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The Viability of Employee-Owned Firms: Evidence from France

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  • Saul Estrin
  • Derek C. Jones

Abstract

This study examines data on French producer cooperatives for the years 1970–79 to test the widely accepted theoretical prediction that employee-owned firms either will fail as commercial undertakings or degenerate into capitalist firms as the proportion of hired workers who are not members of the cooperative firm increases. Contrary to this prediction, the authors find a high rate of survival among the producer cooperatives studied, with many cooperatives still healthy after fifty years of operation, and they find no evidence of degeneration—either in terms of the proportion of hired workers, productivity, profitability, or capital-intensity. The findings do, however, suggest that the firms' financial structure became increasingly inefficient with age.

Suggested Citation

  • Saul Estrin & Derek C. Jones, 1992. "The Viability of Employee-Owned Firms: Evidence from France," ILR Review, Cornell University, ILR School, vol. 45(2), pages 323-338, January.
    • Handle: RePEc:sae:ilrrev:v:45:y:1992:i:2:p:323-338
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    Cited by:

    1. Donald A R George & Eddi Fontanari & Ermanno Celeste Tortia, 2019. "Finance, property rights and productivity in Italian cooperatives," Edinburgh School of Economics Discussion Paper Series 293, Edinburgh School of Economics, University of Edinburgh.
    2. Dean, Andrés, 2019. "Do successful worker-managed firms degenerate?," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 317-329.
    3. 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.
    4. Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Do Workers Gain by Sharing? Employee Outcomes under Employee Ownership, Profit Sharing, and Broad-Based Stock Options," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 257-289, National Bureau of Economic Research, Inc.
    5. 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.
    6. Artz, Georgeanne M. & Kim, Younjun, 2011. "Business ownership by workers: are worker cooperatives a viable option?," ISU General Staff Papers 201111090800001098, Iowa State University, Department of Economics.
    7. Christophe Boone & Serden Özcan, 2016. "Strategic Choices at Entry and Relative Survival Advantage of Cooperatives versus Corporations in the US Bio-Ethanol Industry, 1978-2015," Journal of Management Studies, Wiley Blackwell, vol. 53(7), pages 1113-1140, November.
    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. Marcelo Vieta, 2013. "The emergence of the empresas recuperadas por sus trabajadores: A political economic and sociological appraisal of two decades of self-management in Argentina," Euricse Working Papers 1355, Euricse (European Research Institute on Cooperative and Social Enterprises).
    10. Morley Gunderson & Jeffrey Sack & James McCartney & David Wakely & Jonathan Eaton, 1995. "Employee Buyouts in Canada," British Journal of Industrial Relations, London School of Economics, vol. 33(3), pages 417-442, September.
    11. Joseph R. Blasi & Richard B. Freeman & Christopher Mackin & Douglas L. Kruse, 2010. "Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 139-165, National Bureau of Economic Research, Inc.
    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. Kyoung Yong Kim & Pankaj C. Patel, 2020. "Broad‐Based Employee Ownership and Labour Productivity During the 2008 Recession: Evidence from Public Firms in Europe," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 396-423, June.
    14. Francesca Gagliardi, 2009. "Financial development and the growth of cooperative firms," Small Business Economics, Springer, vol. 32(4), pages 439-464, April.
    15. Perotin, Virginie, 2006. "Entry, exit, and the business cycle: Are cooperatives different?," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 295-316, June.
    16. Derek C. Jones & Panu Kalmi, 2012. "Economies of Scale Versus Participation: a Co-operative Dilemma?," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 1(1), pages 37-64, December.
    17. Françoise Bastié & Sylvie Cieply & Pascal Cussy, 2018. "Does mode of transfer matter for business performance? Transfers to employees versus transfers to outsiders," Small Business Economics, Springer, vol. 50(1), pages 77-89, January.
    18. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650.
    19. Justine Valette & Paul Amadieu & Patrick Sentis, 2018. "Les coopératives résistent-elles mieux ? Une analyse de survie des coopératives agricoles françaises," Post-Print hal-01990418, HAL.

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