IDEAS home Printed from https://ideas.repec.org/p/tep/teppwp/wp11-08.html
   My bibliography  Save this paper

Productivity, Capital and Labor in Labor-Managed and Conventional Firms

Author

Listed:
  • Fathi Fakhfakh
  • Virginie Perotin
  • Monica Gago

Abstract

Despite a continuing interest in the compared efficiency of labor-managed and conventional firms, only a handful of comparative empirical studies exist. These studies suggest that labor-managed firms have the same productivity levels as conventional ones, but organize production differently. However, the data used in these studies cover a single industry, or firms matched by industry and size in manufacturing, and concern a few dozen firms. In addition, the use of constant-elasticity production functions in past studies has made it difficult to distinguish the effects of incentives embodied in the factors of production from those of scale differences that could be caused by the differences in factor demand behavior between conventional and labor-managed firms hypothesized by economic theory. The paper compares the productivity of labor-managed and conventional firms using two new panel data sets covering several thousand firms from France, including representative samples of conventional firms and all worker cooperatives with 20 employees or more in manufacturing and services. We present Generalized Least Squares (GLS) and Generalized Moments Method (GMM) estimations of translog production functions industry by industry for cooperative and conventional firms and test for the equality of their total factor productivities. We also allow systematic differences in scale and technology to be determined by the ownership form. The translog specification, which allows returns to scale to vary with input levels, makes it possible to disentangle embodied incentive effects from systematic differences in scale due to underinvestment in labor-managed firms. In the process, we also propose updated "stylized facts" about labor-managed firms in comparison with conventional firms. Our production function estimates suggest that cooperatives are at least as productive as conventional firms. However, the two types of firms organize production differently. Cooperatives are mor
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Fathi Fakhfakh & Virginie Perotin & Monica Gago, 2011. "Productivity, Capital and Labor in Labor-Managed and Conventional Firms," TEPP Working Paper 2011-08, TEPP.
    • Handle: RePEc:tep:teppwp:wp11-08
    as

    Download full text from publisher

    File URL: http://www.tepp-repec.eu/RePEc/files/teppwp/tepp-wp-11_8-ff-vp-mg.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Fathi Fakhfakh, 2004. "The Effects Of Profit Sharing And Employee Share Ownership On Quits: Evidence From A Panel Of French Firms," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Employee Participation, Firm Performance and Survival, pages 129-147, Emerald Group Publishing Limited.
    5. John T. Addison, 2005. "The Determinants Of Firm Performance: Unions, Works Councils, And Employee Involvement/High‐Performance Work Practices," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 406-450, July.
    6. Ornella Wanda Maietta & Vania Sena, 2004. "Profit-Sharing, Technical Efficiency Change And Finance Constraints," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Employee Participation, Firm Performance and Survival, pages 149-167, Emerald Group Publishing Limited.
    7. Conte, Michael A. & Svejnar, Jan, 1988. "Productivity effects of worker participation in management, profit-sharing, worker ownership of assets and unionization in U.S. firms," International Journal of Industrial Organization, Elsevier, vol. 6(1), pages 139-151, March.
    8. Pencavel, John & Craig, Ben, 1994. "The Empirical Performance of Orthodox Models of the Firm: Conventional Firms and Worker Cooperatives," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 718-744, August.
    9. Estrin, Saul & Jones, Derek C. & Svejnar, Jan, 1987. "The productivity effects of worker participation: Producer cooperatives in western economies," Journal of Comparative Economics, Elsevier, vol. 11(1), pages 40-61, March.
    10. Craig, Ben & Pencavel, John, 1992. "The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest," American Economic Review, American Economic Association, vol. 82(5), pages 1083-1105, December.
    11. Virginie Pe´rotin & Andrew Robinson, 2000. "Employee Participation and Equal Opportunities Practices: Productivity Effect and Potential Complementarities," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 557-583, December.
    12. Felix FitzRoy & Kornelius Kraft, 2005. "Co‐determination, Efficiency and Productivity," British Journal of Industrial Relations, London School of Economics, vol. 43(2), pages 233-247, June.
    13. John Pencavel & Luigi Pistaferri & Fabiano Schivardi, 2006. "Wages, Employment, and Capital in Capitalist and Worker-Owned Firms," ILR Review, Cornell University, ILR School, vol. 60(1), pages 23-44, October.
    14. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    15. Chris Doucouliagos, 1995. "Worker Participation and Productivity in Labor-Managed and Participatory Capitalist Firms: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 49(1), pages 58-77, October.
    16. Wagner, Joachim & Addison, John T. & Schnabel, Claus & Schank, Thorsten, 2004. "Works Councils, Labor Productivity and Plant Heterogeneity: Evidence from Quantile Regressions," IZA Discussion Papers 1414, Institute of Labor Economics (IZA).
    17. Ronald Findlay & Ronald W. Jones, 2018. "Factor Bias and Technical Progress," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 11, pages 167-173, World Scientific Publishing Co. Pte. Ltd..
    18. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    19. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    20. Douglas Kruse & Richard Freeman & Joseph Blasi & Robert Buchele & Adria Scharf & Loren Rodgers & Chris Mackin, 2004. "Motivating Employee-Owners In Esop Firms: Human Resource Policies And Company Performance," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Employee Participation, Firm Performance and Survival, pages 101-127, Emerald Group Publishing Limited.
    21. Ben-ner, Avner, 1988. "The life cycle of worker-owned firms in market economies : A theoretical analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 10(3), pages 287-313, October.
    22. Dow,Gregory K., 2003. "Governing the Firm," Cambridge Books, Cambridge University Press, number 9780521818537.
    23. Perotin, Virginie, 2006. "Entry, exit, and the business cycle: Are cooperatives different?," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 295-316, June.
    24. Ben Craig & John Pencavel, 1995. "Participation and Productiviy: A Comparison of Worker Cooperatives and Conventional Firms in the Plywood Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995 Micr), pages 121-174.
    25. Derek C Jones, 2004. "Ownership And Participation: A Review Of Empirical Evidence For Transition Economies," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Employee Participation, Firm Performance and Survival, pages 171-209, Emerald Group Publishing Limited.
    26. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
    27. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    28. Miyazaki, Hajime, 1984. "On Success and Dissolution of the Labor-Managed Firm in the Capitalist Economy," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 909-931, October.
    29. Swati Basu & Saul Estrin & Jan Svejnar, 2005. "Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 58(3), pages 353-369, April.
    30. Jerome P. Reiter & Elaine L. Zanutto & Larry W. Hunter, 2005. "Analytical Modeling in Complex Surveys of Work Practices," ILR Review, Cornell University, ILR School, vol. 59(1), pages 82-100, October.
    31. Tore Ellingsen & Magnus Johannesson, 2007. "Paying Respect," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 135-150, Fall.
    32. Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
    33. Berman, Katrina V. & Berman, Matthew D., 1989. "An empirical test of the theory of the labor-managed firm," Journal of Comparative Economics, Elsevier, vol. 13(2), pages 281-300, June.
    34. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    35. Ben-Ner, Avner, 1988. "Comparative empirical observations on worker-owned and capitalist firms," International Journal of Industrial Organization, Elsevier, vol. 6(1), pages 7-31, March.
    36. Estrin, Saul, 1991. "Some reflections on self-management, social choice, and reform in eastern europe," Journal of Comparative Economics, Elsevier, vol. 15(2), pages 349-366, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
    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. Gabriel Burdín, 2016. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms," Economic Journal, Royal Economic Society, vol. 126(594), pages 1372-1403, August.
    4. Burdin, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute of Labor Economics (IZA).
    5. John Pencavel, 2013. "Worker cooperatives and democratic governance," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 24, Edward Elgar Publishing.
    6. 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.
    7. Loek Groot & Daan van der Linde, 2017. "The Labor-Managed Firm: Permanent or Start-Up Subsidies?," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(4), pages 1074-1093, October.
    8. 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.
    9. 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.
    10. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650.
    3. Dean, Andrés, 2019. "Do successful worker-managed firms degenerate?," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 317-329.
    4. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2019. "Equilibrium unemployment as a worker insurance device: wage setting in worker owned enterprises," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 653-671, October.
    5. Gregory Dow, 2001. "Allocating Control over Firms: Stock Markets versus Membership Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(2), pages 201-218, March.
    6. 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.
    7. 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.
    8. Jacques Mairesse & Bronwyn H. Hall & Benoît Mulkay, 1999. "Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years," Annals of Economics and Statistics, GENES, issue 55-56, pages 27-67.
    9. Gabriel Burdín, 2016. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms," Economic Journal, Royal Economic Society, vol. 126(594), pages 1372-1403, August.
    10. 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).
    11. 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.
    12. Burdín, Gabriel & Dean, Andrés, 2012. "Revisiting the objectives of worker-managed firms: An empirical assessment," Economic Systems, Elsevier, vol. 36(1), pages 158-171.
    13. Tortia, Ermanno Celeste, 2019. "Employment protection regimes in worker co-operatives: dismissal of worker members and distributive fairness," MPRA Paper 94536, University Library of Munich, Germany.
    14. repec:ilr:articl:v:67:y:2014:i:1:p:202-238 is not listed on IDEAS
    15. John Pencavel, 2013. "Worker cooperatives and democratic governance," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 24, Edward Elgar Publishing.
    16. repec:bla:annpce:v:89:y:2018:i:1:p:65-86 is not listed on IDEAS
    17. 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.
    18. Cecilia Navarra & Ermanno Tortia, 2014. "Employer Moral Hazard, Wage Rigidity, and Worker Cooperatives: A Theoretical Appraisal," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 707-726.
    19. Burdin, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute of Labor Economics (IZA).
    20. Tortia, Ermanno C., 2021. "Employment protection regimes and dismissal of members in worker cooperatives," MPRA Paper 109214, University Library of Munich, Germany.
    21. Vontalge, Alan L., 1991. "A feasibility study of swine producer management cooperatives," ISU General Staff Papers 1991010108000018168, Iowa State University, Department of Economics.
    22. 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.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tep:teppwp:wp11-08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sylvain (email available below). General contact details of provider: https://edirc.repec.org/data/teppnfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.