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Are Worker-Managed Firms Really More Likely to Fail?

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  • Burdin, Gabriel

    (Leeds University Business School)

Abstract
Different theoretical explanations suggest that worker-managed firms (WMFs) are prone to failure in competitive environments. Using a long panel of Uruguayan firms, the author presents new evidence on firm survival comparing WMFs and conventional firms. Excluding microenterprises and controlling for differences in the effective tax burden faced by the two types of firms, the hazard of dissolution is 29% lower for WMFs than for conventional firms. This result is robust to alternative estimation strategies based on semi-parametric and parametric frailty duration models that impose different distributional assumptions about the shape of the baseline hazard and allow to consider firm-level unobserved heterogeneity. The greater survivability of WMFs seems to associated with the greater employment stability achieved in this type of firms. The evidence suggests that the marginal presence of WMFs in actual market economies can hardly be explained by the fact that these organizations exhibit lower survival chances than conventional firms.

Suggested Citation

  • Burdin, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7412
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    1. Tortia, Ermanno, 2014. "L'impresa come bene comune," AICCON Working Papers 131-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
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    3. Fabio Sabatini & Francesca Modena & Ermanno Tortia, 2014. "Do cooperative enterprises create social trust?," Small Business Economics, Springer, vol. 42(3), pages 621-641, March.
    4. Gabriel Burdín, 2016. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms," Economic Journal, Royal Economic Society, vol. 126(594), pages 1372-1403, August.

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    More about this item

    Keywords

    capitalist firms; labor-managed firms; survival analysis;
    All these keywords.

    JEL classification:

    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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