How Well Do Worker Cooperatives Perform in Manufacturing? Evidence from a Large Low-Income Country

Girum Abebe and Mulu Gebreeyesus

Economic Development and Cultural Change, 2024, vol. 72, issue 4, 1993 - 2029

Abstract: This study uses enterprise data from Ethiopia, a developing country, to contribute to a relatively underexplored topic on determinants of cooperative formation and their performance vis-à-vis conventional enterprises. We find that cooperatives are more likely to be formed by entrepreneurs who have low human capital and limited within-family entrepreneurial experience and less likely to engage in capital accumulation and in upgrading, which has implications for their long-term prospects. As a result, they are less efficiently operated, earn lower profits, and grow much more slowly than conventional enterprises. Our results cast doubt on the viability of using cooperatives to support business development and entrepreneurial transformation.

Date: 2024
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