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Democratic firms and economic success. The co-op model
[Empresas democráticas y éxito económico. El modelo cooperativo]

Author

Listed:
  • María José Cabaleiro Casal

    (Universidade de Vigo, España.)

  • Carlos Iglesias Malvido

    (Universidade de Vigo, España.)

  • Rocío Martínez Fontaíña

    (Universidade de Vigo, España.)

Abstract

This paper analyzes how co-operative principles, particularly democratic management, affect the co-op’s economic objective. The theoretical model specifies the characteristics presented by the production function so democracy generates positive net income. Costs derived from maintaining the one person one vote criterion are explicitly incorporated into this function upon new membership. The results show that democracy contributes to the economic success when the decision-making strategy followed by the partners considers all cooperative principles, especially when a retained earnings policy is regularly applied. This study can be extended to all of Social Economy firms concerned about reinforcing democratic institutions through the business sector. This study can be extended to all of Social Economy firms concerned about reinforcing democratic institutions through the business sector.

Suggested Citation

  • María José Cabaleiro Casal & Carlos Iglesias Malvido & Rocío Martínez Fontaíña, 2019. "Democratic firms and economic success. The co-op model [Empresas democráticas y éxito económico. El modelo cooperativo]," REVESCO: Revista de estudios cooperativos, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Escuela de Estudios Cooperativos, issue 132, pages 29-45.
  • Handle: RePEc:ucm:reveco:y:2019:i:132:p:29-45
    DOI: 10.5209/REVE.65482
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    More about this item

    Keywords

    Co-op principles; Co-op objectives; Economic participation; Democratic management; Decision costs; Economic surplus.;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

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