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Efficiency in Employee-Owned Enterprises: An Econometric Case Study of Mondragon

Author

Listed:
  • Arando, Saioa

    (Mondragon University)

  • Gago, Monica

    (Mondragon University)

  • Jones, Derek C.

    (Hamilton College)

  • Kato, Takao

    (Colgate University)

Abstract

We provide the first econometric study of efficiency for a member of the Mondragon group of worker cooperatives. Eroski is a retail distribution chain and, most unusually, there are two distinct types of hypermarkets: (i) cooperatives with significant employee ownership and voice; and (ii) GESPAs with modest employee ownership and limited voice. For supermarkets the chain includes conventional firms with no employee ownership as well. Our key data are a panel of monthly observations from February 2006 through May 2008, a total of 9,800 observations for supermarkets and 2,150 for hypermarkets. By estimating first difference models we find that hypermarket stores with cooperative ownership grow sales significantly faster than GESPA stores. For supermarkets overall we find no significant difference in performance among the three types of stores. However, for a particular segment of the supermarket called SUPERMARKET CITY (a subgroup of small supermarkets for which having "better customer service" employees is particularly important), cooperatives are found to outperform conventional stores. To investigate mechanisms that help explain why cooperatives are better performers we provide additional evidence that takes account of the role of the more extensive opportunities for employee involvement and training, and stronger economic incentives that exist in cooperatives. Finally, while cooperative members are better paid than their peers in comparable firms, individual-level data also show that job satisfaction is actually lower for workers in cooperatives than for GESPA workers. Though this may be a simple reflection of high worker expectation in cooperatives, cooperatives may well be indeed a "high-stress work system." The overall assessment of cooperatives will need to be nuanced.

Suggested Citation

  • 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).
  • Handle: RePEc:iza:izadps:dp5711
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    Cited by:

    1. Pablo Cotler, 2020. "Does it pay to cooperate? The case of cooperatives in the Mexican manufacturing sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(4), pages 497-517, December.
    2. Mikko MAKINEN & Derek C. JONES, 2015. "Comparative Efficiency Between Cooperative, Savings And Commercial Banks In Europe Using The Frontier Approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 401-420, September.
    3. Anne Musson & Damien Rousselière, 2020. "Exploring the effect of crisis on cooperatives: a Bayesian performance analysis of French craftsmen cooperatives," Applied Economics, Taylor & Francis Journals, vol. 52(25), pages 2657-2678, May.
    4. Filippo Belloc, 2019. "Why Isn't Uber Worker-Managed? A Model of Digital Platform Cooperatives," CESifo Working Paper Series 7708, CESifo.
    5. Malleson, Tom, 2014. "After Occupy: Economic Democracy for the 21st Century," OUP Catalogue, Oxford University Press, number 9780199330102.
    6. Imanol Basterretxea & John Storey, 2018. "Do Employee†Owned Firms Produce More Positive Employee Behavioural Outcomes? If Not Why Not? A British†Spanish Comparative Analysis," British Journal of Industrial Relations, London School of Economics, vol. 56(2), pages 292-319, June.
    7. Ignacio Bretos & Anjel Errasti & Carmen Marcuello, 2019. "Multinational Expansion of Worker Cooperatives and Their Employment Practices: Markets, Institutions, and Politics in Mondragon," ILR Review, Cornell University, ILR School, vol. 72(3), pages 580-605, May.
    8. Natalia P. MONTEIRO & Odd Rune STRAUME, 2018. "Are Cooperatives More Productive Than Investor-Owned Firms? Cross-Industry Evidence From Portugal," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 377-414, June.

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    More about this item

    Keywords

    employee ownership; producer cooperatives; labor managed firm; productive efficiency; Mondragon; shared capitalism;
    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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