Cooperatives and Property Rights: Hansmann’s Contribution

Abstract

Hansmann’s theory explains the success of the traditional (capitalistic) firm in terms of transaction costs, asserting that the costs of ownership incurred by capitalist are lower with respect to the costs of contracting that other groups of patrons would have to incur for the acquisition of capital, through the instruments available to the market. The relatively low number of worker-owned firms, on the other hand, is mainly explained by the heterogeneity of the interests among the workers in a firm, which would lead to difficulties in taking collective decisions, thus sharply increasing the costs of ownership of this group of patrons. Although Hansmann’s theory is a step forward with respect to the Ward-Vanek model, it does not fully explain why cooperatives take on the form of quasi non-profit firms in countries where they have greater importance, and above all, it does not fully explain their success, which indicates, at least in these cases, that there are none of the problems he emphasizes regarding collective decision-making, or that the quasi non-profit feature probably represents the tool for overcoming these difficulties.