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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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    Cited by:

    1. Gabriel Burdí­n & Andrés Dean, 2009. "Las decisiones de empleo y salarios de cooperativas de trabajo y empresas capitalistas : evidencia para Uruguay en base a datos de panel," Documentos de Trabajo (working papers) 09-02, Instituto de Economia - IECON.
    2. Dean, Andrés, 2019. "Do successful worker-managed firms degenerate?," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 317-329.
    3. Burdín, Gabriel & Dean, Andrés, 2009. "New evidence on wages and employment in worker cooperatives compared with capitalist firms," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 517-533, December.
    4. 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.
    5. Harold Paredes-Frigolett & Pablo Nachar-Calderón & Carmen Marcuello, 2017. "Modeling the governance of cooperative firms," Computational and Mathematical Organization Theory, Springer, vol. 23(1), pages 122-166, March.
    6. Burdin, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute of Labor Economics (IZA).
    7. 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.
    8. 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.
    9. 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.
    10. Matyja, Małgorzata, 2017. "Zasoby pracy w polskich gospodarstwach z perspektywy pracowniczych spółdzielni rolniczych," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 3(176).
    11. Virginie P�rotin, 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.
    12. Sebastián Berazategui & Emilio Landinelli & Daniel Ramírez, 2013. "Una comparación del comportamiento innovador entre Cooperativas de Trabajo y Empresas Capitalistas en Uruguay," Documentos de Investigacion Estudiantil (students working papers) 13-02, Instituto de Economia - IECON.
    13. 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.
    14. 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.
    15. Marie Bouchard & Damien Rousselière, 2018. "Does Gibrat's law hold among urban social economy enterprises? A research note on Montreal social economy," Economics Bulletin, AccessEcon, vol. 38(3), pages 1523-1540.
    16. 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.
    17. Malleson, Tom, 2014. "After Occupy: Economic Democracy for the 21st Century," OUP Catalogue, Oxford University Press, number 9780199330102.
    18. Verónica Amarante & Andrés Dean, 2012. "Dinámica del mercado laboral uruguayo," Documentos de Trabajo (working papers) 12-17, Instituto de Economia - IECON.
    19. repec:ulr:tpaper:dtm-02-13 is not listed on IDEAS
    20. 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 Economia - IECON.
    21. Gregory K. DOW, 2018. "The Theory Of The Labor-Managed Firm: Past, Present, And Future," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 65-86, March.

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    More about this item

    Keywords

    Capitalist firms; Worker cooperatives; Firm objectives;
    All these keywords.

    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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