Cooperative Firms and the Crisis: Evidence from Some Italian Mixed Oligopolies

We investigate how cooperative firms reacted to the current crisis. This allows us to compare the behavior of cooperative and conventional firms facing exogenous shifts in demand. After a short survey of a stream of theoretical literature, we analyze a large group of Italian production cooperatives in the periods 2003-2010 and 1994-2011 and we contrast co-ops behavior with the overall trend in the industries in which they operate. Our sample’s evidence suggests that the cooperative’s behavior has a stabilizing effect on employment with respect to shocks in output demand. Unlike profit-maximizers, cooperative firms seem to be adjusting pay more than employment when facing shocks. Production co-ops look better equipped than their profit-maximizing counterparts in tackling the long recession also because they have been very cautious in their profit policies over time. Unlike conventional firms, they have significantly increased their own equity during “good” years instead of distributing large dividends to their members.

[1]  Andrés Dean,et al.  Revisiting the Objectives of Worker-Managed Firms: An Empirical Assessment , 2012 .

[2]  Cecilia Navarra.  Collective Accumulation of Capital in Italian Worker Cooperatives Between Employment Insurance and 'We-Rationality': An Empirical Investigation , 2010 .

[3]  Andrés Dean,et al.  New evidence on wages and employment in worker cooperatives compared with capitalist firms , 2009 .

[4]  Ben R. Craig,et al.  The Objectives of Worker Cooperatives , 1993 .

[5]  J. Crémer,et al.  Duopoly with employee-controlled and profit-maximizing firms: Bertrand vs Cournot competition , 1992 .

[6]  G. Rossini,et al.  Competition policy vs horizontal merger with public, entrepreneurial, and labor-managed firms , 1992 .

[7]  I. Horowitz.  On the effects of cournot rivalry between entrepreneurial and cooperative firms , 1991 .

[8]  Flavio Delbono,et al.  GAME THEORETIC MODELS OF MIXED OLIGOPOLY , 1990 .

[9]  H. Hwang,et al.  Export subsidies and oligopolistic rivalry between labor-managed and capitalist economies☆ , 1989 .

[10]  M. Waterson,et al.  Labor-managed Cournot oligopoly and industry output , 1983 .

[11]  M. Landsberger,et al.  Allocative and distributional effects of a monopolistic cooperative firm in a capitalist economy , 1980 .

[12]  V. Pérotin.  The Cooperative Business Movement, 1950 to the Present: The Performance of Workers’ Cooperatives , 2012 .

[13]  Ben R. Craig,et al.  Participation and Productiviy: A Comparison of Worker Cooperatives and Conventional Firms in the Plywood Industry , 1995 .

[14]  K. Okuguchi.  COURNOT OLIGOPOLY WITH PROFIT-MAXIMIZING AND LABOR-MANAGED FIRMS , 1993 .

[15]  Ben R. Craig,et al.  The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest , 1992 .

[16]  Y. Miyamoto.  A Labour-Managed Firm's Reaction Function Reconsidered , 1982 .

[17]  N. Ireland,et al.  The Economics of Labor Managed Enterprises , 1982 .

[18]  T. Başar,et al.  Workers and incentives , 1982 .

[19]  B. Ward.  The Firm in Illyria: Market Syndicalism , 1977 .