Participation, Profit Sharing, Worker Ownership and Efficiency in Italian Producer Cooperatives

Abstract

This paper analyses the productivity effects of worker participation in management, profit-sharing and worker ownership. It develops an estimating framework and applies it to firm-level data for Italian producer cooperatives, one of the largest and fastest growing systems of producer cooperatives in industrialized Western economies. The results are of particular interest because they provide a systematic test of numerous hypotheses from the literature on incentives and efficiency in participatory and labour-managed firms. Moreover, they may help in formulating public policy guidelines in the numerous Western countries that consider participation, worker ownership of assets and profitsharing as possible means for increasing workplace democracy, stimulating productivity and reducing unemployment owing to plant shutdowns.1 The results of our study are more conclusive than all existing findings with respect to efficiency of participatory, profit-sharing and worker-owned firms because we were able to use an unusually large panel of firms. The firms are both small and large (equivalent to the Fortune 500), and the variable values for participation, profit-sharing and worker ownership vary widely both crosssectionally and over time (see Table 1). Since our data relate exclusively to