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Are Worker-Managed Firms Really More Likely to Fail?

Gabriel Burdín ()

No 7412, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: capitalist firms; labor-managed firms; survival analysis (search for similar items in EconPapers)
JEL-codes: C41 P13 P51 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2013-05
New Economics Papers: this item is included in nep-hme
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Citations: View citations in EconPapers (5) Track citations by RSS feed

Published - published in: Industrial and Labor Relations Review, 2014, 67(1), 202-238

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