Using two new data sets from France, the authors present the first study of the comparative productivity of labor-managed and conventional firms involving large representative samples of firms in a range of industries including services. Their study offers new stylized facts on labor-managed firms, and disentangles incentive effects from those of differences in input demand behavior on factor elasticities. Contrary to received wisdom, labor-managed firms are not smaller than conventional firms; they grow as fast or faster in all industries. The two groups of firms organize production differently. Labor-managed firms are as productive as conventional firms, or more productive, in all industries, and use their inputs efficiently; but in several industries conventional firms would produce more with their current input levels if they organized production like labor-managed firms. On average overall, firms would produce more using the labor-managed firms' industry-specific technologies. Labor-managed firms do not produce at inefficiently low scales.
Get full access to this article
View all access options for this article.
References
1.
AddisonJohn T.2005. The determinants of firm performance: Unions, works councils and employee involvement/high-performance work practices. Scottish Journal of Political Economy52(3): 406–50.
2.
AddisonJohn T.SchankT.SchnabelC.WagnerJoachim. 2004. Works councils, labour productivity and plant heterogeneity: Evidence from quantile regressions. IZA Discussion Paper 1414. Institute for the Study of Labour.
3.
AhnS. C.SchmidtP., 1995. Efficient estimation of models for dynamic panel data. Journal of Econometrics68: 5–28.
4.
AlzolaIzaskunArandoSaioaFakhfakhFathiFreundlichFredGagoMónicaPérotinVirginieZeviAlberto. 2010. Are labour-managed firms all the same? A comparison of incentives for growth, democracy and institutional sustainability in the constitutions of worker cooperatives in Mondragon, Italy and France. Universities of Mondragon, Paris II and Leeds. Paper presented at the 15th World Congress of the International Association for the Economics of Participation, July. Paris.
5.
ArellanoM.BondS., 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies58: 277–98.
6.
ArellanoM.BoverO., 1995. Another look at the instrumental-variable estimation of error-components models. Journal of Econometrics68: 29–52.
7.
BartlettWill. 1994. Employment in small firms: Are cooperatives different? Evidence from southern Europe. In AtkinsonJ.StoreyD. (Eds.), Employment, the Small Firm and the Labour Market, pp. 256–87. New York: Routledge.
8.
BartlettWillCableJohnEstrinSaulJonesDerek C.SmithStephen C., 1992. Labor-managed and private firms in north central Italy: An empirical comparison. Industrial and Labor Relations Review46(1): 103–18.
9.
BasuSwatiEstrinSaulSvejnarJan. 2005. Employment determination in enterprises under communism and in transition: Evidence from Central Europe. Industrial and Labor Relations Review58(3): 353–69.
10.
MorionesBayoAlbertoJoséSalvatierraPedro Javier GalileaMerinoJavierde CerioDíaz. 2003. Participation, cooperatives and performance: An analysis of Spanish manufacturing firms. In KatoTakaoPliskinJeff (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms. The Determinants of the Incidence and the Effects of Participatory Organizations, Vol. 7, pp. 31–56. Oxford: Elsevier Science.
11.
Ben-NerAvnerJonesDerek C., 1995. Employee participation, ownership and productivity: A new theoretical framework. Industrial Relations34(4): 532–54.
12.
BermanKatrina V.BermanMatthew D., 1989. An empirical test of the theory of the labor-managed firm. Journal of Comparative Economics13: 281–300.
13.
BessièreSabineDepilStéphanie. 2008. Les salaires dans les entreprises en 2006: Une hausse modérée. Insee Première1174(January).
14.
BlackSandra E.LynchLisa M., 2001. How to compete. The impact of workplace practices and information technology on productivity. Review of Economics and Statistics83(3):434–45.
15.
BlundellRichardBondS., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics87: 115–45.
16.
BlundellRichardBondS., 2000. GMM estimation with persistent panel data: An application to production functions. Econometric Review19(3): 321–40.
17.
BoninJohnJonesDerek C.PuttermanLouis. 1993. Theoretical and empirical studies of producer cooperatives: Will ever the twain meet?Journal of Economic Literature31: 1290320.
18.
BurdínGabrielDeanAndrés. 2009. New evidence on wages and employment in worker cooperatives compared with capitalist firms. Journal of Comparative Economics37: 517–33.
19.
CG-SCOP (Confédération Générale des SCOP). 2003. Guide juridique des SCOP. Paris: Scop Edit.
20.
ConteMichael A.SvejnarJan. 1988. Productivity effects of worker participation in management, profit-sharing, worker ownership of assets and unionization in US firms. International Journal of Industrial Organization6: 139–51.
21.
ConteMichael A.SvejnarJan. 1990. The performance effect of employee ownership plans. In BlinderA. S. (Ed.), Paying for Productivity: A Look at the Evidence, pp. 143–72. Washington (DC): Brookings Institution Press.
22.
CraigBenPencavelJohn. 1992. The behavior of worker cooperatives: The plywood companies of the Pacific Northwest. American Economic Review82(5): 1083–105.
23.
CraigBenPencavelJohn. 1995. Participation and productivity: A comparison of worker cooperatives and conventional firms in the plywood industry. Brookings Papers: Microeconomics, pp. 121–74. Washington (DC): Brookings Institution Press.
24.
DoucouliagosChris. 1995. Worker participation and productivity in labor-managed and participatory capitalist firms: A meta-analysis. Industrial and Labor Relations Review49(1): 58–78.
25.
DowGregory K.2003. Governing the Firm. Workers' Control in Theory and Practice. Cambridge (UK): Cambridge University Press.
26.
EarleJohn S.EstrinSaul. 1998. Workers' self-management in transition economies. In BartlettWillUvalićMilica (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Vol. 6, pp. 3–28. Oxford:Elsevier Science.
27.
ElioEunate. 2006. Women in the Mondragon cooperatives. Paper presented at the 13th Congress of the International Association for the Economics of Participation, July. Mondragon University, Spain.
28.
EllingsenToreJohannessonMagnus. 2007. Paying respect. Journal of Economic Perspectives21(4): 135–49.
29.
EstrinSaul. 1991. Some reflections on self-management, social choice, and reform in Eastern Europe. Journal of Comparative Economics15: 349–66.
30.
EstrinSaulJonesDerek C., 1992. The viability of employee-owned firms: Evidence from France. Industrial and Labor Relations Review45(2): 323–38.
31.
EstrinSaulJonesDerek C., 1995. Workers' participation, employee ownership and productivity: Results from French producer cooperatives. In JonesDerek C.SvejnarJan (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Vol. 5, pp. 3–24. Oxford:Elsevier Science.
32.
EstrinSaulJonesDerek C., 1998. The determinants of investment in employee-owned firms: Evidence from France. Economic Analysis1(1): 17–28.
33.
EstrinSaulJonesDerek C.SvejnarJan. 1987. The productivity effects of worker participation: Producer cooperatives in Western economies. Journal of Comparative Economics11(1): 40–61.
34.
EstrinSaulHanousekJanKočendaEvženSvejnarJan. 2009. The effects of privatization and ownership in transition economies. Journal of Economic Literature47(3): 699–728.
35.
FakhfakhFathi. 2004. The effects of profit sharing and employee share ownership on quits: Evidence from a panel of French firms. In PérotinVirginieRobinsonAndrew (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Employee Participation, Firm Performance and Survival, Vol. 8, pp. 129–47. Oxford:Elsevier Science.
36.
FakhfakhFathiPérotinVirginie. 2002. France: Weitzman under state paternalism? In BrownMicheleHeywoodJohn (Eds.), Paying for Performance: An International Comparison, pp. 90–114. Armonk, NY: ME Sharpe.
37.
FitzRoyFelixKraftKornelius. 2005. Co-determination, efficiency and productivity. British Journal of Industrial Relations43(2): 233–47.
FurubotnEirek G.PejovichSvetozar. 1970. Property rights and the behaviour of the firm in a socialist state: The example of Yugoslavia. Zeitschrift für Nationalökonomie30(3–4): 431–54.
40.
GrilichesZviMairesseJacques. 1997. Production functions: The search for identification. In StromS. (Ed.), Essays in Honour of Ragnar Frisch. Econometric Society Monograph D series. Cambridge: Cambridge University Press.
41.
JensenMichaelMecklingWilliam. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics3: 305–60.
42.
JonesDerek C.2004. Ownership and participation: A review of empirical evidence for transition economies. In PérotinVirginieRobinsonAndrew (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Employee Participation, Firm Performance and Survival, Vol. 8, pp. 171–209. Oxford:Elsevier Science.
43.
JonesDerek C.2007. The productive efficiency of Italian producer cooperatives: Evidence from conventional and cooperative firms. In NovkovicSonjaSenaVania (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Cooperative Firms in Global Markets: Incidence, Viability and Economic Performance, Vol. 9, pp. 3–28. Oxford:Elsevier Science.
44.
KatoTakaoMorishimaMotohiro. 2002. The productivity effects of participatory employment practices. Evidence from Japanese panel data. Industrial Relations41(4): 487–520.
45.
KruseDouglasBlasiJoseph. 1997. Employee ownership, employee attitudes, and firm performance: A review of the evidence. In LewinD. (Eds.), The Human Resource Management Handbook, Part 1. Greenwich (CT):JAI Press.
46.
KruseDouglasFreemanRichardBlasiJosephBucheleRobertScharfAdriaRodgersLorenMackinChris. 2004. Motivating employee owners in ESOP firms: Human resource policies and company performance. In PérotinVirginieRobinsonAndrew (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Employee Participation, Firm Performance and Survival, Vol. 8, pp. 101–28. Oxford: Elsevier Science.
47.
KruseDouglasBlasiJosephParkRhokeun. 2008. Shared capitalism in the U.S. economy: Prevalence, characteristics, and employee views of financial participation in enterprises. Paper presented at the Academy of Management Conference, August. Anaheim (CA).
48.
LevineDavid I.TysonLaura. 1990. Participation, productivity and the firm's environment. In BlinderA. S. (Ed.), Paying for Productivity: A Look at the Evidence, pp. 183–243. Washington (DC): Brookings Institution Press.
49.
MaiettaOrnella WandaSenaVania. 2004. Profit sharing, technical efficiency change and finance constraints. In PérotinVirginieRobinsonAndrew (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Employee Participation, Firm Performance and Survival, Vol. 8, pp. 149–67. Oxford:Elsevier Science.
50.
NavarraCecilia. 2008. Collective accumulation of capital in Italian worker cooperatives between employment insurance and “we-rationality”: An empirical investigation. Paper presented at the 14th World Congress of the International Association for the Economics of Participation, July. Hamilton College, Clinton (NY).
51.
PencavelJohn. 2001. Worker Participation: Lessons from the Worker Co-ops of the Pacific Northwest. New York: Russell Sage Foundation.
52.
PencavelJohnCraigBen. 1994. The empirical performance of orthodox models of the firm: Conventional firms and worker cooperatives. Journal of Political Economy102(4): 718–44.
53.
PencavelJohnPistaferriLuigiSchivardiFabiano. 2006. Wages, employment and capital in capitalist and worker-owned firms. Industrial and Labor Relations Review60(1): 23–44.
54.
PendletonAndrewRobinsonAndrew. 2010. Employee stock ownership, involvement, and productivity: An interaction-based approach. Industrial and Labor Relations Review64(1): 3–29.
55.
PérotinVirginie. 2006. Entry, exit and the business cycle: Are cooperatives different?Journal of Comparative Economics34: 295–316.
56.
PérotinVirginieRobinsonAndrew. 2003. Employee participation in profit and ownership: A review of the issues and evidence. European Parliament Working Paper SOCI 109 EN.
57.
ReiterJerome P.ZanuttoElaine L.HunterLarry W., 2005. Analytical modeling in complex surveys of work practices. Industrial and Labor Relations Review59(1): 82–100.
58.
RosAgustin J.2003. Do ESOPs motivate employees? Worker effort, monitoring and participation in employee-ownership plans. In KatoTakaoPliskinJeffrey (Eds.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms. The Determinants of the Incidence and the Effects of Participatory Organizations, Vol. 7, pp. 83–103. Oxford:Elsevier Science.
59.
UvalićMilica. 1992. Investment and Property Rights in Yugoslavia. Cambridge (UK): Cambridge University Press.
60.
VanekJaroslav. 1977. The Labor-Managed Economy. Ithaca (NY): Cornell University Press.
61.
ZeviAlberto. 2005. Il finanziamento delle cooperative. In MazzoliE.ZamagniS. (Eds.), Verso una nuova storia della cooperazione, pp. 293–332. Bologna (Italy): Il Mulino.
