source-library/worker_ownership/cooperatives.md

Cooperatives

Co-ops are more productive, robust, resistant to price shocks, and increase worker pay and engagement (as opposed to a firm organized by a traditional employer-employee framework). Increased employee engagement in decision-making at all levels is consistently associated with better performance.

• Doucouliagos 95
  • Meta-analysis of 43 studies comparing various forms of worker participation in business
  • Found that “profit sharing, worker ownership, and worker participation in decision making are all positively associated with productivity”
    • These observed correlations are stronger in worker-managed firms than in traditional capitalist firms
  • Bit outdated as it’s from 1995 and only shows correlation, but still useful
• Pérotin 15: UK Coop Report
  • HUGE analysis of a large quantity of data on worker cooperatives
  • Worker cooperatives are found to:
    • be larger than conventional businesses
    • survive as well or better than ther businesses
    • have more stable employment
    • Be more productive than conventional businesses, with staff working “better and smarter” and production organized more efficiently
    • have workers retain a larger share of their profits than other business models
• Pérotin 12
  • The study found increased productivity in the case of:
    • Increased profit sharing (note: this may also involve reverse causality, although data on ESOPs seems to thoroughly verify this anyway)
    • A higher proportion of employees becoming cooperative member, thus increasing participation in decision-making (in France and Italy)
    • A greater proportion of workers on the board (in the UK)
• Williams 07
  • After 1 year, 50-60% of corporations fail while only 10% of cooperatives do
  • After 5 years, 90% of Co-Ops remain open while only 3-5% of standard corporations do
• Co-op Law
  • Co-ops have been shown multilaterally to be more resilient and less likely to fail than traditionally-operated businesses
  • Coops also face unique barriers to entry which might be mitigated through the transformation of existing enterprises into worker’s coops.
• Burdín & Dean 09
  • Economic analysis of capitalist firms vs worker cooperatives in Uruguay from 1996-2005
  • Coops have a greater correspondence between profit increase and wage increase
  • Employment in coops is more resistant to price shocks
  • Employment has a negative correlation with wages for capitalist firms and a positive correlation with wages in worker coops
• Conte, M. A., & Svejnar, J. 88
  • Worker participation in management seems to increase technical efficiency.
• Abell 14
  • Coops make $652 billion in revenue, hold around $3 trillion in assets, and employ nearly one million people in the U.S., showing that coops are already successfully contributing to the U.S. economy
  • Data shows that worker coops:
    • can increase worker incomes by 70-80%
    • have 9-19% greater levels of productivity
    • have 45% lower turnover rates
    • are 30% less likely to fail in the first few years of operation
• Craig & Pencavel 95
  • Study of worker coops in the timber industry of Washington state
  • “What differences we have found imply that coops are more efficient than the principal conventional firms by between 6 and 14 percent”
• Sabatini et al. 12
  • Study based on a 2011 questionnaire in Trento, Italy
  • Found that employment in cooperative enterprises increases trust between workers relative to public and private enterprises
    • 47.5% increase relative to public enterprises
    • 36.9% increase relative to private enterprises
• Park 18
  • In conventional firms, there is a negative relationship between job demands and worker commitment
  • This negative relationship was not found in worker co-ops
• Erdal 12
  • Study of three Italian towns of similar demographics, income, and geography
  • The town with the most worker cooperatives experienced the following:
    • Better mental and physical health, as well as longer lives
    • Children were less likely to skip school and skipped school less
    • Less crime, including less domestic violence and greater feelings of safety.
    • Higher rates of ‘social participation’ (joining clubs and charities, giving blood, voting)
    • Perception of a more positive society, more supportive personal networks, and more trust in the government
  • Note: this study fails to prove causation, and only establishes a correlation between coop prevalence and community wellbeing