo dt2012-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    16. Belloc, Filippo, 2017. "What deters labor-owned firm creation? Evidence from Italian manufacturing sectors," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 139-153.

    More about this item

    Keywords

    Capitalist firms; Worker cooperatives; Firm objectives;

    JEL classification:

    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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