Worker Cooperatives Are More Productive

The term “co-op” evokes images of collective farming or crunchy craft breweries. But Virginie Perotin of Leeds University Business Schoolsynthesized research on “labor-managed firms” in Western Europe, the United States and Latin America, and found that, aside from the holistic social benefits of worker autonomy, giving workers a direct stake in managing production enables a business to operate more effectively. On balance, Perotin concludes, “worker cooperatives are more productive than conventional businesses, with staff working ‘better and smarter’ and production organized more efficiently.”

Contrary to stereotype, the European co-op sector is generally as diverse as any other type of ownership structure, including full-scale factories. Though co-op conversion is often seen as a way to rescue “failing” firms, Perotin’s research reveals that in France from 1997 to 2001 more than eight in 10 worker co-ops starting up during this period were established “from scratch,” not derived from ownership transfers in failing companies (compared to new business formations overall, co-ops had a larger portion of brand-new startups). …

While co-ops vary in form, the underlying philosophy, particularly in Europe, is the co-op asboth democratic enterprise and public trust. Often worker-owned firms are mandated—either by law or corporate bylaws—to reserve a portion of assets for longer-term preservation of the integrity of the co-op model. Even if the owners close or leave the business, these indivisible assets are recycled back into future co-op generations or co-op support organizations. The practice seems less common among American co-ops, but in European co-op culture, Perotin observes, “we set up a collective good, we set up an institution for future generations.”

Worker Cooperatives Are More Productive Than Normal Companies