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Does workers' control affect firm survival? Evidence from Uruguay

Gabriel Burdín

No 108-2012, AICCON Working Papers from Associazione Italiana per la Cultura della Cooperazione e del Non Profit

Abstract: Worker-managed firms (WMFs) represent a marginal proportion of total firms and aggregate employment in most countries. The bulk of firms in real economies is ultimately controlled by capital suppliers. Different theoretical explanations suggest that worker managed firms (WMFs) are prone to failure in competitive environments. Using a panel of Uruguayan firms based on social security records and including the entire population of WMFs over the period January 1997-July 2009, I present new evidence on worker managed firms´ survival. I find that the hazard of exit is 24%-38% 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 evidence suggests that the marginal presence of WMFs in market economies can hardly be explained by the fact that these organizations exhibit lower survival chances than conventional firms. This paper adds to the literature on labor managed firms, shared capitalism and to the Industrial Organization literature on firm survival.

Keywords: labor-managed firms; capitalist firms; survival analysis (search for similar items in EconPapers)
JEL-codes: C41 P13 P51 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2012-06-25
New Economics Papers: this item is included in nep-hme and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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