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Labor Managed Firms

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lightbulbAbout this topic
Labor Managed Firms (LMFs) are enterprises owned and operated by their workers, where decisions regarding production, management, and profit distribution are made collectively by the workforce. This model emphasizes democratic governance and equitable sharing of profits, contrasting with traditional capitalist firms that are typically owned by external shareholders.
lightbulbAbout this topic
Labor Managed Firms (LMFs) are enterprises owned and operated by their workers, where decisions regarding production, management, and profit distribution are made collectively by the workforce. This model emphasizes democratic governance and equitable sharing of profits, contrasting with traditional capitalist firms that are typically owned by external shareholders.

Key research themes

1. How do labor-managed firms (LMFs) balance employment goals and income optimization in firm behavior and productivity?

This theme examines the empirical objectives that labor-managed firms pursue in practice, especially regarding the traditional neoclassical assumption of net income per worker maximization versus alternative views that LMFs also care about employment levels. It also analyzes productivity comparisons between LMFs and conventional firms, evaluating whether labor-managed governance leads to different factor uses or outcomes. Such analysis matters for understanding the organizational incentives and viability of LMFs as alternatives to capitalist firms.

Key finding: Using a comprehensive panel dataset covering all Uruguayan worker-managed and conventional firms over 1996–2005, this study estimates a generic welfare function revealing that LMFs value both income per worker and employment... Read more
Key finding: Comparing around 7,000 French firms including ~500 employee-owned cooperatives, this work finds that labor-managed firms are at least as productive as conventional firms but organize production differently, with higher... Read more
Key finding: Proposing a mixed duopoly model where an LMF maximizes a weighted sum of profits and employment (distinguishing member and non-member workers), the paper rationalizes empirical findings that LMFs show greater concern for... Read more
Key finding: Analyzing Uruguayan LMFs using linked employee-employer data from 1996 to 2013, this study empirically tests the 'degeneration hypothesis' that successful LMFs gradually replace worker-members with wage employees,... Read more

2. What roles do labor unions and collective voice play in shaping labor standards, employee access, and firm governance outcomes?

This theme investigates how organized labor influences firm-level outcomes such as audit quality, internal control systems, employee access to work-life flexibility, and labor-management relations. It explores the mechanisms through which unions as collective actors improve information transparency, enforce labor standards compliance, and affect employee welfare policies, with implications for governance and organizational performance. Understanding union effects is critical for grasping the institutional environment of labor-managed and unionized firms.

Key finding: The study finds that stronger labor unions correlate with higher audit quality—evidenced by higher audit fees, fewer audit failures, and fewer material weaknesses in internal control. This suggests unions reduce information... Read more
Key finding: Through multilevel models on data from eight U.S. unionized establishments, findings reveal that perceived union support for schedules increases employee access to and usage of flexible work practices like flextime and... Read more
Key finding: The paper argues firms benefit from unionization primarily by reduced employee turnover and more effective employee involvement programs, as unions provide a structured channel for employee voice that facilitates... Read more
Key finding: Using pooled cross-sectional time-series data from U.S. states (1961–1991), the paper identifies that racial divisions and small business dominance increase the likelihood of right-to-work laws favoring management over labor,... Read more

3. How do institutional and policy contexts shape the development, prevalence, and competitiveness of labor-managed firms?

This research theme explores external influences such as government subsidies, franchise structures, private equity, organizational forms, and the political economy on labor-managed firms’ establishment, growth, compliance, and international competitiveness. It also looks at the socio-political dynamics affecting cooperative development internationally, evaluating policy tools and structural barriers relevant to LMF proliferation and sustainability.

Key finding: A theoretical model shows that government R&D subsidies can increase the market share and competitiveness of labor-managed firms vis-à-vis profit-maximizing firms in international markets, but optimal subsidy rates depend on... Read more
Key finding: Using enforcement data on the top 20 U.S. fast food chains, the study demonstrates that franchisee-owned units have substantially lower compliance with labor standards than company-owned outlets, reflected in higher backwage... Read more
Key finding: Investigating why labor-managed firms remain underrepresented despite economic and social benefits, this paper theorizes three main causes: widespread lack of awareness of LMF options, entrepreneur preference for conventional... Read more
Key finding: Through firm-level surveys and national censuses, the paper documents a recent steep increase in employee ownership in the UK linked to regulatory frameworks and incentivizing policies. It highlights that macro-level policy... Read more
Key finding: Through international comparison, the paper argues that revitalization of labor movements, including growth of labor-managed enterprises, requires periods of rank-and-file mobilization and popular protest. Institutional... Read more

All papers in Labor Managed Firms

This chapter reviews empirical and theoretical studies on how democratic participation at work relates to broader civic life, with a focus on democratically organized and participatory workplaces such as worker cooperatives. Here we... more
In this work we present the results of a recent survey that covered the whole universe of Worker Cooperatives in Uruguay. In order to be able to evaluate the comparative performance of Worker Cooperatives the survey covered also a control... more
* Este texto es el resultado de un trabajo en equipo, a partir de comentarios y críticas a una primera versión redactada por los autores, en el cual intervinieron
Face à un contexte entrepreneurial de plus en plus risqué et incertain, marqué notamment par la menace de faillites (cessation de paiements) ou de fermetures (absence de repreneur suite au départ en retraite du dirigeant), la... more
This paper is motivated by empirical observations on popular-economy firms (PEFs) in the informal sector of Santiago de Chile. These are labor-managed firms embedded in popular milieu where cooperation between their members plays a... more
Literature on non-traditional firms has focused on behavioral differences with for-profit firms. Less attention has been given to the variations in behavior among non-traditional firms. This paper examines differences across three types... more
Workers in cooperatives are self-employed workers and, if they resemble employees in conventional workplaces, they care about the length of their working hours. In this paper, their choice of hours is characterized as a conventional labor... more
In this work we present the results of a recent survey that covered the whole universe of Worker Cooperatives in Uruguay. In order to be able to evaluate the comparative performance of Worker Cooperatives the survey covered also a control... more
The literature postulates that government subsidization of strategic R&D activities of profit maximising firms (PMFs) increases their shares in international markets. Will this also hold for labor-managed firms (LMFs) which are owned by... more
El control en las empresas de trabajo asociado. Revisión crítica, desde una perspectiva de agencia, de los principales mecanismos de control, y análisis de sus repercusiones organizativas
Bogetik, hljko, and Heffley, Dennis-Market Syndicalism and Market Imbalances The endogenous relationship between income-per-worker (Y) and product price (E') under labor management or, more broadly, market syndicalism, causes P to play a... more
A PERENNIAL ISSUE in the study of organizational behavior is the impact on productivity of participation by workers in a firm's decisionmaking. The question has returned to the foreground in the recent debate over policies to increase... more
In this work we present the results of a recent survey that covered the whole universe of Worker Cooperatives in Uruguay. In order to be able to evaluate the comparative performance of Worker Cooperatives the survey covered also a control... more
The degeneration hypothesis of worker-managed firms (WMFs) asserts that the pursuit of higher earnings would induce successful WMFs to gradually disintegrate their labor-managed economies and become more similar to a conventional firm.... more
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.... more
A partir de un análisis institucional comparado se definen las características institucionales y los problemas de agencia en los diferentes tipos de empresas. A continuación se examina la interdependencia y circularidad del problema de... more
utilidad para comprender los factores que influyen en la satisfacción de los socios con la cooperativa y, en definitiva, en la supervivencia y éxito de esta singular organización. Esta teoría revela importantes diferencias con las... more
The authors are grateful to the French worker cooperatives federation, Confédération Générale des SCOP (CG-SCOP) for communicating the data on cooperatives and to Jean-Marie Collache and Alain Schlecht for transferring and documenting the... more
espanolEl presente articulo busca ofrecer una vision panoramica de la literatura teorica que aborda un problema de investigacion relativamente novedoso, al menos en el medio academico local. ?Por que las cooperativas de trabajadores... more
The theoretical discussion concerning the comparison of employment and wage decisions between capitalist firms and worker cooperatives began with the seminal work of Ward (1958). The model assumes that worker cooperatives maximizes the... more
The degeneration hypothesis in labor-managed firms (LMFs) was originally formalized by the seminal contributions of Ben-Ner (1984) and Miyazaki (1984). Within these models, LMFs are collectively owned by workers-members who can hire... more
Se puede encontrar información sobre esta Asociación y sus actividades en: http://eaepe.tuwien.ac.at/.Elartículo se publica con autorización del autor. Traducción de Ángela Montoya, revisión técnica y edición de Alberto Supelano.... more
Se puede encontrar información sobre esta Asociación y sus actividades en: http://eaepe.tuwien.ac.at/.Elartículo se publica con autorización del autor. Traducción de Ángela Montoya, revisión técnica y edición de Alberto Supelano.... more
In this work we present the results of a recent survey that covered the whole universe of Worker Cooperatives in Uruguay. In order to be able to evaluate the comparative performance of Worker Cooperatives the survey covered also a control... more
The participatory governance on the workplace remains rare. Control does not follow ownership by logical necessity; why, then, is the capitalist enterprise so prevalent? Oliver Williamson, Michael Jensen, Henry Hansmann and some other... more
Chillemi, Ottorino, and Gui, Benedetto-On the Performance of Worker-Managed Firms: Does Participation Only Exert "Technical" Effects? We consider those studies of worker-managed firms that estimate production functions augmented to... more
Chillemi, Ottorino, and Gui, Benedetto-On the Performance of Worker-Managed Firms: Does Participation Only Exert "Technical" Effects? We consider those studies of worker-managed firms that estimate production functions augmented to... more
and three anonymous referees for comments on various drafts of this paper. Jones acknowledges with gratitude thefinancial assistance of the National Science Foundation (Grant # 9010591). Of course, all remaining errors and any omissions... more
Traducción libre del idioma inglés realizada por Marcela Apa Revisión técnica de Luisa Baigorria * Este artículo se basa en una investigación financiada por los subsidios para investigación FRN A 13-5/20 y A13-5/66.
Aunque el término institución tiene una larga historia en las ciencias sociales, aún no existe consenso en torno a su definición. El autor primero muestra las ambigüedades que presentan los planteamientos de North al limitar el concepto... more
El cooperativismo de trabajo es uno de los principales exponentes de la Democracia Económica en cuanto a elaboraciones teóricas y realizaciones prácticas. En este sentido, las cooperativas de trabajo se conciben como las organizaciones en... more
I review the problems of labor-managed firms in their historical and largely socialist setting, and make a case for them in a freed market economy.
The degeneration hypothesis of worker-managed firms (WMFs) asserts that the pursuit of higher earnings would induce successful WMFs to gradually disintegrate their labor-managed economies and become more similar to a conventional firm.... more
The participatory governance on the workplace remains rare. Control does not follow ownership by logical necessity; why, then, is the capitalist enterprise so prevalent? Oli-ver Williamson, Michael Jensen, Henry Hansmann and some other... more
A Teoria Moderna da Firma centrou-se na análise de empresas hierárquicas, mostrando uma relutância em estudar os processos de autogestão. Na verdade, com a exceção de certas contribuições marginais, sob o preconceito teórico de que todos... more
El Relevamiento Industrial de la ciudad de Tandil (RIT), se llevó a cabo a partir Convenio Res. CS Nº 118. (28/2/2013) entre el Municipio de Tandil y la UNCPBA con la finalidad de actualizar la información preexistente de los dos... more
English abstract below ------ Las cooperativas de trabajo asociado tienen un papel fundamental en la mejora de la calidad de vida de las personas, a través de la solución de su situación laboral y con la puesta en práctica de valores... more
This paper explores whether labour-management theory provides significant insights into the operation of the Yugoslav economy and into the process of transition in the Yugoslav successor states. It concludes that the literature offered... more
It is well known that Serbia – along with the other Southeast European successor states of former Yugoslavia – emerged from a country recognized for its specific labour-managed institutional arrangement. The paper recalls the main... more
La conception socialiste des retraites s’est cristallisée dans les années 1880- 1914 tandis que les socialistes s’opposaient sur la propriété au sein des coopératives. Jaurès a défendu des positions originales sur la propriété collective... more
Labor-management relations are the interacting relations between labor and management. The purpose of our study is to find out the worker wage satisfaction, worker satisfaction with supervisory behavior and worker satisfaction with... more
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