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> After all, shouldn't those who actually form the workforce of a company and shape the products and services it offers be in control? Why not have those who ac

• vladharbuz 4y ago
  That reasoning makes sense to me. Do you think there actually _is_ some material disadvantage to co-operatives that leads them to be less economically successful than companies where shareholders have all the power and ownership? If so, do you think there is something that can correct this imbalance such that companies structured in more equitable ways can work just as well as the current inequality-laden corporations?
  • zhdc1 4y ago
    > That reasoning makes sense to me. Do you think there actually _is_ some material disadvantage to co-operatives that leads them to be less economically successful than companies where shareholders have all the power and ownership? This is hard to say. I think there are two competing trends: 1. Co-operative ownership is becoming more prevalent. This is particularly true in situations where entrepreneurial bricolage (making do with what you have on hand) is a factor. 2. However, there aren't that many examples of legitimate co-operative ownership in larger corporations. They do exist, but the sample size is small. As far as I'm aware, employee co-ownership is more associated with the concept of 'psychological ownership', where the organization tries to make an employee feel like they own a portion of the company. This can come from actual ownership via RSUs or stock options, or through other factors, such as company culture. The idea here being that psychological ownership increases employee effectiveness. The issue is that 1. top management generally has more influence than owners and 2. it's not always (or usually) in the best interest of the employee to have more than a small percentage of their net worth tied up in their employer. Think about it this way. In a (greatly simplified model of) democracy, voters essentially "own" the government. However, the politicians they elect as well as an employed bureaucracy are the ones generally calling the shots. Democracy works because it provides a floor where, if performance falls to a certain point, the top management layer is replaced by a different set of managers. However, corporations are not governments. Governments (especially local governments) - and bureaucracies - last a very long time, to the extent that they generally survive well after whatever state they were originally part-of goes away. In other words, they're robust. You can have a bad set of elected, or unelected, officials and regardless of what happens, odds are that the entity they represent will still be around decades if not centuries later. Corporations are the opposite. The failure rate is sizable. Like I wrote in my previous post, a small number of larger companies are adding economic value, while the rest are in the process of fading away. The question here is whether a co-operative model provides enough of a benefit beyond the standard corporate ownership structure to provide some benefit to either of these phases. My guess is that the answer is no for the growth phase and, depending on the organization/industry, maybe or a slight yes for the later maintenance phase. That said, the sample size of employee owned co-operatives in growth-oriented industries is so small that I don't know if the data exists to take a shot at answering either question.