Workers Cooperatives as an Alternative Competitive Organizational Form

Developing an alternative and more realistic modeling of the firm, the key point of this paper is that workers cooperatives represent a form of corporate governance, which is a subset of the participatory organizational form, that constitutes a competitive alternative to the typical relatively hierarchical and narrowly controlled firms. An important component of the cooperative advantage lies in its capacity to increase the quantity and quality of effort inputs into the 'production process.' However, to do so incurs economic costs. Thus, cooperatives can yield competitive outcomes without driving out of the market non-cooperative organizational forms. To some extent, whether cooperative or other participatory solutions are adopted depends upon the preferences of economic agents since cooperatives are shown to be competitive even in an extremely competitive environment. However, dominant or not, the cooperative solution can yield higher social-economic welfare levels to members.